What changed in CROWN CRAFTS INC's 2024 10-K compared to 2023?

Across the narrative sections we track, CROWN CRAFTS INC (CRWS) added 141 paragraphs, removed 163, and edited 94 between the 2023 and 2024 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+55/−73), Item 1A. Risk Factors (+55/−50), Item 1. Business (+24/−33).

Did CROWN CRAFTS INC add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 55 new/edited paragraphs and 50 removed paragraphs versus the 2023 10-K.

What changed in CROWN CRAFTS INC's MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 55 new/edited paragraphs and 73 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did CROWN CRAFTS INC's Legal Proceedings (Item 3) change in 2024?

Item 3 shows 1 added/edited paragraphs and 1 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this CRWS 10-K diff come from?

The source filings are CROWN CRAFTS INC's official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in CROWN CRAFTS INC's 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of CROWN CRAFTS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+141 added−163 removedSource: 10-K (2024-06-28) vs 10-K (2022-06-08)

Top changes in CROWN CRAFTS INC's 2024 10-K

141 paragraphs added · 163 removed · 94 edited across 6 sections

Item 7. Management's Discussion & Analysis+55 / −73 · 28 edited
Item 1A. Risk Factors+55 / −50 · 40 edited
Item 1. Business+24 / −33 · 19 edited
Item 2. Properties+3 / −3 · 3 edited
Item 5. Market for Registrant's Common Equity+3 / −3 · 3 edited

Item 1. Business

Business — how the company describes what it does

19 edited+5 added−14 removed13 unchanged

2023 filing

2024 filing

Biggest changeFiscal Year 2022 2021 Walmart Inc. 52 % 43 % Amazon.com, Inc. 21 % 25 % Products The Company’s primary focus is on infant, toddler and juvenile products, including the following: ● infant and toddler bedding ● blankets and swaddle blankets ● nursery and toddler accessories ● room décor ● reusable and disposable bibs ● burp cloths ● hooded bath towels and washcloths ● reusable and disposable placemats and floor mats ● disposable toilet seat covers and changing mats ● developmental toys ● feeding and care goods ● other infant, toddler and juvenile soft goods 5 Table of Contents Seasonality and Inventory Management There are no significant variations in the seasonal demand for the Company’s products from year to year.

Biggest changeFiscal Year 2024 2023 Walmart Inc. 42% 51% Amazon.com, Inc. 19% 20% 5 Table of Contents Products The Company’s primary focus is on infant, toddler and juvenile products, including the following: ● developmental toys ● dolls and plush toys ● reusable and disposable bibs ● infant and toddler bedding ● blankets and swaddle blankets ● nursery and toddler accessories ● room décor ● burp cloths ● reusable and disposable placemats and floor mats ● disposable toilet seat covers and changing mats ● feeding and care goods ● other infant, toddler and juvenile soft goods Seasonality and Inventory Management Approximately 20% of the Company’s annual gross sales typically occur during the first fiscal quarter (April through June).

Sales of the Company’s products are generally made directly to retailers, such as mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, wholesale clubs and internet-based retailers. The Company’s products are marketed under a variety of Company-owned trademarks, under trademarks licensed from others and as private label goods.

Most sales of the Company’s products are generally made directly to retailers, such as mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, wholesale clubs and internet-based retailers. The Company’s products are marketed under a variety of Company-owned trademarks, under trademarks licensed from others and as private label goods.

The Company does not enter into long-term or other purchase agreements with its customers. The table below sets forth those customers that represented at least 10% of the Company’s gross sales in fiscal years 2022 and 2021.

Sales of licensed products represented 40% of the Company’s gross sales in fiscal year 2022, which included 33% of sales under the Company’s license agreements with affiliated companies of The Walt Disney Company (“Disney”), which expire as set forth below: License Agreement Expiration Infant Bedding December 31, 2022 Infant Feeding and Bath December 31, 2023 Toddler Bedding December 31, 2023 STAR WARS Toddler Bedding December 31, 2023 Customers The Company’s customers consist principally of mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs.

Sales of licensed products represented 40% of the Company’s gross sales in fiscal year 2024, which included 24% of sales under the Company’s license agreements with affiliated companies of The Walt Disney Company (“Disney”), which expire as set forth below: License Agreement Expiration Infant Bedding December 31, 2025 Infant Feeding and Bath December 31, 2024 Toddler Bedding December 31, 2024 Marvel December 31, 2024 STAR WARS Toddler Bedding December 31, 2024 STAR WARS - Lego Plush December 31, 2025 Customers The Company’s customers consist principally of mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs.

Sales and Marketing The Company’s products are marketed through a national sales force consisting of salaried sales executives and employees located in Compton, California; Gonzales, Louisiana; Grand Rapids, Michigan; and Bentonville, Arkansas and by independent commissioned sales representatives located throughout the United States. 6 Table of Contents

Sales and Marketing The Company’s products are marketed through a national sales force consisting of salaried sales executives and employees located in Gonzales, Louisiana; Compton, California; Minneapolis, Minnesota; Grand Rapids, Michigan; Bentonville, Arkansas; and London, United Kingdom; and by independent commissioned sales representatives located throughout the United States.

Sales of products marketed under the Company’s trademarks, including NoJo®, Neat Solutions®, Carousel Designs® and Sassy®, accounted for 30% and 38% of the Company’s total gross sales during fiscal years 2022 and 2021, respectively. Protection for these trademarks is obtained through domestic and foreign registrations.

Sales of products marketed under the Company’s trademarks, including Sassy®, Manhattan Toy®, NoJo® and Neat Solutions® accounted for 38% and 35% of the Company’s total gross sales during fiscal years 2024 and 2023, respectively. Protection for these trademarks is obtained through domestic and foreign registrations.

The Company maintains a foreign representative office located in Shanghai, China, which is responsible for the coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social compliance and quality. The Company’s products are warehoused and distributed from a leased facility located in Compton, California.

Sales are generally higher in periods when customers take initial shipments of new products, as these orders typically include enough products for initial sets for each store and additional quantities for the customer’s distribution centers.

There are otherwise no significant variations in the seasonal demand for the Company’s products from year to year. Sales are generally higher in periods when customers take initial shipments of new products, as these orders typically include enough products for initial sets for each store and additional quantities for the customer’s distribution centers.

When designing products under the Company’s various licensed brands, the Company’s designers coordinate their efforts with the licensors’ design teams to provide for a more fluid design approval process and to effectively incorporate the image of the licensed brand into the product. The Company’s designs include traditional, contemporary, textured and whimsical patterns across a broad spectrum of retail price points.

International sales are based upon the location that predominately represents what the Company believes to be the final destination of the products delivered to the Company’s customers.

International sales are based upon the location that predominately represents what the Company believes to be the final destination of the products delivered to the Company’s customers. Competition The infant, toddler and juvenile consumer products industry is highly competitive.

The Company also markets designs that are subject to copyrights and design patents owned by the Company. 4 Table of Contents Product Sourcing Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China.

The Company also markets designs that are subject to copyrights and design patents owned by the Company. Product Sourcing Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China. The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties.

The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties. Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products may be readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.

Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products may be readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.

These reports are also available without charge on the SEC’s website at www.sec.gov . 3 Table of Contents International Sales Sales to customers in countries other than the U.S. represented 4% and 3% of the Company’s total gross sales during fiscal years 2022 and 2021, respectively, which included 1% of sales to the customers set forth below that represented at least 10% of the Company’s gross sales during fiscal year 2022.

These reports are also available without charge on the SEC’s website at www.sec.gov . International Sales Sales to customers in countries other than the U.S. represented 8% and 5% of the Company’s total gross sales during fiscal years 2024 and 2023, respectively.

The Company operates indirectly through two of its wholly-owned subsidiaries, NoJo Baby & Kids, Inc. (“NoJo”) and Sassy Baby, Inc. (“Sassy”), in the infant, toddler and juvenile products segment within the consumer products industry. The infant, toddler and juvenile products segment consists of infant and toddler bedding and blankets, bibs, soft bath products, disposable products, developmental toys and accessories.

The Company operates indirectly through three of its wholly-owned subsidiaries, NoJo Baby & Kids, Inc. (“NoJo”), Sassy Baby, Inc. (“Sassy”) and Manhattan Toy Europe Limited (“MTE”) in the infant, toddler and juvenile products segment within the consumer products industry.

The Company considers its relationship with its employees to be good. Trademarks, Copyrights and Patents The Company considers its intellectual property to be of material importance to its business.

The Company attracts and maintains qualified personnel by paying competitive salaries and benefits and offering opportunities for advancement. The Company considers its relationship with its employees to be good. Trademarks, Copyrights and Patents The Company considers its intellectual property to be of material importance to its business.

The Company's fiscal year ends on the Sunday nearest to or on March 31. References herein to “fiscal year 2022” or “2022” represent the 53-week period ended April 3, 2022, and references herein to “fiscal year 2021” or “2021” represent the 52-week period ended March 28, 2021.

The Company's fiscal year ends on the Sunday nearest to or on March 31. References herein to “fiscal year 2024” or “2024” represent the 52-week period ended March 31, 2024, and references herein to “fiscal year 2023” or “2023” represent the 52-week period ended April 2, 2023.

The licensing agreements are generally for an initial term of one to three years and may or may not be subject to renewal or extension.

Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements. The licensing agreements are generally for an initial term of one to three years and may or may not be subject to renewal or extension.

Utilizing state of the art computer technology, the Company continually develops new designs throughout the year for all of its product groups. This continual development cycle affords the Company design flexibility, multiple opportunities to present new products to customers and the ability to provide timely responses to customer demands and changing market trends.

This continual development cycle affords the Company design flexibility, multiple opportunities to present new products to customers and the ability to provide timely responses to customer demands and changing market trends. The Company also creates designs for exclusive sale by certain of its customers under the Company’s brands, as well as the customers’ private label brands.

Human Capital Resources As of June 2, 2022, the Company had 126 employees, all of whom are full-time and none of whom is represented by a labor union or is otherwise a party to a collective bargaining agreement. The Company attracts and maintains qualified personnel by paying competitive salaries and benefits and offering opportunities for advancement.

The Company’s ability to compete depends principally on styling, price, service to the retailer and continued high regard for the Company’s products and trade names. 4 Table of Contents Human Capital Resources As of May 31, 2024, the Company had 162 employees, all of whom are full-time and none of whom is represented by a labor union or is otherwise a party to a collective bargaining agreement.

Removed

During fiscal 2021 and the first 54 days of fiscal 2022, the Company also operated indirectly through Carousel Designs, LLC (“Carousel”), a wholly-owned subsidiary that manufactured and marketed infant and toddler bedding directly to consumers online from a facility in Douglasville, Georgia.

Added

The infant, toddler and juvenile products segment consists of infant and toddler bedding and blankets, bibs, soft bath products, disposable products, developmental toys and accessories.

Removed

On May 5, 2021, the Company’s Board of Directors (the “Board”) approved the closure of Carousel due to a history of high costs, declining sales and operating and cash flow losses, as well as management’s determination that such losses were likely to continue. Accordingly, the operations of Carousel ceased at the close of business on May 21, 2021.

Added

On March 17, 2023 (the “Closing Date”), the Company acquired Manhattan Group, LLC (“Manhattan”) and MTE, Manhattan’s then wholly-owned subsidiary (the “Manhattan Acquisition”), for a purchase price of $17.0 million, subject to adjustments for cash as of the Closing Date and to the extent that actual net working capital as of the Closing Date differed from target net working capital of $13.75 million.

Removed

Company Response to COVID-19 The Company continues to monitor the impact of the COVID-19 pandemic on its supply chain, manufacturing and distribution operations, customers and employees, as well as the U.S. economy in general.

Added

The Manhattan Acquisition was funded with available cash and borrowings under the Company’s revolving line of credit with The CIT Group/Commercial Services (“CIT”). From the Closing Date through the fiscal year ended March 31, 2024, the Company operated Manhattan as a wholly-owned subsidiary that manufactured and marketed developmental toys. On April 1, 2024, the Company merged Manhattan into Sassy.

Removed

However, due to the uncertainty as to the duration and widespread nature of the COVID-19 pandemic, the success rates of the vaccines on COVID-19 and the variants thereof, and the extent to which the vaccines will be accepted and effectively administered, the Company cannot currently predict the long-term impact of the COVID-19 pandemic on its operations and financial results.

Added

The Company’s products are warehoused and distributed domestically from leased facilities located in Compton, California and Eden Valley, Minnesota and internationally from third-party logistics warehouses in Belgium and the United Kingdom. Licensed Products Certain products are manufactured and sold pursuant to licensing agreements for trademarks.

Removed

On April 19, 2020, the Company executed a Note (the “Note”) in connection with a loan made pursuant to the Paycheck Protection Program (the “PPP Loan”), which is administered by the U.S. Small Business Administration (the “SBA”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the Paycheck Protection Program Flexibility Act of 2020.

Added

The Company’s designs include traditional, contemporary, textured and whimsical patterns across a broad spectrum of retail price points. 6 Table of Contents Utilizing state of the art computer technology, the Company continually develops new designs throughout the year for all of its product groups.

Removed

The Note was entered into with CIT Bank, N.A. (the “Lender”) for the principal amount of $1,963,800 and bore a 1.0% interest rate. As authorized by the provisions of the CARES Act, the Company applied to the Lender for forgiveness of the PPP Loan.

Removed

The Note would have matured on April 20, 2022, but on May 20, 2021, the PPP Loan was forgiven in full and the SBA remitted to the Lender on that date the principal amount of the Note of $1,963,800 and interest of $21,000 that had accrued from the funding date of April 20, 2020 through the forgiveness date of May 20, 2021.

Removed

During fiscal year 2022, the Company recorded a gain on extinguishment of debt in the amount of $1,985,000 associated with the forgiveness of the PPP Loan, which has been presented below income from operations in the accompanying consolidated statements of income.

Removed

The uncertainties associated with the COVID-19 pandemic include potential adverse effects on the overall economy, the impact on the Company’s supply chain, manufacturing and distribution operations, transportation services, customers and employees, as well as consumer sentiment in general and traffic within the retail stores that carry the Company’s products.

Removed

The COVID-19 pandemic could adversely affect the Company’s revenues, earnings, liquidity and cash flows and may require significant actions in response, including employee furloughs, closings of Company facilities, expense reductions or discounts of the pricing of the Company’s products, all in an effort to mitigate such effects.

Removed

Conditions surrounding COVID-19 change rapidly, and additional impacts of which the Company is not currently aware may arise. Based on the operational and financial plans that management has developed, the Company expects to be able to meet its obligations as they become due over the next 12 months. Competition The infant, toddler and juvenile consumer products industry is highly competitive.

Removed

The Company’s ability to compete depends principally on styling, price, service to the retailer and continued high regard for the Company’s products and trade names.

Removed

Licensed Products Certain products are manufactured and sold pursuant to licensing agreements for trademarks. Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements.

Removed

The Company also creates designs for exclusive sale by certain of its customers under the Company’s brands, as well as the customers’ private label brands.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+15 added−10 removed31 unchanged

2023 filing

2024 filing

Biggest changeHowever, the laws and courts of certain countries at times do not protect intellectual property rights or respect contractual agreements to the same extent as the laws of the U.S. Therefore, in certain jurisdictions the Company may not be able to protect its intellectual property rights against counterfeiting or enforce its contractual agreements with other parties.

Biggest changeSuch reliance serves to establish and maintain the intellectual property rights associated with the products that the Company develops and sells. However, the laws and courts of certain countries at times do not protect intellectual property rights or respect contractual agreements to the same extent as the laws of the U.S.

General Risk Factors The Company ’ s ability to successfully identify, consummate and integrate acquisitions, divestitures and other significant transactions could have an adverse impact on the Company ’ s financial results, business and prospects.

Such an action by the factor could result in the loss of future sales to the affected customer. Economic conditions could result in an increase in the amounts paid for the Company ’ s products.

Such an action by the factor could result in the loss of future sales to such affected customers. Economic conditions could result in an increase in the amounts paid for the Company ’ s products.

The Company’s credit facility contains usual and customary covenants regarding significant transactions, including restrictions on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions, transactions with affiliates and changes in or amendments to the organizational documents for the Company and its subsidiaries.

The Company’s credit facility contains usual and customary covenants regarding significant transactions, including restrictions on other indebtedness, liens, investments and acquisitions, merger or consolidation transactions, transactions with affiliates and changes in or amendments to the organizational documents for the Company and its subsidiaries.

A pandemic could adversely affect the Company’s revenues, earnings, liquidity and cash flows and require significant actions in response, including employee furloughs, closings of Company facilities, expense reductions or discounts of the pricing of the Company’s products, all in an effort to mitigate such effects.

The loss of one or more of the Company ’ s licenses could result in a material loss of revenues. Sales of licensed products represented 40% of the Company’s gross sales in fiscal year 2022, which included 33% of sales associated with the Company’s license agreements with Disney.

The loss of one or more of the Company ’ s licenses could result in a material loss of revenues. Sales of licensed products represented 40% of the Company’s gross sales in fiscal year 2024, which included 24% of sales associated with the Company’s license agreements with Disney.

In response to Russia’s invasion of Ukraine, the U.S. government and more than 30 allied countries across the world have levied coordinated and wide-ranging economic sanctions against Russia.

In response to Russia’s invasion of Ukraine, the U.S. government and other allied countries across the world have levied coordinated and wide-ranging economic sanctions against Russia.

The Company ’ s sourcing and marketing operations in foreign countries are subject to anti-corruption laws. The Company’s foreign operations are subject to laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act and similar laws and regulations in foreign jurisdictions, which apply to the Company’s directors, officers, employees and agents acting on behalf of the Company.

The Company’s foreign operations are subject to laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act and similar laws and regulations in foreign jurisdictions, which apply to the Company’s directors, officers, employees and agents acting on behalf of the Company.

The Company has implemented security measures to securely maintain confidential and proprietary information stored on the Company’s information systems and continually invests in maintaining and upgrading the systems and applications to mitigate these risks.

The Company has implemented both passive and active cybersecurity measures to securely maintain confidential and proprietary information stored on the Company’s information systems and continually invests in maintaining and upgrading the systems and applications to mitigate these risks.

Recalls or product liability claims could increase costs or reduce sales. The Company must comply with the Consumer Product Safety Improvement Act, which imposes strict standards to protect children from potentially harmful products and which requires that the Company’s products be tested to ensure that they are within acceptable levels for lead and phthalates.

The Company must comply with the Consumer Product Safety Improvement Act, which imposes strict standards to protect children from potentially harmful products and which requires that the Company’s products be tested to ensure that they are within acceptable levels for lead and phthalates.

If similar sanctions were levied against China, up to and including a ban on the importation of goods manufactured in China, then the Company could be forced to source its products from suppliers in other countries.

If China were to escalate its aggression towards Taiwan, similar sanctions could be levied against China, up to and including increased tariffs or a complete ban on the importation of goods manufactured in China, then the Company could be forced to source its products from suppliers in other countries.

The COVID-19 pandemic has led global government authorities to implement numerous public health measures, including quarantines, business closures, travel bans and lockdowns to confront the pandemic. China’s unwavering commitment to controlling the spread of the COVID-19 virus by locking down its largest cities has placed a strain on already-stressed global supply chains.

During fiscal years 2022 and 2021, the COVID-19 pandemic led global government authorities to implement numerous public health measures, including quarantines, business closures, travel bans and lockdowns to confront the pandemic. China’s efforts to control the spread of the COVID-19 virus by locking down its largest cities placed a strain on already-stressed global supply chains.

These systems are vulnerable to cybersecurity incidents, including disruptions and security breaches, which can result from unintentional events or deliberate attacks by insiders or third parties, such as cybercriminals, competitors, nation-states, computer hackers and other cyber terrorists.

The Company also employs third-party systems and software that are integral to its operations. These systems are vulnerable to cybersecurity incidents, including disruptions and security breaches, which can result from unintentional events or deliberate attacks by insiders or third parties, such as cybercriminals, competitors, nation-states, computer hackers and other cyber terrorists.

Also, as an equity investment, a stockholder’s investment in the Company is subordinate to the interests of the Company’s creditors, and a stockholder could lose all or a substantial portion of his or her investment in the Company in the event of a bankruptcy filing or liquidation. 11 Table of Contents ITEM 1B. Unresolved Staff Comments None.

These conditions could result in reduced demand for some of the Company’s products, increased order cancellations and returns, an increased risk of excess and obsolete inventories and increased pressure on the prices of the Company’s products.

In recent years, the birthrate in the United States has steadily declined. These conditions could result in reduced demand for some of the Company’s products, increased order cancellations and returns, an increased risk of excess and obsolete inventories and increased pressure on the prices of the Company’s products.

Also, although the Company’s use of a commercial factor significantly reduces the risk associated with collecting accounts receivable, such factor may at any time terminate or limit its approval of shipments to a particular customer, and the likelihood of such factor doing so may increase due to a change in economic conditions.

An unfavorable outcome in litigation involving intellectual property could result in any or all of the following: (i) civil judgments against the Company, which could require the payment of royalties on both past and future sales of certain products, as well as plaintiff’s attorneys’ fees and other litigation costs; (ii) impairment charges of up to the carrying value of the Company’s intellectual property rights; (iii) restrictions on the ability of the Company to sell certain of its products; (iv) legal and other costs associated with investigations and litigation; and (v) adverse effects on the Company’s competitive position.

The failure by the Company to achieve the sales envisioned by the license agreements could result in the payment by the Company of shortfalls in the minimum guaranteed royalty payments, which would adversely impact the Company’s operating results.

Recalls or product liability claims could result in decreased consumer demand for the Company’s products, damage to the Company’s reputation, a diversion of management’s attention from its business and increased customer service and support costs, any or all of which could adversely affect the Company’s operating results. 9 Table of Contents The Company could experience adjustments to its effective tax rate or its prior tax obligations, either of which could adversely affect its results of operations.

Although the Company believes that the calculations and positions taken on its original and amended filed returns are reasonable and justifiable, negotiations or litigation leading to the final outcome of any examination could result in an adjustment to the position that the Company has taken.

Although the Company believes that the calculations and positions taken on its filed income tax returns are reasonable and justifiable, administrative or legal proceedings leading to the outcome of any examination could result in an adjustment to the position that the Company has taken.

The uncertainties associated with the COVID-19 pandemic have included adverse effects on the overall economy, the impact on the Company’s supply chain, manufacturing and distribution operations, transportation services, customers and employees, as well as consumer sentiment in general and traffic within the retail stores that carry the Company’s products.

Significant outbreaks of contagious diseases could have adverse effects on the overall economy and impact the Company’s supply chain, manufacturing and distribution operations, transportation services, customers and employees, as well as consumer sentiment in general and traffic within the retail stores that carry the Company’s products.

Unless waived by the Company’s lender, these covenants could limit the Company’s ability to pursue opportunities to expand its business operations, respond to changes in business and economic conditions and obtain additional financing, or otherwise engage in transactions that the Company considers beneficial.

Any of these actions could result in an increase in the cost of the Company’s products, if the Company was even in a position to maintain the current sourcing of its products. Also, an arbitrary strengthening of the Chinese currency versus the U.S. Dollar could increase the prices at which the Company purchases finished goods.

Any of these actions could result in lost sales, increased transportation costs and ultimately the inability of the Company to maintain the current sourcing of its products. Also, an arbitrary strengthening of the Chinese currency versus the U.S. Dollar could increase the prices at which the Company purchases finished goods.

The Company ’ s ability to comply with its credit facility is subject to future performance and other factors. The Company’s ability to make required payments of principal and interest on its debts, to refinance its maturing indebtedness, to fund capital expenditures or to comply with its debt covenants will depend upon future performance.

The Company’s ability to make required payments of principal and interest on its debts, to refinance its maturing indebtedness, to fund capital expenditures or to comply with its debt covenants will depend upon future performance. The Company’s future performance is, to a certain extent, subject to general economic, financial, competitive, legislative, regulatory and other factors beyond its control.

The Company relies upon the fair interpretation and enforcement of patent, copyright, trademark and trade secret laws in the U.S., similar laws in other countries, and agreements with employees, customers, suppliers, licensors and other parties. Such reliance serves to establish and maintain the intellectual property rights associated with the products that the Company develops and sells.

The Company could experience losses associated with its intellectual property. The Company relies upon the fair interpretation and enforcement of patent, copyright, trademark and trade secret laws in the U.S., similar laws in other countries, and agreements with employees, customers, suppliers, licensors and other parties.

Nearly all of the Company’s products are imported from China into the Port of Long Beach in Southern California. There are many links in the distribution chain, including the availability of ocean freight, cranes, dockworkers, containers, tractors, chassis and drivers. The timely receipt of the Company’s products is also dependent upon efficient operations at the Port of Long Beach.

Most of the Company’s products are imported from China into the Port of Long Beach in Southern California and the Port of Prince Rupert in British Columbia. There are many links in the distribution chain, including the availability of ocean freight, cranes, dockworkers, containers, tractors, chassis and drivers.

The Company’s common stock has also historically been thinly traded, a circumstance that exists when there is a relatively small volume of buy and sell orders for the Company’s common stock at any given point in time. In such situations, a stockholder may be unable to liquidate his or her position in the Company’s common stock at the desired price.

The Company’s common stock has historically experienced a degree of price variability, and the price could be subject to rapid and substantial fluctuations. The Company’s common stock has also historically been thinly traded, a circumstance that exists when there is a relatively small volume of buy and sell orders for the Company’s common stock at any given point in time.

An assault against the Company’s information technology infrastructure could also lead to other adverse impacts to its results of operations such as increased future cybersecurity protection costs, which may include the costs of making organizational changes, deploying additional personnel and protection technologies, and engaging third-party experts and consultants. 10 Table of Contents A significant disruption to the Company ’ s distribution network or to the timely receipt of inventory could adversely impact sales or increase transportation costs, which would decrease the Company ’ s profits.

Disruptions to the Company ’ s information technology systems could negatively affect the Company ’ s results of operations. The Company’s operations are highly dependent upon computer hardware and software systems, including customized information technology systems and cloud-based applications. The Company also employs third-party systems and software that are integral to its operations.

The occurrence of any of these events could adversely affect the Company’s profitability. 10 Table of Contents Disruptions to the Company ’ s information technology systems could negatively affect the Company ’ s results of operations. The Company’s operations are highly dependent upon computer hardware and software systems, including customized information technology systems and cloud-based applications.

There can be no assurance that the demand for the Company’s products will not decline or that the Company will be able to anticipate and respond to changes in demand related to consumers’ tastes and preferences. The infant and toddler consumer products industry is characterized by the continual development of cutting-edge new products to meet the high standards of parents.

Sales are driven by consumer demand for the Company’s products. There can be no assurance that the demand for the Company’s products will not decline or that the Company will be able to anticipate and respond to changes in demand related to consumers’ tastes and preferences.

Such inventory would then need to be written down to the lower of carrying or market value, or possibly completely written off, which would adversely affect the Company’s operating results. 8 Table of Contents The Company could experience losses associated with its intellectual property.

Such inventory would then need to be written down to the lower of carrying or market value, or possibly completely written off, which would adversely affect the Company’s operating results. Recalls or product liability claims could increase costs or reduce sales.

Finally, a party could claim that the Company is infringing upon such party’s intellectual property rights, and claims of this type could lead to a civil complaint.

Therefore, in certain jurisdictions the Company may not be able to protect its intellectual property rights against counterfeiting or enforce its contractual agreements with other parties. Finally, a party could claim that the Company is infringing upon such party’s intellectual property rights, and claims of this type could lead to a civil complaint.

Upon the occurrence of an event of default, the Company’s lender could make an immediate demand of the amount outstanding under the credit facility. If a default was to occur and such a demand was to be made, there can be no assurance that the Company’s assets would be sufficient to repay the indebtedness in full.

If a default was to occur and such a demand was to be made, there can be no assurance that the Company’s assets would be sufficient to repay the indebtedness in full. A stockholder could lose all or a portion of his or her investment in the Company.

Conditions surrounding COVID-19 change rapidly, and additional impacts of which the Company is not currently aware may arise. The loss of one or more of the Company ’ s key customers could result in a material loss of revenues. The Company’s top two customers represented approximately 73% of gross sales in fiscal year 2022.

Risks Associated with the Company, Business and Industry The loss of one or more of the Company ’ s key customers could result in a material loss of revenues. The Company’s top two customers represented approximately 61% of gross sales in fiscal year 2024.

Certain of the Company’s executive management and other key personnel have been integral to the Company’s operations and the execution of its growth strategy.

The effects of increased competition could result in a material decrease in the Company’s revenues. The Company ’ s success is dependent upon retaining key management personnel. Certain of the Company’s executive management and other key personnel have been integral to the Company’s operations and the execution of its growth strategy.

The Company’s failure to adapt to these changes or to develop new products could lead to lower sales and excess inventory, which could have a material adverse effect on the Company’s financial condition and operating results. 7 Table of Contents The Company ’ s business is impacted by general economic conditions and related uncertainties, including a declining birthrate, affecting markets in which the Company operates.

The Company’s failure to adapt to these changes, develop new products or reach consumers where they are could lead to lower sales and excess inventory, which could have a material adverse effect on the Company’s financial condition and operating results. The Company ’ s sourcing and marketing operations in foreign countries are subject to anti-corruption laws.

Even under optimal economic conditions, shifts in demographic trends and preferences could have the consequence of individuals starting to have children later in life and/or having fewer children. In recent years, the birthrate in the United States has steadily declined.

Geopolitical risks and economic conditions, including the real and perceived threat of wars, terrorism, tension among nations, rising prices or unemployment, could lead individuals to decide to forgo or delay having children. Even under optimal conditions, shifts in demographic trends and preferences could have the consequence of individuals starting to have children later in life and/or having fewer children.

Several of the Company’s customers have experienced financial difficulties as a result of the COVID-19 pandemic. If these difficulties persist, these customers may close their retail stores permanently, reduce orders, file for bankruptcy or liquidate, any of which may negatively impact the Company’s sales.

Several of the Company’s customers experienced financial difficulties as a result of the COVID-19 pandemic.

The Company ’ s inability to anticipate and respond to consumers ’ tastes and preferences could adversely affect the Company ’ s revenues. Sales are driven by consumer demand for the Company’s products.

Climate change has the potential to result in a material adverse effect on the Company’s business, cash flow, results of operations and financial condition. 7 Table of Contents The Company ’ s inability to anticipate and respond to consumers ’ tastes and preferences could adversely affect the Company ’ s revenues.

The Company’s growth is largely dependent upon growth in the birthrate, and in particular, the rate of first births. Economic conditions, including the real and perceived threat of a recession, could lead individuals to decide to forgo or delay having children.

The Company ’ s business is impacted by general economic conditions and related uncertainties, including a declining birthrate, affecting markets in which the Company operates. The Company’s growth is largely influenced by the birthrate, and in particular, the rate of first births.

Removed

Risks Associated with the Company, Business and Industry The COVID-19 pandemic may adversely affect the Company ’ s business operations, employee availability, financial condition, liquidity and cash flow.

Added

Mounting terrorist activity, ongoing wars and violence in the Middle East and Ukraine, the potential for the escalation of China’s aggression towards Taiwan and the increasingly erratic behavior of North Korea have resulted in growing geopolitical tensions. Nearly all nations have felt the effects of global economic uncertainty, including higher energy and food prices.

Removed

Due to the uncertainty as to the duration and widespread nature of the COVID-19 pandemic, the effectiveness of the vaccines on COVID-19 and variants thereof, and the extent to which the vaccines will be administered, the Company cannot currently predict the long-term impact of the COVID-19 pandemic on its operations and financial results.

Added

These uncertainties could result in a slowdown to the global economy that may affect the Company’s business by reducing the prices that the Company’s customers may be willing or able to pay for its products or by reducing the demand for the Company’s products, which could negatively impact the Company’s revenues and result in a material adverse effect on the Company’s business, cash flow, results of operations and financial condition.

Removed

Those facing financial pressures could choose to make particularly aggressive pricing decisions in an attempt to increase revenue. The effects of increased competition could result in a material decrease in the Company’s revenues. The Company ’ s success is dependent upon retaining key management personnel.

Added

Climate change may negatively affect the Company ’ s business, results of operations, cash flow and financial condition. The Company is exposed to risks associated with climate change. The adverse impacts of climate change include the increased frequency and severity of natural disasters and extreme weather events, including hurricanes, tornados, wildfires, extreme heat, rising sea levels and inland flooding.

Removed

Specifically, as discussed above, the Company sources its products primarily from foreign contract manufacturers, with the largest concentration being in China.

Added

The occurrence of one or more of these events pose a physical risk to the Company’s facilities, as well as those of its customers, suppliers and employees, the likelihood of a loss of the Company’s inventory and an overall disruption to the Company’s operations.

Removed

Article VII of the National Intelligence Law of China requires every commercial entity in China, by simple order of the Chinese government, to act as an agent of the government by committing espionage, technology theft, or whatever else the government deems to be in the national interest of China.

Added

The infant and toddler consumer products industry is characterized by the continual development of cutting-edge new products to meet the high standards of parents. Also, the development of social media has resulted in a monumental shift in the modern shopping experience.

Removed

The occurrence of any of these events could adversely affect the Company’s profitability. 9 Table of Contents The Company could experience adjustments to its effective tax rate or its prior tax obligations, either of which could adversely affect its results of operations.

Added

The bankruptcy of a customer, the perceived pending threat of a bankruptcy of a customer, or an adverse change in overall economic conditions are among the events that would increase the likelihood that the factor would terminate or limit its approval of shipments to customers.

Removed

In August 2020, the Company received notification from the Franchise Tax Board of the State of California (the “FTB”) of its intention to examine the Company’s claims for refund made in connection with California consolidated income tax returns that the Company had filed for the fiscal years ended April 2, 2017, April 1, 2018 and March 31, 2019.

Added

A resurgence of the COVID-19 pandemic, or any other outbreak of a contagious disease, could adversely affect the Company’s revenues, earnings, liquidity and cash flows and may require significant actions in response, including employee furloughs, closings of Company facilities, expense reductions or discounts of the pricing of the Company’s products, all in an effort to mitigate such effects.

Removed

In February 2021, the Company was notified by the U.S. Internal Revenue Service that they had selected for examination the Company’s original and amended federal consolidated income tax returns for the fiscal year ended April 2, 2017. The ultimate resolution of these examinations could include administrative or legal proceedings.

Added

Those facing financial pressures could choose to make particularly aggressive pricing decisions in an attempt to increase revenue. Competitors based in China have begun to sell and ship directly to customers without having to rely on distributors in the destination country, making their products more affordable.

Removed

The Company’s future performance is, to a certain extent, subject to general economic, financial, competitive, legislative, regulatory and other factors beyond its control. The breach of any of the debt covenants could result in a default under the Company’s credit facility.

Added

The Company’s products are primarily shipped by merchant vessels across the world’s oceans. The intrinsic nature of such shipping includes the risk of intentional or unintentional impediments at the world’s global marine chokepoints, including various straits and the Panama and Suez canals.

Removed

A stockholder could lose all or a portion of his or her investment in the Company. The Company’s common stock has historically experienced a degree of price variability, and the price could be subject to rapid and substantial fluctuations.

Added

The recent firing on merchant vessels in the Red Sea by militants of Yemen’s Houthi movement has resulted in the shipment of the Company’s products from China to Europe to be routed around Africa, just as the Company has been benefitting from increased sales in Europe.

Added

These and any other events causing a disruption of the flow of the Company’s products, whether within the Chinese interior, at the port of embarkation, on global waters, or at the destination port, could result in delays in shipping.

Added

The timely receipt of the Company’s products is dependent upon efficient operations at these ports.

Added

In addition to firewalls, antivirus software and intrusion detection, the Company’s passive cybersecurity measures include multifactor authentication for external access to the Company’s cyber networks. The Company’s active cybersecurity measures are designed to detect and prevent live ransomware attacks, insider threats and data breaches.

Added

The breach of any of the debt covenants could result in a default under the Company’s credit facility. Upon the occurrence of an event of default, the Company’s lender could make an immediate demand of the amount outstanding under the credit facility.

Added

In such situations, a stockholder may be unable to liquidate his or her position in the Company’s common stock at the desired price.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged

2023 filing

2024 filing

Biggest changeProperties Each of the Company’s facilities are rented under leases that expire on various dates through fiscal year 2026, including 157,400 square feet at a warehouse and distribution facility located in Compton, California under a lease that expires May 31, 2023 and 15,598 square feet at the Company’s headquarters facility located in Gonzales, Louisiana under a lease that expires January 31, 2026.

Biggest changeProperties Each of the Company’s facilities are rented under leases that expire on various dates through fiscal year 2029, including 157,400 square feet at a warehouse and distribution facility located in Compton, California under a lease that expires May 31, 2028, 128,074 square feet at a warehouse and distribution facility located in Eden Valley, Minnesota under a lease that expires June 30, 2026, 16,837 square feet at Manhattan’s headquarters facility located in Minneapolis, Minnesota under a lease that expires March 31, 2027 and 15,598 square feet at the Company’s headquarters facility located in Gonzales, Louisiana under a lease that expires January 31, 2026.

The table below sets forth certain information regarding the Company's principal real property as of the close of business on June 2, 2022.

The table below sets forth certain information regarding the Company's principal real property as of the close of business on May 31, 2024.

Location Use Approximate Square Feet Owned/ Leased Gonzales, Louisiana Administrative and sales office 15,598 Leased Compton, California Offices, warehouse and distribution center 157,400 Leased Grand Rapids, Michigan Product design offices 3,600 Leased Shanghai, People’s Republic of China Office 1,912 Leased

Location Use Approximate Square Feet Owned/ Leased Gonzales, Louisiana Administrative and sales office 15,598 Leased Compton, California Offices, warehouse and distribution center 157,400 Leased Minneapolis, Minnesota Product design and sales office 16,837 Leased Eden Valley, Minnesota Warehouse and distribution center 128,074 Leased Grand Rapids, Michigan Product design office 5,711 Leased London, United Kingdom Sales office 1,800 Leased Shanghai, People’s Republic of China Office 1,912 Leased

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged

2023 filing

2024 filing

Biggest changeNeither the Company nor any of its subsidiaries is a party to any such legal proceeding the outcome of which, individually or in the aggregate, is expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows. ITEM 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed1 unchanged

2023 filing

2024 filing

Biggest changeThe Company’s payment of dividends is and will continue to be restricted by or subject to, among other limitations, applicable provisions of federal and state laws, the Company’s earnings and various business considerations, including the Company’s financial condition, results of operations, cash flow, level of capital expenditures, future business prospects and such other matters as the Board deems relevant.

For information regarding securities of the Company that have been authorized for issuance under equity compensation plans, refer to “Securities Authorized for Issuance under Equity Compensation Plans” in Item 12, Part III. of this Annual Report.

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is traded on the Nasdaq Capital Market under the symbol “CRWS”. As of June 2, 2022, there were 152 record holders of the Company’s common stock. The Company has historically paid cash dividends.

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is traded on the Nasdaq Capital Market under the symbol “CRWS”. As of May 31, 2024, there were 155 record holders of the Company’s common stock. The Company has historically paid cash dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

28 edited+27 added−45 removed19 unchanged

2023 filing

2024 filing

Biggest changeReferences herein to GAAP are to topics within the FASB Accounting Standards Codification (the “FASB ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by nongovernmental entities. 16 Table of Contents Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated balance sheets and the reported amounts of revenues and expenses during the reporting period.

CIT may at any time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation occurs, then the Company either assumes (and may seek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer.

CIT may at any time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation occurs, the Company either assumes (and may seek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer.

In the event that actual results differ from management's estimates or these estimates and judgments are revised in future periods, the Company may not fully realize the carrying value of its inventory or may need to establish additional allowances, either of which could materially impact the Company's financial position and results of operations. ITEM 8.

Known Trends and Uncertainties The Company’s financial results are closely tied to sales to the Company’s top two customers, which represented approximately 73% of the Company’s gross sales in fiscal year 2022. A significant downturn experienced by either or both of these customers could lead to decreased sales.

Known Trends and Uncertainties The Company’s financial results are closely tied to sales to the Company’s top two customers, which represented approximately 61% of the Company’s gross sales in fiscal year 2024. A significant downturn experienced by either or both of these customers could lead to decreased sales.

For an additional discussion of trends, uncertainties and other factors that could impact the Company’s operating results, refer to “Risk Factors” in Item 1A, Part I. of this Annual Report. 15 Table of Contents Financial Position, Liquidity and Capital Resources Net cash provided by operating activities decreased from $8.7 million for the fiscal year ended March 28, 2021 to $8.3 million for the fiscal year ended April 3, 2022.

For an additional discussion of trends, uncertainties and other factors that could impact the Company’s operating results, refer to “Risk Factors” in Item 1A, Part I. of this Annual Report. 15 Table of Contents Financial Position, Liquidity and Capital Resources Net cash provided by operating activities decreased from $7.7 million for the fiscal year ended April 2, 2023 to $7.1 million for the fiscal year ended March 31, 2024.

The Company believes it was in compliance with these covenants as of April 3, 2022. To reduce its exposure to credit losses, the Company assigns substantially all of its trade accounts receivable to CIT pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described above.

The Company believes it was in compliance with these covenants as of March 31, 2024. To reduce its exposure to credit losses, the Company assigns substantially all of its trade accounts receivable to CIT pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below.

Assets to be disposed of, if any, are recorded at the lower of net book value or fair market value, less estimated costs to sell at the date management commits to a plan of disposal, and are classified as assets held for sale on the consolidated balance sheets.

Specifically, the COVID-19 pandemic led global government authorities to implement numerous public health measures, including quarantines, business closures and lockdowns to confront the pandemic. China’s efforts to control the spread of the COVID-19 virus by locking down its largest cities placed a strain on already-stressed global supply chains.

The financing agreement also provides for the payment by CIT to the Company of interest on daily negative balances, if any, held by CIT at the rate of prime as of the beginning of the calendar month minus 2.0%, which was 1.5% as of April 3, 2022.

As of April 3, 2022 and March 28, 2021, there was no balance owed on the revolving line of credit, there was no letter of credit outstanding and $26.0 million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

As of April 2, 2023, there was a balance of $12.7 million owed on the revolving line of credit, there was no letter of credit outstanding and $20.0 million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

Results of Operations The following table contains results of operations for fiscal years 2022 and 2021 and the dollar and percentage changes for those periods (in thousands, except percentages).

Results of Operations The following table contains results of operations for the fiscal years ended March 31, 2024 and April 2, 2023 and the dollar and percentage changes for those periods (in thousands, except percentages).

Factoring fees, which are included in marketing and administrative expenses in the accompanying consolidated statements of income, were $344,000 and $291,000 during fiscal years 2022 and 2021, respectively. 16 Table of Contents Critical Accounting Policies and Estimates The Company prepares its financial statements to conform with accounting principles generally accepted in the U.S.

Factoring fees, which are included in marketing and administrative expenses in the accompanying consolidated statements of income, were $353,000 and $287,000 during fiscal years 2024 and 2023, respectively. Critical Accounting Policies and Estimates The Company prepares its financial statements to conform with accounting principles generally accepted in the U.S. (“GAAP”) as promulgated by the Financial Accounting Standards Board (“FASB”).

When a customer requests to have an agreed-upon deduction applied against the customer’s outstanding balance due to the Company, the allowances are correspondingly reduced to reflect such payments or credits issued against the customer’s account balance. The Company analyzes the components of the allowances for customer deductions monthly and adjusts the allowances to the appropriate levels.

The majority of the Company’s allowances for such chargebacks occurs on a per-invoice basis. When a customer requests to have an agreed-upon deduction applied against the customer’s outstanding balance due to the Company, the allowances are correspondingly reduced to reflect such payments or credits issued against the customer’s account balance.

Income Tax Expense: The Company’s provision for income taxes is based upon an annual effective tax rate (“ETR”) on continuing operations, which was 20.1% and 24.0% during fiscal years ended April 3, 2022 and March 28, 2021, respectively.

Income Tax Expense: The Company’s provision for income taxes is based upon an annual effective tax rate (“ETR”) on continuing operations, which was 21.4% and 23.2% for the fiscal years ended March 31, 2024 and April 2, 2023, respectively.

Payment terms can vary from prepayment for sales made directly to consumers to payment due in arrears (generally, 60 days of being invoiced) for sales made to retailers.

Payment terms can vary from prepayment for sales made directly to consumers to payment due in arrears (generally, 60 days of being invoiced) for sales made to retailers. Allowances Against Accounts Receivable: The Company estimates certain allowances from revenues recognized through sales made to its customers.

Although the timing of funding requests for advertising support can cause the net balance in the allowance account to fluctuate from period to period, such timing has no impact on the consolidated statements of income since such costs are accrued commensurate with sales activity or using the straight-line method, as appropriate.

Since allowances associated with cooperative advertising are accrued commensurate with sales activity or using the straight-line method, as appropriate, the timing of funding requests for cooperative advertising may result in fluctuations in the allowance from period to period, although such timing should not have a material impact on the consolidated statements of income.

Actual results could differ materially from those estimates. 17 Table of Contents Inventory Valuation: On a periodic basis, management reviews its inventory quantities on hand for obsolescence, physical deterioration, changes in price levels and the existence of quantities on hand which may not reasonably be expected to be sold within the Company’s normal operating cycle.

Thus, the Company’s allowances against accounts receivable at any point in time may be over-funded or under-funded. Inventory Valuation: On a periodic basis, management reviews its inventory quantities on hand for obsolescence, physical deterioration, changes in price levels and the existence of quantities on hand which may not reasonably be expected to be sold within the Company’s normal operating cycle.

As of April 3, 2022, the Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the LIBOR option, which was 1.95% as of April 3, 2022.

At March 31, 2024, the Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the SOFR option, which was 6.9%.

The Company’s credit facility at April 3, 2022 consisted of a revolving line of credit under a financing agreement with CIT of up to $26.0 million, which includes a $1.5 million sub-limit for letters of credit, bearing interest at the rate of prime minus 0.5% or LIBOR plus 1.75%, and which is secured by a first lien on all assets of the Company.

The Company’s credit facility at March 31, 2024 consisted of a revolving line of credit under a financing agreement with CIT of up to $35.0 million, which includes a $1.5 million sub-limit for letters of credit.

Net cash used in financing activities was $7.7 million in fiscal year 2021 compared with $6.8 million in fiscal year 2022.

Net cash used in financing activities was $7.8 million in the fiscal year ended March 31, 2024 compared with $9.3 million in cash provided by financing activities in the fiscal year ended April 2, 2023.

Significant outbreaks of contagious diseases have had adverse effects on the overall economy and impact the Company’s supply chain, manufacturing and distribution operations, transportation services, customers and employees, as well as consumer sentiment in general and traffic within the retail stores that carry the Company’s products.

The ETR on continuing operations and the discrete income tax charges and benefits discussed above contributed to an overall provision for income taxes of 19.5% and 21.3% for fiscal years 2022 and 2021, respectively.

The ETR on continuing operations combined with certain discrete income tax charges and benefits resulted in an overall provision for income taxes of 21.4% and 23.9% for the fiscal years ended March 31, 2024 and April 2, 2023, respectively.

As offsets to these decreases in cash provided by operating activities, the Company in the current year experienced an increase in its net income that was $3.8 million higher than in the prior year; and the Company experienced an increase in its inventory balances that was $2.3 million lower than the increase in the prior year.

The Company in the current year experienced a decrease in its accounts receivable balances that was $3.1 million lower than the decrease in the prior year, and the Company in the current year experienced a decrease in its accounts payable balances that was $2.3 million higher than the decrease in the prior year.

Sales of bibs, bath, developmental toys, feeding, baby care and disposable products increased by $9.9 million, which was partially offset by a decrease of $1.7 million in sales of bedding, blankets and accessories, which included a decrease of $3.5 million due to the closure of Carousel.

Sales of bedding, blankets and accessories decreased by $4.7 million, and sales of bibs, toys and disposable products increased by $17.3 million.

A provision for anticipated returns, which are based upon historical returns and claims, is provided through a reduction of net sales and cost of products sold in the reporting period within which the related sales are recorded.

The allowance for anticipated returns and claims is recorded as a reduction of net sales in the reporting period within which the related sales are recorded. To reduce the Company’s exposure to expected credit losses, and to enhance the predictability of its cash flows, the Company assigns substantially all of its receivables under factoring agreements with CIT.

Allowances Against Accounts Receivable: Revenue from sales made to retailers is reported net of allowances for anticipated returns and other allowances, including cooperative advertising allowances, warehouse allowances, placement fees, volume rebates, coupons and discounts.

These allowances include anticipated returns and claims, expected credit losses, chargebacks related to negotiated customer terms and discounts, cooperative advertising allowances, warehouse allowances, placement fees, volume rebates, coupons, discounts and other allowances.

The Company’s gross profit was also adversely impacted in fiscal year 2022 by increases in costs across the entire supply chain. Marketing and Administrative Expenses: Marketing and administrative expenses decreased by $1.2 million, and decreased from 18.0% of net sales for fiscal year 2021 to 14.9% of net sales for fiscal year 2022.

Marketing and Administrative Expenses: Marketing and administrative expenses increased by $3.5 million and increased from 16.9% of net sales for fiscal year 2023 to 18.4% of net sales for fiscal year 2024.

Removed

Change 2022 2021 $ % Net sales by category: Bedding, blankets and accessories $ 45,341 $ 47,036 $ (1,695 ) -3.6 % Bibs, bath, developmental toy, feeding, baby care and disposable products 42,019 32,128 9,891 30.8 % Total net sales 87,360 79,164 8,196 10.4 % Cost of products sold 64,052 55,067 8,985 16.3 % Gross profit 23,308 24,097 (789 ) -3.3 % % of net sales 26.7 % 30.4 % Marketing and administrative expenses 13,002 14,218 (1,216 ) -8.6 % % of net sales 14.9 % 18.0 % Loss from impairment of long-lived assets - 2,234 (2,234 ) -100.0 % Interest expense - net of interest income 50 (83 ) 133 -160.2 % Gain on extinguishment of debt 1,985 - 1,985 Other expense (income) - net (85 ) 5 (90 ) -1800.0 % Income tax expense 2,408 1,642 766 46.7 % Net income 9,918 6,081 3,837 63.1 % % of net sales 11.4 % 7.7 % Net Sales: Sales of $87.4 million for 2022 were $8.2 million higher than 2021, an increase of 10.4%.

Added

Change 2024 2023 $ % Net sales by category: Bedding, blankets and accessories $ 32,036 $ 36,747 $ (4,711 ) -12.8 % Bibs, toys and disposable products 55,596 38,306 17,290 45.1 % Total net sales 87,632 75,053 12,579 16.8 % Cost of products sold 64,632 55,225 9,407 17.0 % Gross profit 23,000 19,828 3,172 16.0 % % of net sales 26.2 % 26.4 % Marketing and administrative expenses 16,105 12,655 3,450 27.3 % % of net sales 18.4 % 16.9 % Interest (expense) income - net (734 ) 81 (815 ) -1006.2 % Other (expense) income - net 67 172 (105 ) -61.0 % Income tax expense 1,334 1,776 (442 ) -24.9 % Net income 4,894 5,650 (756 ) -13.4 % % of net sales 5.6 % 7.5 % 14 Table of Contents Net Sales: Sales increased to $87.6 million for the fiscal year ended March 31, 2024, compared with $75.1 million in the fiscal year ended April 2, 2023, an increase of $12.6 million, or 16.8%.

Removed

The increases in sales are partially due to a strong new modular set and higher replenishment orders at a major retailer.

Added

Although Manhattan generated net sales of $18.5 million of developmental toy, feeding and baby care products during the fiscal year ended March 31, 2024, sales of bedding, blankets and accessories were lower due to the continued overall softness of that market, the impact of retailers that have been managing inventory levels and consumers that have lowered their spending due to inflationary pressures.

Removed

Also, in advance of the expectation that shipments to customers from the Company’s Compton warehouse would be suspended during the first days of April 2022 due to the Company’s annual count of its inventory, customers were encouraged to place their orders earlier than they ordinarily would have.

Added

Gross Profit: Gross profit increased by $3.2 million and decreased from 26.4% of net sales for the fiscal year ended April 2, 2023 to 26.2% of net sales for the fiscal year ended March 31, 2024. The gross profit from Manhattan was $4.3 million in the current year, which was $4.1 million higher than the prior year.

Removed

In this manner, approximately $700,000 of sales were “shifted” from fiscal year 2023 into fiscal year 2022. Finally, the results for fiscal 2022 also include an additional week compared with fiscal 2021, as the Company operated under a 53-week calendar for fiscal 2022.

Added

This increase in the gross profit amount for the current year was partially offset by an increase in operating lease costs in the current year, which were $2.5 million higher than the prior year, and which included $615,000 in higher operating lease costs of Manhattan.

Removed

These increases were somewhat offset by declines in sales to online retailers as consumers have begun to return to stores. 13 Table of Contents Gross Profit: Gross profit decreased by $789,000 and decreased from 30.4% of net sales for 2021 to 26.7% of net sales for 2022.

Added

The increase in the current year was primarily due to costs incurred by Manhattan and MTE, which were $3.9 million higher than the prior year, and which included credit losses and advertising costs that were $360,000 and $213,000 higher than the prior year, respectively.

Removed

The closure of Carousel resulted in a $2.2 million decrease in gross profit, which in fiscal year 2022 included the sale of inventory below cost and the recognition of charges of $334,000 associated with the settlement with a supplier of a commitment to purchase fabric and $265,000 associated with the liquidation of Carousel’s remaining inventory upon the closure of the business.

Added

During fiscal year 2024, consumers responded to macroeconomic conditions by trading down to lower priced items, buying fewer items, or foregoing some items altogether due to inflationary concerns.

Removed

The decrease in amount included lower charges incurred by Carousel of $2.1 million for fiscal year 2022 as compared with fiscal year 2021.

Added

The Company monitors the impact of inflation on its operations on an ongoing basis and may need to adjust its prices to mitigate the impact of changes to the rate of inflation in future periods. Future volatility of prices could affect consumer purchases of our products.

Removed

Loss from Impairment of Long-Lived Assets: The Company recognized a loss of $2.2 million from the impairment of Carousel’s long-lived assets during the fiscal year ended March 28, 2021, and did not recognize such a loss during the fiscal year ended April 3, 2022.

Added

Additionally, the impact of inflation on input and other operational costs could adversely affect the Company's financial results.

Removed

The loss from impairment did not result in any cash expenditures and did not have an adverse effect on the covenant calculations under the Company’s financing agreement with The CIT Group/Commercial Services, Inc. (“CIT”), a subsidiary of CIT Group Inc.

Added

Several of the Company’s customers experienced financial difficulties as a result of the COVID-19 pandemic.

Removed

Gain on Extinguishment of Debt: During fiscal year 2022, the Company recorded a gain on extinguishment of debt in the amount of $1,985,000 associated with the forgiveness of the PPP Loan, which has been presented below income from operations in the accompanying consolidated statements of income, and did not record such a gain during fiscal year 2021.

Added

Offsetting these decreases in cash provided by operating activities was a decrease in inventory in the current year that was $4.6 million higher than the increase in the prior year. Net cash used in investing activities was $193,000 in the fiscal year ended March 31, 2024 compared with $16.9 million in the fiscal year ended April 2, 2023.

Removed

Management evaluates items of income, deductions and credits reported on the Company’s various federal and state income tax returns filed and recognizes the effect of positions taken on those income tax returns only if those positions are more likely than not to be sustained.

Added

The decrease in the current year was primarily due to the $16.1 million payment that was made in the prior year to complete the Manhattan Acquisition, net of cash acquired of $1.3 million.

Removed

The Company applies the provisions of accounting guidelines requiring a minimum recognition threshold that a tax benefit must meet before being recognized in the financial statements. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized.

Added

The Company incurred net borrowings under its revolving line of credit of $12.7 million in the prior year, such borrowings primarily being required to fund the Manhattan Acquisition, compared with $4.6 million in net repayments under its revolving line of credit in the current year.

Removed

Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Added

The financing agreement matures on July 11, 2028, bears interest at the rate of prime minus 0.5% or the Secured Overnight Financing Rate (“SOFR”) plus 1.6%, and which is secured by a first lien on all assets of the Company.

Removed

After considering all relevant information regarding the calculation of the state portion of its income tax provision, the Company believes that the technical merits of the tax position that the Company has taken with respect to state apportionment percentages would more likely than not be sustained.

Added

As of March 31, 2024, there was a balance of $8.1 million owed on the revolving line of credit, there was no letter of credit outstanding and $19.2 million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

Removed

However, the Company also realizes that the ultimate resolution of such tax position could result in a tax charge that is more than the amount realized based upon the application of the tax position taken.

Added

The allowance for anticipated returns and claims is estimated based upon the Company’s historical experience with actual returns and claims, combined with the consideration of events that could result in a change from historical rates on a per-customer basis.

Removed

Therefore, the Company’s measurement regarding the tax impact of the revised state apportionment percentages resulted in the Company recording discrete reserves for unrecognized tax liabilities during fiscal years 2022 and 2021 of $59,000 and $88,000, respectively, in the accompanying consolidated statements of income.

Added

In the event that a factored receivable becomes uncollectible due to creditworthiness, CIT bears the risk of loss. With respect to the receivables that are not assigned under factoring agreements with CIT, the Company addresses this credit risk by establishing an allowance that is intended to represent the Company’s best estimate of the expected credit losses for such receivables.

Removed

In December 2016, the Company was notified by the FTB of its intention to examine the Company’s claims for refund made in connection with amended consolidated income tax returns that the Company had filed. On January 10, 2021, the Company’s California consolidated income tax returns for the fiscal year ended April 3, 2016 became closed to examination or other adjustment.

Added

In the development of this estimate, the Company makes a number of judgements utilizing the Current Expected Credit Losses (“CECL”) methodology, which requires the Company to estimate lifetime expected credit losses by specifically analyzing the receivables.

Removed

Accordingly, the Company reversed the reserve for an unrecognized tax liability that it had previously recorded for that fiscal year, which resulted in the recognition of a discrete income tax benefit of $233,000 during the fiscal year ended March 28, 2021 in the accompanying consolidated statements of income.

Added

This analysis incorporates an aging of the receivables, relevant payment history and historical loss experience, as well as the consideration of customer concentrations, customer creditworthiness, negotiated changes to the payment terms of customers, recent economic trends, and expectations regarding economic conditions over a reasonable and supportable future period.

Removed

During the fiscal years ended April 3, 2022 and March 28, 2021, the Company recorded discrete income tax benefits of $34,000 and $74,000, respectively, to reflect the aggregate effect of certain tax credits claimed on its consolidated federal income tax returns. 14 Table of Contents During the fiscal years ended April 3, 2022 and March 28, 2021, the Company recorded discrete income tax benefits of $83,000 and $12,000, respectively, to reflect the effects during the periods of the excess tax benefits from the exercise of stock options and the vesting of non-vested stock.

Added

The allowance for expected credit losses is included in marketing and administrative expenses in the accompanying consolidated statements of income. The allowance for chargebacks related to negotiated customer terms and discounts, cooperative advertising, warehouse allowances, placement fees, volume rebates, coupons, discounts and other allowances is recorded commensurate with sales activity or using the straight-line method, as appropriate.

Removed

During fiscal years 2022 and 2021, the Company at times faced higher costs associated with the Company’s sourcing activities in China, including freight and higher duties on some products.

Added

The Company analyzes the components of the allowances for customer chargebacks monthly and adjusts the allowances to appropriate levels.

Removed

Future increases in these costs could adversely affect the profitability of the Company if it cannot pass the cost increases along to its customers in the form of price increases or if the timing of price increases does not closely match the cost increases.

Added

The allowance for cooperative advertising is included in marketing and administrative expenses in the consolidated statements of income.

Removed

Due to the uncertainties associated with the duration and widespread nature of the COVID-19 pandemic, the effectiveness of the vaccines on COVID-19 and variants thereof, and the extent to which the vaccines will be administered, the Company cannot currently predict the long-term impact on its operations and financial results.

Added

All other allowances for chargebacks related to negotiated customer terms and discounts, warehouse allowances, placement fees, volume rebates, coupons and discounts are recorded as a reduction of net sales in the reporting period within which the related sales are recorded. 17 Table of Contents The Company’s actual experience associated with its allowances against accounts receivable in a future period may differ from the judgements, estimates, analysis and considerations employed in the development of these allowances.

Removed

The COVID-19 pandemic, and the government and private sector responses thereto, has negatively impacted certain of the Company’s customers who have been forced to temporarily close retail stores or have seen a significant decline in their sales. As a result, the Company experienced a decrease in sales to these customers beginning in March 2020.

Added

Business Combinations: The Company accounts for acquisitions using the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations . An acquisition is accounted for as a purchase and the appropriate account balances and operating activities are recorded in the Company’s consolidated financial statements as of the acquisition date and thereafter.

Removed

This decrease, however, has been somewhat offset by higher sales to other customers and sales in other channels, such as e-commerce. The Company cannot predict with certainty when or if these customers will reopen their retail stores or if demand from consumers will return to the same level as it was prior to the COVID-19 pandemic.

Added

Assets acquired, liabilities assumed and noncontrolling interests, if any, are measured at fair value as of the acquisition date using the appropriate valuation method. The Company may engage an independent third party to assist with these measurements.

Removed

If the Company’s customers experience financial difficulties as a result of the COVID-19 pandemic, such difficulties may cause them to close their retail stores permanently, reduce orders, file for bankruptcy or liquidate, any of which may negatively impact the Company’s sales.

Added

Goodwill resulting from an acquisition is recognized for the excess of the purchase price over the fair value of the tangible and identifiable intangible assets, less the liabilities assumed. In determining the fair value of the identifiable intangible assets and any noncontrolling interests, the Company uses various valuation techniques, including the income approach, the cost approach and the market approach.

Removed

On the other side of the Pacific Ocean, the Company’s supply chain has also been disrupted because nearly all of the Company’s products are imported from China into the Port of Long Beach in California.

Added

These valuation methods require significant management judgement to make estimates and assumptions surrounding projected revenues and costs, growth rates and discount rates.

… 20 more changes not shown on this page.

Top changes in CROWN CRAFTS INC's 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other CRWS 10-K year-over-year comparisons