# EDGAR Filing Document

**Accession Number:** 0001690455
**File Stem:** 0001079973-26-000657
**Filing Date:** 2026-5
**Character Count:** 396002
**Document Hash:** 31497ada383934a7228fe331eccb2044
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001079973-26-000657.hdr.sgml**: 20260514

**ACCESSION NUMBER**: 0001079973-26-000657

**CONFORMED SUBMISSION TYPE**: 10-12G

**PUBLIC DOCUMENT COUNT**: 5

**FILED AS OF DATE**: 20260514

**DATE AS OF CHANGE**: 20260514

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Feel The World, Inc.
- **CENTRAL INDEX KEY:** 0001690455
- **STANDARD INDUSTRIAL CLASSIFICATION:** RUBBER & PLASTICS FOOTWEAR [3021]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 274419848
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-12G
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56848
- **FILM NUMBER:** 26977811

**BUSINESS ADDRESS:**
- **STREET 1:** 320  INTERLOCKEN PARKWAY
- **STREET 2:** SUITE 100
- **CITY:** BROOMFIELD
- **STATE:** CO
- **ZIP:** 80021
- **BUSINESS PHONE:** 303-447-3100

**MAIL ADDRESS:**
- **STREET 1:** 320  INTERLOCKEN PARKWAY
- **STREET 2:** SUITE 100
- **CITY:** BROOMFIELD
- **STATE:** CO
- **ZIP:** 80021

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10**

**GENERAL FORM FOR REGISTRATION OF SECURITIES**

**PURSUANT TO SECTION 12(b) OR 12(g) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

---

| |
|:---|
| **Feel The World, Inc.** |
| **D.B.A. XERO Shoes** |

---

(Exact Name of Registrant As Specified In Its Charter)

---

| | |
|:---|:---|
| **Delaware** | **27-4419848** |
| (State or other jurisdiction of<br> incorporation or organization) | (I.R.S. Employer <br> Identification No.) |
| **320 Interlocken Parkway, Suite 100, Broomfield, Colorado** | **80021** |
| (Address of Principal Executive Offices) | (ZIP Code) |

---

Registrant's telephone number, including area code: **<u>(</u>303) 447 – 3100**

Please send copies of all correspondence to:

**Jill Wallach**

**Jeanne Campanelli.** 

**CrowdCheck Law LLP<br> 700 12<sup>th</sup> Street NW, Suite 700<br> Washington, DC 20005**

Securities to be registered under Section 12(b) of the Act:

None.

Securities to be registered under Section 12(g) of the Act:

**Class B Non-Voting Common Stock, $0.0001 par value**

(Title of Class)

Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻ Accelerated filer ◻ <br> Non-accelerated filer ⌧ Smaller reporting company ⌧ <br> Emerging growth company ⌧

If an emerging growth company, indicate by check mark if the Company 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 ◻

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **[Item 1. Business](#a_001)** | **1** |
| **[Item 1A. Risk Factors](#a_002)** | **9** |
| **[Item 2. Financial Information](#a_003)** | **25** |
| **[Item 3. Properties](#a_004)** | **32** |
| **[Item 4. Security Ownership of Certain Beneficial Owners and Management](#a_005)** | **32** |
| **[Item 5. Directors and Executive Officers](#a_006)** | **34** |
| **[Item 6. Executive Compensation](#a_007)** | **37** |
| **[Item 7. Certain Relationships and Related Transactions, and Director Independence](#a_008)** | **41** |
| **[Item 8. Legal Proceedings](#a_009)** | **42** |
| **[Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters](#a_010)** | **43** |
| **[Item 10. Recent Sales of Unregistered Securities](#a_011)** | **44** |
| **[Item 11. Description of Registrant's Securities to be Registered](#a_012)** | **45** |
| **[Item 12. Indemnification of Directors and Officers](#a_013)** | **49** |
| **[Item 13. Financial Statements and Supplementary Data](#a_014)** | **50** |
| **[Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#a_015)** | **50** |
| **[Item 15. Financial Statements and Exhibits](#a_016)** | **50** |
| **[Consolidated Financial Statements](#a_023)** | **F-1** |

---

*In this Form 10, references to the terms "we", "our", "us", "Feel The World, Inc.", "FTWI", "Xero Shoes®", "Xero", or "the Company" means Feel The World, Inc.* 

THIS FILING MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN THIS REGISTRATION STATEMENT, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

i

**Implications of Being an Emerging Growth Company**

We are currently not subject to the ongoing reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") because we did not register our securities under the Exchange Act. Rather, we are subject to the more limited reporting requirements under the Regulation A reporting regime until this Registration Statement is declared effective.

When we become subject to the ongoing reporting requirements of the Exchange Act, as an issuer with less than $1.235 billion in total annual gross revenues during our last fiscal year, we will qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and this status will be significant. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

&nbsp;&nbsp;&nbsp;&nbsp;· will not be required to obtain an auditor attestation on our
internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

&nbsp;&nbsp;&nbsp;&nbsp;· will not be required to provide a detailed narrative disclosure
discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives
(commonly referred to as "compensation discussion and analysis");

&nbsp;&nbsp;&nbsp;&nbsp;· will not be required to obtain a non-binding advisory vote
from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the "say-on-pay,"
"say-on-frequency" and "say-on-golden-parachute" votes);

&nbsp;&nbsp;&nbsp;&nbsp;· will be exempt from certain executive compensation disclosure
provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

&nbsp;&nbsp;&nbsp;&nbsp;· may present only two years of audited financial statements
and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A;
and

&nbsp;&nbsp;&nbsp;&nbsp;· will be eligible to claim longer phase-in periods for the adoption
of new or revised financial accounting standards.

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that we no longer meet the definition of an emerging growth company. In this regard, the JOBS Act provides that we would cease to be an "emerging growth company" if we have more than $1.235 billion in annual revenues, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

Certain of these reduced reporting requirements and exemptions are also available to us due to the fact that we also qualify, once this Registration Statement is declared effective, as a "smaller reporting company" under the SEC's rules. For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

ii

**Item 1. Business.**

**Company History** 

Feel The World, Inc., d.b.a. Xero Shoes®, is a footwear brand focusing on natural movement, and quality craftsmanship, at accessible prices. Xero Shoes® product lines currently include minimalist performance and casual shoes, boots, and sandals, as well as do-it-yourself (DIY) sandal kits. Its products are sold directly to customers through its own website, via third party sites such as Amazon, in certain retail stores, and to international wholesale and distribution partners.

The Company's brand tenets are:

&nbsp;&nbsp;&nbsp;&nbsp;· **NATURAL FIT**. Wide toe boxes let your toes spread and relax with a
Xero drop, non-elevated heel for proper posture.

&nbsp;&nbsp;&nbsp;&nbsp;· **NATURAL MOTION.** Flexible soles let your feet bend and flex naturally
and feature a low-to-the- ground design for balance and agility.

&nbsp;&nbsp;&nbsp;&nbsp;· **NATURAL FEEL**. Our patented FeelTrue® sole lets you safely Feel The World, protecting your feet while providing
the necessary sensory feedback.

The Co-Founders started the business in 2009 with a website that sold products under the brand name Invisible Shoes. They incorporated the current company in 2010 in the State of Delaware and rebranded the name to Xero Shoes®.

The current business to consumer ("B2C") online business model provides a solid foundation for future growth. The Company has developed a variety of online marketing programs with clearly identifiable and repeatable ROI results. The management team believes that it can thoughtfully scale its online, B2C business through increased and targeted marketing activity, conversion optimization, and targeted affiliate marketing, as well as an expanded product line designed to increase average order values (AOV), and lifetime customer value (LTV).

Management also intends to use additional capital to support its growing retail ("B2B") business by bringing in more inventory that can be sold in season to new store accounts, hiring additional staff to support these accounts, and expanding its presence at industry trade shows.

**The Xero Shoes® Brand** 

The Company is committed to natural movement and designs footwear that amplifies natural mechanics and elevates human performance. The Company's footwear is also versatile and can be used for a wide range of activities.

**Xero Shoes® Customers** 

Xero Shoes® appeals to customers in a variety of segments. Its primary customer demographic is healthy, lifestyle-conscious men and women, who enjoy outdoor and fitness activities, with higher-than-average income and education. Approximately 25% percent of our customers reside outside the US.

**Marketing** 

The umbrella concept for the Company's marketing efforts entails building an inspirational lifestyle brand and building an engaged community around the Company and its products. Core customer engagement and interaction is high. The Company plans to continue to build awareness through influencers, and ambassadors with both online campaigns and in-person events.

**Sales**

As of December 31, 2025, the Company sells its products through three principal sales channels: direct-to-consumer e-commerce, wholesale and regional distributor partners, and a third-party marketplace channel managed by a partner. The Company's sales organization is structured to support each of these channels and to coordinate go-to-market activities across channels and geographies.

*Direct-to-Consumer*

The Company's direct-to-consumer channel is its largest sales channel and represented 65% of net revenue for the year ended December 31, 2025. The Company sells directly to consumers through its primary U.S. e-commerce site at www.xeroshoes.com and through a dedicated European e-commerce site serving customers in the European Union www.xeroshoes.eu The Company previously operated a direct-to-consumer channel in the United Kingdom, which was launched in 2024 and discontinued by the end of 2025 when the Company entered into a distributor and licensing arrangement with a Unity Distribution Ltd., a U.K. distributor, which serves the U.K. and Ireland market and operates the Company's U.K.-direct-to-consumer website under license.

The Company invests in digital marketing, brand and content development, loyalty programs, social media, independent third-party affiliates, and customer experience, to support direct-to-consumer growth, The Company believes that its direct relationship with consumers provides important advantages in consumer engagement, brand building, product education, and customer insight.

The Company also operates a modest Company-owned retail location in Denver, Colorado, which serves as a brand and product showcase for local and visiting customers.

*Wholesale and Distributor*

The Company's wholesale and distributor channel includes domestic and international wholesale accounts, specialty retailers, and a network of independent international distributors covering the territories described under "International Distribution" below. This channel represented 25% of net revenue for the year ended December 31, 2025. The Company's wholesale strategy is intentionally diversified across a mix of large-scale retail partners and independent specialty accounts in each region. Large-scale and strategic accounts drive a significant portion of wholesale volume, while specialty retailers contribute to brand credibility, consumer education, and local sell-through, particularly within the training, outdoor, and natural-movement footwear communities.

In the United States, the Company's wholesale accounts include large-scale and strategic retailers such as REI, Nordstrom, Road Runner Sports, Sun & Ski, and Zappos; regional and volume-driving accounts such as Jax Mercantile, Sportsman & Ski Haus (Crown Enterprises), The Joneses NY, Cool East Market, and Country Casuals; and specialty running and outdoor retailers that influence the Company's standing within the natural-movement, running, and outdoor communities, including Distance Runwear, Foot RX Running, Gear West, and Tops for Shoes.

In Europe, the Company's wholesale accounts include large-scale and e-commerce retailers such as Bergfreunde, Bergzeit, Tradeinn, Deporvillage, and Sportano, and Nordic, as well as chain retail accounts such as Varuste.net, Scandinavian Outdoor, Partioaitta, Intersport Finland, and Kesko; and specialty and distributor-influenced retailers such as Barefoot & More, Maerkbare, Naboso, Proactive Life, and Widetoes.

The Company manages its wholesale and distribution business through a combination of an in-house sales team and independent regional sales agencies. The Company's in-house wholesale sales teams, based at its Broomfield, Colorado headquarters and its European office in the Czech Republic, lead key account relationships and oversee the Company's overall wholesale strategy. In addition, the Company engages independent outside sales agencies.

*Third-Party Marketplace*

The Company also sells through a third-party marketplace channel managed by a partner, which represented approximately 10% of net revenue for the year ended December 31, 2025.

*International Distribution*

The Company sells its products internationally through a combination of direct-to-consumer e-commerce, third-party marketplaces, and a network of independent international distributors and wholesale partners. The Company's direct-to-consumer presence includes its primary U.S. website and a dedicated European website serving the European Union.

The Company previously operated a direct-to-consumer channel in the United Kingdom, which was launched in 2024 and discontinued by the end of 2025. In connection with the wind-down of the U.K. direct-to-consumer operation, the Company entered into a distribution and licensing arrangement with a U.K. distributor, under which the distributor serves the U.K. market and operates the Company's U.K.-facing website under license.

To extend the Company's reach into markets where direct operations are not currently practical, the Company partners with independent distributors who purchase product on a wholesale basis and resell into their respective territories through local retail, e-commerce, and wholesale channels. As of the date of this filing, the Company has distribution relationships covering the following territories:

&nbsp;&nbsp;&nbsp;&nbsp;• Japan

&nbsp;&nbsp;&nbsp;&nbsp;• South Korea

&nbsp;&nbsp;&nbsp;&nbsp;• Hong Kong

&nbsp;&nbsp;&nbsp;&nbsp;• Taiwan

&nbsp;&nbsp;&nbsp;&nbsp;• Thailand

&nbsp;&nbsp;&nbsp;&nbsp;• Singapore

&nbsp;&nbsp;&nbsp;&nbsp;• Australia and New Zealand

&nbsp;&nbsp;&nbsp;&nbsp;• Israel

&nbsp;&nbsp;&nbsp;&nbsp;• Moldova

&nbsp;&nbsp;&nbsp;&nbsp;• United Kingdom

&nbsp;&nbsp;&nbsp;&nbsp;• Colombia

&nbsp;&nbsp;&nbsp;&nbsp;• Peru

&nbsp;&nbsp;&nbsp;&nbsp;• Uruguay

&nbsp;&nbsp;&nbsp;&nbsp;• Venezuela

&nbsp;&nbsp;&nbsp;&nbsp;• United States and United Kingdom Caribbean

The Company's international distributor relationships are generally non-exclusive and governed by distribution agreements that establish territory, pricing, brand standards, and other commercial terms. The Company does not guarantee minimum purchase volumes from its distributors and is not party to long-term, take-or-pay distribution commitments.

**Core Products**

Xero Shoes® are designed around a consistent set of natural-movement design principles. All Xero Shoes® feature an anatomically shaped foot-wide toe box, a "Xero-drop" non-elevated heel, and low-to-the-ground, flexible construction intended to provide balance, agility, and sensory feedback while protecting the foot. Outsoles use the Company's FeelTrue® technology, which incorporates a patented dual-chevron tread design engineered for grip and traction. The Company's footwear is backed by a 5,000-mile sole warranty.

The Company organizes its Xero Shoes® product line into four categories: Performance, Lifestyle, Sandals, and Kids. Within Performance, the Company further segments by activity (train-including walk, run and fitness; court, and hike/trail). Within Lifestyle, the Company segments between Outdoor Life and Performance Life.

**Performance**

***Performance — Walk***

The *Prio* is the Company's flagship multi-purpose athletic shoe, offered in synthetic, suede, and leather upper variants. The Prio features the Company's wide toe box, zero-drop platform, and FeelTrue® outsole, with a removable sock liner that allows the wearer to adjust between a more cushioned or more minimal feel. The *Prio Coast* is a hands-free variant of the Prio franchise, built on a different last and upper construction than other Prio styles, and designed for easy on-and-off wear.

***Performance — Run and Fitness***

The *HFS II* is the Company's current performance running shoe, featuring an engineered mesh upper, refined fit, and updated FeelTrue® outsole. The *HFS Original* remains in the line as a classic-feel platform for runners who prefer the original construction.

***Performance — Train***

The *XT Max* is the Company's natural-movement performance trainer, designed for cross-training and lifting applications where lateral stability and lockdown are required. The *Prio Neo* is a training-focused member of the Prio franchise, built on a distinct last and upper construction from the standard Prio and Prio Coast and engineered specifically for training use. The *Nexus Knit* is a knit-upper training shoe that the Company also positions for casual athleisure-style wear.

***Performance — Court***

The Company's court line includes the *X1 Low* and *X1 Mid*, the Company's barefoot-style basketball platforms designed for natural motion and responsive ground feel during court play, and the *X2*, an additional court silhouette. The *360 Rally* is the Company's dedicated pickleball and multi-directional court-sports shoe.

***Performance — Outdoor***

The *Mesa Summit* and *Mesa Summit WP* (waterproof) are the Company's primary trail running shoes, built on a lightweight FeelTrue® outsole with multi-directional lugs designed for grip on variable terrain while preserving ground feel. The *Scrambler* collection addresses more rugged trail and outdoor use with a deeper-lugged FeelTrue® outsole and reinforced upper construction. Most styles in the collection are waterproof, including the *Scrambler Trail Mid WP*, *Scrambler Trail Low WP*, and *Scrambler Mid WP EV*. The non-waterproof *Scrambler Low EV* extends the Scrambler franchise into light-hiking applications.

**Lifestyle**

***Lifestyle — Outdoor Life***

The *Ridgeway* collection is the Company's casual outdoor boot family, including the *Ridgeway* lace-up, *Ridgeway Chelsea* and *Ridgeway Chelsea Lined* pull-on silhouettes, and the *Ridgeway Mesh Low*, a casual mesh approach shoe for men. The *Alpine* is the Company's insulated, fully waterproof cold-weather boot, offered in both a lace-up version (*Alpine*) and a pull-on version (*Alpine Pull On*). The *Pagosa* is a casual indoor/outdoor slipper and camp-shoe franchise. All Pagosa styles feature a collapsible heel for versatile wear.

**Lifestyle — Performance Life**

The *Wynn* is a casual everyday athletic-styled shoe, offered in multiple upper materials as a styling option across the franchise. The *Coast* franchise includes the *Coast Suede* and *Coast Mesh*, casual everyday silhouettes positioned in the Company's lifestyle line. The *Dillon* franchise is one of the Company's larger casual lines, offered in *Dillon Canvas*, *Dillon Canvas Slip-On*, *Dillon Leather*, and *Dillon Leather Loafer* variations covering lace-up, slip-on, and loafer constructions. The *Phoenix* and *Phoenix Leather* are women's ballet-flat silhouettes built on the Company's natural-movement platform. The *Glenn* is a leather-upper dress-casual shoe for office and more formal wear, with a *Glenn City* variant featuring high-shine dress leather for a more refined finish. The *Cassie* is a women's Mary Jane silhouette. The *Tari II* and *Breckenridge* round out the Performance Life category as casual boot offerings. The *Denver II* is the Company's leather casual lace boot, offered in a single all-leather construction.

**Sandals**

The *Z-Trail EV* is the Company's multi-layer sport sandal featuring the Company's tri-layer construction with cushioning, structural midsole, and inset FeelTrue® pads at abrasion points. The *Z-Trek* is a lower-profile sport sandal with a 100% FeelTrue® rubber outsole and the Company's heel-cup design and adjustable webbing system. The *Genesis* is a simple, lightweight huarache-style sandal serving as the Company's accessible-price entry point in the sandal category, offered in synthetic (*Genesis*) and leather (*Genesis Leather*) variants. The *D-Trail* is a more rugged hiking sandal designed for trail use, featuring a deeper-lugged FeelTrue® outsole and reinforced upper construction.

**Kids**

The Company offers kids' versions of its core Prio platform — the *Prio Little Kids* and *Prio Big Kids* — extending the Company's natural-movement design principles to children. The Company expects its kids' line to narrow in coming years as it refines its assortment in this category.

**DIY (Do-It-Yourself) Sandal Kits**

The Company continues to offer FeelTrue® DIY sandal kits, the original product on which the Company was founded. Customers select sole sizes, sole styles, and lacing options to assemble huarache-style sandals at home.

**Accessories**

The Company offers branded accessories, including replacement insoles, replacement sandal hardware, and apparel.

**Raw Materials and Suppliers**

The principal raw materials used in the Company's products include the rubber compound used in the Company's FeelTrue® outsoles, ethylene-vinyl acetate (EVA) foam, leather, suede, canvas, knit and woven textiles, engineered mesh, polyester webbing, thermoplastic polyurethane (TPU) and other synthetic upper materials, foam and microfiber linings, laces, and metal and plastic hardware components such as eyelets, buckles, and adjustment hardware. The Company's raw material inputs are sourced several suppliers across multiple categories, and the Company does not consider any individual raw material or any individual supplier to be material to its business. The Company also does not believe that its relationships with its largest suppliers, considered in the aggregate, are material to its business, and believes that alternative sources of supply are available for each of its principal raw material categories. The Company does not have any long-term fixed-price supply contracts for its raw materials and generally purchases inputs on a purchase-order basis at prevailing market prices. While the Company believes alternative supply is available, transitioning to a new supplier for any given input could involve lead time for qualification and validation and could result in temporary cost or delivery impacts.

**Manufacturing** 

The Company designs and develops all of its footwear styles in-house and contracts with third-party manufacturers for production. The Company does not own any of its manufacturing facilities and does not directly manufacture any of its products.

In 2022, the Company transitioned away from using a single manufacturing agent and now works directly with multiple contract manufacturers. This transition was undertaken to provide the Company with greater visibility into and control over product cost, quality, lead times, and the relationships with the factories that produce the Company's footwear.

The Company sources its production through a network of contract manufacturers located across the Asia-Pacific region, with current production primarily in the People's Republic of China and Vietnam and additional manufacturing capacity available in Indonesia and Cambodia. In 2025, we migrated a material portion of our manufacturing from China to Vietnam, where the manufacturer procures the supplies for us through their supply chain. Approximately 60% of our products are manufactured in Vietnam. A portion of the facilities at which the Company's products are manufactured are owned in part by one of the Company's sourcing partners, which holds a minority equity interest in such facilities. This sourcing structure was selected in part because it provides the Company with access to manufacturing capacity in multiple countries, which the Company believes provides operational resilience in the event of disruption — including geopolitical, regulatory, public-health, or trade-policy disruption — affecting any single country.

The Company does not own any of its manufacturing facilities and is not party to any long-term, exclusive, or take-or-pay manufacturing commitments. The Company's relationships with its contract manufacturers are generally governed by purchase orders and ongoing commercial arrangements rather than by long-term, exclusive, or take-or-pay manufacturing agreements. The Company believes this arrangement provides flexibility to allocate or reallocate production across factories as cost, capacity, lead-time, quality, or geopolitical conditions change.

The Company manages its production through a combination of in-house product development, sourcing, and quality functions based at the Company's Broomfield, Colorado headquarters, and a dedicated quality assurance team that conducts pre-production, in-line, and final inspections at the Company's contract manufacturing facilities. The Company's quality assurance program is intended to confirm that finished goods conform to the Company's design specifications, material specifications, and quality standards prior to shipment.

While the Company believes that alternative manufacturing capacity is available in the event of a disruption with any single contract manufacturer, transitioning production to a new factory typically involves lead time for tooling, sampling, quality validation, and production ramp-up. Any such transition could result in temporary inventory shortfalls, increased cost, or delivery delays, any of which could adversely affect the Company's results of operations.

**Market**

*Industry Overview*

The Company operates in the global athletic and casual footwear industry, which spans performance footwear (including training, run and fitness; court, and hike/trail), casual and lifestyle footwear, sandals, and boots. Within this broader industry, the Company is positioned in the minimalist and natural-movement footwear sub-segment, which is characterized by footwear featuring foot-shaped wide toe boxes, low or zero-drop platforms, flexible soles, and lightweight construction designed to allow for natural foot motion and ground feel.

The Company believes that several long-term trends support continued growth in the categories in which it competes, including increasing consumer interest in foot health, biomechanics, and the role of footwear in supporting natural movement; growing participation in outdoor recreation, hiking, running, and active lifestyles; rising consumer demand for footwear with wider toe boxes and lower heel-to-toe drops, including from consumers who do not identify as part of the traditional barefoot or minimalist footwear community; and continued consumer interest in product durability and longevity. The Company also believes that the broader wellness and natural-living consumer movement has expanded the addressable audience for natural-movement footwear beyond its traditional core consumers.

The footwear industry is influenced by changes in consumer preferences, fashion trends, demographic patterns, and discretionary spending, as well as by macroeconomic conditions, input cost inflation, tariffs, and global supply chain dynamics, each of which can affect demand, pricing, and profitability across the industry.

*Target Customer*

The Company's customer base spans a broad demographic range, united by interest in natural movement, foot health and active lifestyles. The Company's products appeal to:

* runners, hikers, and other athletes seeking a minimalist or natural-movement
alternative to conventional cushioned footwear;

* consumers seeking everyday footwear with a foot-shaped toe box and zero-drop
platform for casual, work, and travel;

* consumers focused on foot health;

* outdoor and active-lifestyle consumers seeking lightweight, packable,
and durable footwear suitable for travel, hiking, and water activities; and

* consumers attracted to the brand's design heritage, founder story, and
natural-movement educational content.

The Company reaches its customers globally through its direct-to-consumer e-commerce platforms, third-party marketplaces such as Amazon, wholesale partners in the United States and Europe, and a network of independent international distributors. The Company has built an engaged customer community supported by athlete and brand ambassadors, social media, and educational content focused on natural movement and foot health.

**Competition**

The global athletic and casual footwear industry is highly competitive and concentrated, with several large brands accounting for a significant portion of industry sales. Many of these brands are owned by large multinational corporations with substantial resources and diversified product portfolios. Companies that compete in the broader athletic and casual footwear industry include Nike, Inc.; Adidas AG; Skechers U.S.A., Inc.; Puma SE; ASICS Corporation; New Balance Athletic Shoe, Inc.; Deckers Outdoor Corporation; On Holding AG; Wolverine World Wide, Inc.; V.F. Corporation; and Crocs, Inc.

The Company competes more directly with brands that focus specifically on minimalist, barefoot, and natural-movement footwear. The Company's principal competitors in this sub-segment include Vivobarefoot Ltd.; Vibram S.p.A. (including the FiveFingers® line); Lems Shoes; Altra Running; Topo Athletic; ; and Whitin. Certain large athletic footwear brands also offer products positioned as minimalist or natural-movement footwear, including the Nike® Free line and Merrell® Barefoot and M-Connect lines, and the Company expects continued competition from large brands that introduce wider-toe-box, lower-drop, or natural-movement-influenced designs.

Many of the Company's competitors have substantial financial, marketing, manufacturing, and distribution resources. The footwear industry is also characterized by rapidly changing consumer preferences, frequent product introductions, and significant competition based on design, performance, brand recognition, and price. The Company's ability to compete effectively depends on its ability to anticipate and respond to consumer trends, develop innovative products, build brand recognition, and execute across its direct-to-consumer, wholesale, and international distribution channels.

***Competitive Positioning***

The Company believes it occupies a differentiated position in the footwear market. The Company's principal competitive differentiators include:

&nbsp;&nbsp;&nbsp;&nbsp;· **Natural-movement design across a broad product line.** The Company applies a consistent
set of natural-movement design principles — wide toe box, zero-drop platform, and flexible, low-to-the-ground construction —
across a uniquely broad product line that spans performance running, training, court sports, hiking, casual, dress-casual, sandals,
boots, and kids' footwear. The Company believes few minimalist footwear brands offer this breadth of category coverage.

&nbsp;&nbsp;&nbsp;&nbsp;· **FeelTrue® outsole technology and 5,000-mile sole warranty.** The Company's FeelTrue®
outsole, which incorporates a patented dual-chevron tread design, is engineered for durability, grip, and ground feel. The Company backs
its footwear with a 5,000-mile sole warranty, which the Company believes is among the most extensive product warranties in the footwear
industry.

&nbsp;&nbsp;&nbsp;&nbsp;· **Lightweight, flexible, and packable construction.** Xero Shoes® products are lightweight
and flexible, allowing for natural foot motion and ground feel while providing foot protection. The flexibility of the Company's products
also makes them packable and travel-friendly.

&nbsp;&nbsp;&nbsp;&nbsp;· **Founder-led brand authenticity.** The Company was founded
in 2009 by Steven Sashen and Lena Phoenix,. The Company's product design
originates in the founders' personal use of and advocacy for natural-movement footwear, and the Company has built a global customer community
grounded in education about natural movement and foot health.

&nbsp;&nbsp;&nbsp;&nbsp;· **Accessible price-point positioning within the minimalist category.** The Company's products are at accessible price points compared to
certain premium priced minimalist competitors, which the Company believes enables Xero Shoes® to be a gateway as an entry point for
consumers new to natural-movement footwear

&nbsp;&nbsp;&nbsp;&nbsp;· **Multi-channel global distribution.** The Company reaches
consumers through its direct-to-consumer e-commerce platforms, third-party marketplaces such as Amazon, U.S. and international wholesale
partners, and a network of independent international distributors See "*—Sales-–International Distribution* "
above.

&nbsp;&nbsp;&nbsp;&nbsp;· **Heritage product line.** The
Company's original DIY huarache-style sandal kits remain part of the product line, reflecting the Company's heritage and the design lineage
that traces to traditional Tarahumara huarache sandals.

**Employees**

As of March 31, 2026, we had 79 full-time employees and 5 part-time employees.

**Regulation**

The Company's operations are subject to a variety of federal, state, local, and foreign laws and regulations governing the design, manufacture, labeling, distribution, marketing, and sale of footwear and related products. These regulations are administered by numerous governmental authorities in the United States and in the foreign jurisdictions in which we operate.

In the United States, the Company is subject to consumer protection and product safety laws enforced by agencies such as the U.S. Consumer Product Safety Commission, which establishes standards and regulations intended to protect consumers from potentially hazardous products. The Company is also subject to regulations enforced by the Federal Trade Commission relating to advertising, marketing practices, and labeling requirements, including rules concerning truth-in-advertising and disclosure of product origin and materials.

The Company's products must comply with various labeling and disclosure requirements, including those related to country of origin, materials used in manufacturing, and applicable care instructions. In addition, the Company is subject to federal and state environmental, health, and safety laws and regulations governing, among other things, the use, handling, and disposal of certain materials and chemicals used in the manufacturing process, whether conducted internally or by third-party manufacturers.

Because the Company sources and manufactures a portion of its products internationally, the Company is subject to import and export regulations, including customs laws, tariffs, trade restrictions, and sanctions administered by U.S. and foreign authorities. Changes in trade policies, including the imposition of tariffs or other trade barriers, could increase our costs or disrupt our supply chain. "*See Risk Factors - Our reliance on independent manufacturers located in Asia and in particular Vietnam subjects us to risks associated with complex and evolving international trade policies, regulatory environments, and geopolitical relations that could materially increase our costs, disrupt our global supply chain, and adversely affect our financial performance".*

We are also subject to labor and employment laws in the jurisdictions in which we operate, as well as laws relating to the oversight of working conditions within our supply chain. We may be subject to additional disclosure obligations regarding our sourcing practices and supply chain transparency.

Additionally, we are subject to data privacy and cybersecurity laws and regulations that govern the collection, use, storage, and protection of personal information of our customers, employees, and business partners. Compliance with these laws may require us to implement and maintain appropriate data protection and security measures.

Compliance with applicable laws and regulations may require significant resources and may impact our operational flexibility. Failure to comply with these requirements could result in fines, penalties, product recalls, or other enforcement actions, which could have a material adverse effect on our business, financial condition, and results of operations.

**Intellectual Property** 

FTWI has registered 96 trademarks and applied for 10 additional marks in the US and internationally. There is no guarantee that these additional marks will be registered. Successful registrations to date include Australia, Canada, Japan, South Korea, South Africa and Singapore. The Company has 196 registered domain names.

The Company holds 26 shoes design patents that include 2 sandal sole designs with and without contour.

The company also holds a utility patent for Biofeedback for altering gait and a utility patent for its unique huarache-style lacing system.

**Available Information and Reports to Security Holders**

We are currently required to make annual and semi-annual filings with the Securities and Exchange Commission (the "SEC"). We make annual filings on Form 1-K which is due by the end of April each year and will include audited financial statements for the previous fiscal year. We make semi-annual filings on Form 1-SA, which are due by September 28 each year, which will include unaudited financial statements for the six months to June 30. We also required to file a Form 1-U to announce important events such as the loss of a senior officer or a change in auditor.

When this Registration Statement becomes effective, we will begin to file reports, proxy statements, information statements, and other information with the SEC. Our SEC filings will also be available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.

Our website address is http://www.xeroshoes.com**.** Information contained on the website does not constitute part of this Registration Statement. We have included our website address in this Registration Statement solely as an inactive textual reference. When this Registration Statement is effective, we will make available, through a link to the SEC's website, electronic copies of the materials we file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, the Section 16 reports filed by our executive officers, directors and 10% stockholders and amendments to those reports.

**Item 1A. Risk Factors.**

The SEC requires that we identify risks that are specific to our business and financial condition. We are subject to all of the same risks impacting small, early-stage businesses, including risks relating to economic downturns, political and economic events, and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest in our Company.

**Risk Factors Related to Economic and Industry Risks**

***The footwear industry is subject to rapid changes in consumer preferences, and if we do not accurately anticipate and promptly respond to consumer demand and spending patterns, including by successfully introducing new products, it could impact sales, our relationships with customers could be compromised, and our brand loyalty could be diminished.***

The footwear, industry is subject to rapid changes in consumer preferences and fashion tastes, which make it difficult to anticipate demand for our products and forecast our financial results. Our success is driven to some extent by brand loyalty, and there can be no assurance consumers will continue to prefer our brands. Consumer demand for our products depends in part on the continued strength of our brands, which in turn depends on our ability to anticipate, understand, and promptly respond to the rapidly changing preferences and fashion tastes, as well as consumer spending patterns, with appealing merchandise. As our brands and product offerings evolve, it is necessary for our products to appeal to an even broader range of consumers whose preferences cannot be predicted with certainty. New footwear models that we introduce may not be successful with consumers or our brands may fall out of favor with consumers. If we are unable to anticipate, identify, or react appropriately to changes in consumer preferences, our revenues may decrease, our brands' image may suffer, our operating performance may decline, and we may not be able to execute our growth plans. Even if we develop and manufacture new footwear products and collaborations that consumers find appealing, their ultimate success may depend on our pricing, and we may set the prices of new styles too high for the market to bear.

Further, the value of our brands is based on evolving consumer perceptions, including as a result of shifting ethical, political or social standards, and concerns with respect to product pricing, quality, design, technical performance, components or materials (including their sustainability), or customer service could result in negative perceptions and the loss of brand loyalty and value. These concerns may be exacerbated by negative publicity regarding us or our products, brands, marketing campaigns, partners, or endorsers, which could adversely affect our reputation and sales regardless of the accuracy of such claims. Social media and digital marketing campaigns, which accelerate the dissemination of information, can increase the challenges of containing negative claims. If consumers perceive our brands negatively, whether warranted, our brand image would become tarnished and our products would become less desirable, which could have a material adverse effect on our business.

Failure to gain market acceptance for new products could impede our ability to maintain or grow current revenue levels, reduce profits, adversely affect the image of our brands, erode our competitive position, and result in long-term harm to our business and financial results.

***The Company's revenues and profits depend on the level of consumer spending for footwear, which is sensitive to global economic conditions and other factors. A decline in consumer spending could have a material adverse effect on the Company.***

The success of the Company's business depends on consumer spending on footwear and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, interest rates, consumer credit availability, inflationary pressures, recessions or economic slowdowns, unemployment, stock market performance, weather conditions and natural disasters (including potential climate risks and impacts), energy prices, public health issues, geopolitical and political instability (such as the current tensions between the U.S. and China, and the current conflicts in Europe, the Middle East and Asia), trade wars, consumer discretionary spending patterns and tax rates in the international, national, regional and local markets where the Company's products are sold. Decreased consumer spending could result in reduced demand for our products, reduced orders from customers for our products, order cancellations or returns, lower revenues, higher discounts, increased inventories and lower gross margins. The uncertain state of the global economy continues to impact businesses around the world. If global economic and financial market conditions do not improve, or if they worsen, adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on the Company.

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***The footwear industry is highly competitive, and the Company's success depends on its ability to gauge consumer preferences and product trends, and to respond to constantly changing markets.***

The Company competes with numerous footwear brands and manufacturers. Competition is generally based upon brand name recognition, the price, design, quality, innovation and selection of product, service and purchasing convenience. Some of our competitors are larger and have more resources than the Company in some product categories and regions. The Company's ability to compete within the footwear industry depends on our ability to:

* anticipate, respond to, and potentially influence changing consumer preferences
and product trends in a timely manner;

* develop attractive and innovative products that meet changing consumer
needs, consistent with consumer trends and demands;

* maintain strong brand recognition;

* fuel modern marketing and marketplace strategies to enable deeper consumer
connections that lead to enhanced engagement with our brands and increased purchases of products;

* competitively price products;

* provide best in class marketing support and intelligence and optimize
and react to available consumer data;

* ensure product availability and optimize supply chain efficiencies;

* produce or procure quality products on a consistent basis; and

* adapt to a more digitally driven consumer landscape, including the effective
re-creation of the in-store experience through digital channels and reaching consumers on social media.

In addition, our ability to compete is also dependent on our ability to reach consumers effectively and efficiently in an evolving media landscape, including digital, which is subject to evolving and increasingly restrictive privacy requirements. Failure to compete effectively or to keep pace with rapidly changing consumer preferences, markets, technology, business model and product trends could have a material adverse effect on the Company's business, financial condition and results of operations. Moreover, there are significant shifts underway in retail (e-commerce and retail store) channels. The Company may not be able to manage its brands within and across channels sufficiently, which could have a material adverse effect on the Company's business, financial condition and results of operations.

***The Company's profitability may decline as a result of increasing pressure on margins.***

The footwear industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, inflation, tariffs levied on component and finished goods, rising freight costs, rising labor costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and purchasing. Customers may increasingly seek markdown allowances, incentives and other forms of economic support. If these factors cause us to reduce our sales prices to retailers and consumers, and we fail to sufficiently reduce our product costs or operating expenses, the Company's profitability will decline. This could have a material adverse effect on the Company's results of operations, liquidity and financial condition.

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***The Company's revenues and cash requirements are affected by the seasonal nature of its business.***

The Company's business is seasonal, with a higher proportion of revenues and operating cash flows generated during the second half of the calendar year, which includes the fall and holiday selling seasons. Poor sales in the second half of the calendar year would have a material adverse effect on the Company's full-year operating results and cause higher inventories. In addition, fluctuations in sales and operating income in any fiscal quarter are affected by the timing of seasonal shipments and other events affecting retail sales.

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***Changes to economic conditions may adversely affect the Company's financial condition and results of operations.***

Volatile economic conditions and changes in the market have affected, and may continue to affect, consumer spending generally and the buying habits and preferences of consumers. A significant portion of the products we sell, especially those sold under the Xero Shoes® brand, are premium retail products. The purchase of these products is discretionary and is therefore highly dependent upon the level of consumer confidence and discretionary spending. Sales of these products may be adversely affected by variable economic factors, including worsening economic conditions, consumer confidence in future economic conditions, including recessionary concerns, changes to fuel, energy, labor, and healthcare costs, declines in income or asset values, and increases in consumer debt levels, inflation and interest rates, tariffs, and unemployment rates. Uncertainty in global economic conditions may result in unpredictable consumer discretionary spending trends. During an actual or perceived economic downturn, fewer consumers may shop for our products, and those who do may limit the amount of their purchases or seek less costly substitutes for our products. As a result, we could be required to reduce the price we can charge for our products or increase our marketing and promotional expenses to generate additional demand for our products. In either case, these changes could reduce our sales and profitability, which could have a material adverse effect on our financial condition and results of operations.

We sell a significant portion of our products through online marketplaces. The businesses of these customers may be affected by factors such as changes in economic conditions, ongoing geopolitical conflicts and uncertainties, fluctuations in foreign currency exchange rates, reduced consumer demand for premium products, decreases in available credit, and increased competition. If our customers face financial difficulties, it could have an adverse effect on our estimated allowances and reserves and potentially result in us losing key customers.

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**Risk Factors Related to the Company and its Business**

***We are highly dependent on a small management team, and the loss of one or more key members of our management could adversely affect our business.***

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Our success is highly dependent on the continued services and performance of our senior management team, which currently consists of a relatively small number of individuals who possess significant experience, institutional knowledge, and relationships critical to our business. These individuals are responsible for many key aspects of our operations, including strategic planning, business development, capital raising, operational oversight, and management of key customer and business relationships.

Because of the limited size of our management team, the loss of one or more of these individuals could have a disproportionate impact on our business. If any member of our senior management team were to resign, become unable to perform their duties, or otherwise cease to be actively involved in our operations, we may experience disruptions to our business operations, delays in the execution of our strategic initiatives, and difficulty maintaining relationships with customers, partners, suppliers, and other key stakeholders.

We do not maintain key person life insurance covering members of our management team. In addition, competition for qualified executive personnel in our industry is intense, and we may be unable to attract, retain, or replace qualified management personnel on a timely basis or at all. Even if we are able to identify suitable replacements, the integration of new personnel into our management team could require significant time and resources and may not be successful.

Furthermore, our small management team may face increasing demands regarding its time and resources as our business grows and as we comply with the additional reporting, regulatory, and operational requirements associated with operating as a public company. These demands may divert management's attention from day-to-day operations and strategic initiatives and could adversely affect our ability to effectively manage and grow our business.

If we are unable to retain our existing management team or successfully recruit and integrate additional qualified management personnel, our business, financial condition, results of operations, and prospects could be materially and adversely affected.

***Rapid growth may place significant demands on our management and operational resources, and our failure to effectively manage our growth could adversely affect our business.***

We have experienced, and may continue to experience, periods of rapid growth and expansion in our operations, which have placed, and may continue to place, significant demands on our management, operational, financial, and administrative resources. Our ability to successfully manage our growth will depend on a number of factors, including our ability to expand our operational, financial, and management systems and controls, recruit and retain qualified personnel, and effectively manage our evolving business operations.

As our business grows, we may encounter difficulties in maintaining the quality and efficiency of our operations. Rapid growth could strain our infrastructure, including our information technology systems, internal controls, and reporting systems, and may increase the complexity of our business. In addition, as we expand our operations, we may need to hire, train, and manage a larger workforce, which could place additional pressure on our management team and may divert management's attention from other strategic priorities.

Our continued growth may also require significant expenditure and the allocation of additional financial and operational resources. We may not be able to scale our systems, processes, and infrastructure at a sufficient pace to support our growth, and our attempts to do so may not be successful. If our management team is unable to effectively manage our growth and expansion, our business operations could become inefficient, and our service quality and customer satisfaction could suffer. Furthermore, rapid growth may make it more difficult to maintain effective internal controls and compliance procedures, particularly as we expand our operations and workforce. As we transition to operating as a public company, we will face additional reporting, regulatory, and governance requirements that may further increase the demands on our management and administrative personnel.

If we are unable to effectively manage our growth, expand our operational capabilities, and maintain adequate internal controls and operational efficiency, our business, financial condition, results of operations, and prospects could be materially and adversely affected.

***Our shoes are not approved medical devices.***

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Our Company was born out of a trend for minimalist style footwear. Many people have experienced benefits from wearing minimalist shoes. Our shoes are not designed, marketed or approved to treat or cure any injury or condition, but some customers may believe otherwise because of widespread publicity about people's experiences with barefoot running and/or minimalist shoes. Like all footwear, the Company's products may not be suitable for every customer in considering each person's particular expectations, needs, and limitations.

***We may not have adequate liquidity.***

To date, the Company has bootstrapped its growth using a combination of long-term notes payable, short-term lines of credit, revolving credit cards, trade payables, and a modest equity injection. In November 2021, the Company closed on a revolving credit facility with JPMorgan Chase, which was used to refinance an existing loan with Genlink/La Plata and provided an additional $4.0 million in working capital capacity. In conjunction with this facility, the Company also secured a $2.0 million Term Note. Together, these credit facilities have been instrumental in funding inventory purchases aligned with the Company's growth strategy. While the Company has an established history of on-time loan payments, it may not always be able to acquire new debt capital or extend maturity dates on its existing loans. Increases in interest rates may also impact the Company's ability to use debt as a source of growth capital in the future. Changes in the economic environment or the Company's performance may make it difficult to secure future working capital through any means.

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***The Company's business and the success of its products could be harmed if the Company is unable to maintain the image of its brands.***

The Company's success to date has been due in large part to the growth of its brands' image and the Company's consumers' connection to its brands. If we are unable to timely and appropriately respond to changing consumer demand, the names and image of our brands may be impaired. Even if we react appropriately to changes in consumer preferences, consumers may consider our brands' image to be outdated or associate our brands with styles that are no longer popular. In addition, brand value is based in part on consumer perceptions on a variety of qualities, including merchandise quality, corporate integrity, and environmental, social and governance practices, including with respect to human rights, responsible business practices, and our impact on the environment. Negative claims or publicity regarding the Company, its brands or its products, including licensed products, or its culture and values, or its employees, or suppliers could adversely affect our reputation and sales regardless of whether such claims are accurate.

The rapidly changing media environment, including our increasing reliance on social media and online marketing, which accelerates the dissemination of information, including misinformation and disinformation, can increase the challenges of responding to negative claims. Our reputation and brand image also could be damaged as a result of our support of, association with or lack of support or disapproval of certain political or social issues or catastrophic events, as well as any decisions we make to continue to conduct, or change, certain of our activities in response to such considerations.

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***We may be unable to accurately forecast our inventory and working capital requirements, which may have a material adverse effect on our financial condition and results of operations.***

Like other companies in our industry, we have an extended design and manufacturing process, which involves product design, material purchases, inventory accumulation and the subsequent sales of the inventory, and accounts receivable collection. This cycle requires us to incur significant expenses relating to the design, manufacturing, and marketing of our products in advance of the realization of revenue from sales, and results in significant liquidity requirements and working capital fluctuations throughout our fiscal year. Because this cycle involves long lead times, which require us to make manufacturing decisions months in advance of an anticipated purchasing decision by the consumer, it is challenging to manage our inventory and working capital requirements. Further, supply chain disruptions may drive higher inventory procurement positions that could negatively affect our gross profit as a percentage of net sales (gross margin) as a result of selling excess quantities though close out channels. Further, once manufacturing decisions are made, it is difficult to predict and timely adjust expenses, accurately forecast our financial results, and meet the expectations of analysts and investors, including as a result of:

* changes in consumer preferences, tastes, discretionary
spending, and prevailing fashion trends;

* market acceptance of our current products and new products,
and of competitive products;

* the competitive environment, including pricing pressure
from reduced pricing of competitive products, which may cause consumers to shift their purchasing decisions away from our products

* delays in resource or product availability from supply
chain disruptions; and

* uncertain macroeconomic and political conditions.

The evolution and expansion of our brands and product offerings have made our inventory management activities more complex. For example, if we overestimate demand for any products or styles, we may be forced to incur significant markdowns or sell excess inventories at reduced prices, which would result in lower revenues and reduced gross margin, and we may not be able to recover our investment in the development of new styles and product lines. On the other hand, if we underestimate demand, or if our independent manufacturing facilities are unable to supply products in sufficient quantities, we may experience inventory shortages that may prevent us from fulfilling customer orders or result in us delaying shipments to customers. If that occurred, we could lose sales, our relationships with customers could be harmed, and our brand loyalty could be diminished. In either event, these factors could have a material adverse effect on our financial condition and results of operations.

***We rely upon independent manufacturers for most of our production needs, and the failure of these manufacturers to manage these responsibilities would prevent us from filling customer orders, which would result in loss of sales and harm our relationships with customers.***

We rely upon independent manufacturers and their respective material suppliers for most of our production needs, the majority of which are located in Asia, predominately in Vietnam and China and we do not have direct control over these manufacturers or their suppliers. In 2025, we migrated a material portion of our manufacturing from China to Vietnam. We now have 52% of our manufacturing in Vietnam. We expect our independent manufacturers to finance the production of goods ordered, maintain manufacturing capacity, comply with our policies, and store finished goods in a safe location pending shipment. Further, because most of our independent manufacturers are in Vietnam and China, we are subject to risks associated with natural disasters, epidemics, geopolitical tensions, or other events outside of our control affecting the region. If any of these were to occur, we may not be able to timely source raw and other materials, manufacture products, or fill customer orders, or products delivered may not meet our quality standards, which would result in lost sales and harm to our relationships with customers.

There can be no assurance of a long-term, uninterrupted supply of products from our independent manufacturers. While we have long-standing relationships with most of these manufacturers, they could terminate our engagement, seek to increase their prices, or extract other concessions from us, and we may not be able to timely engage a suitable alternative. If we are required to find alternative manufacturers, we could experience manufacturing delays, increased manufacturing costs, and substantial disruption to our business, any of which could negatively affect our results of operations.

Interruptions in the supply of our products can also result from adverse events that impair our manufacturers' operations. For example, we keep proprietary materials necessary to produce our products, such as shoe molds and other materials, in the custody of our independent manufacturers. If these independent manufacturers were to lose or damage these proprietary materials, we cannot be assured that the manufacturers would have adequate insurance to cover such loss or damage, and, in any event, the replacement of such materials would likely result in significant delays in the production of our products, which could result in a loss of sales and earnings.

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***Our reliance on independent manufacturers and suppliers located primarily in Asia and in particular Vietnam subjects us to risks associated with complex and evolving international trade policies, regulatory environments, and geopolitical relations that could materially increase our costs, disrupt our global supply chain, and adversely affect our financial performance.***

The production of finished goods is outsourced to independent manufacturers, which are primarily located in Asia predominately in Vietnam and China. We now have 52% of our manufacturing in Vietnam. The majority of our raw materials and components used in the production of our products by our independent manufacturers are sourced from designated suppliers. As a result, our operations are exposed to risks arising from evolving international trade dynamics, including tariffs, import restrictions, customs disputes, retaliatory measures, shifting trade agreements and cross-border partnerships, and broader geopolitical instability. US administrations have enacted tariffs on imports, renegotiated or withdrawn from trade agreements, and implemented other restrictive measures. These changes can adversely affect sourcing costs, product pricing, inventory flow, and product demand, which could materially increase our cost of sales, adversely affect our gross margins, and reduce our competitiveness in the US and other markets. Customs authorities may also disagree with our claimed tariff treatment for certain products, resulting in unexpected costs that may negatively impact our gross margin. We cannot predict the outcome of ongoing or future trade negotiations, and any escalation of trade tensions could materially and adversely impact our business, financial condition, and results of operations, and those of our customers.

In addition to trade-related risks, our international operations and independent manufacturers are subject to a range of regulatory, operational, and reputational risks. While we require our independent manufacturers and suppliers to adhere to environmental, labor, ethical, health, safety, and other business standards and conduct periodic audits of their operations, we do not directly control their practices. Noncompliance with applicable laws or standards could lead to product recalls, regulatory penalties, the seizure or forfeiture of our products, or reputational harm. If any of our suppliers are unable or unwilling to comply with our standards, we may be forced to terminate those relationships, which could increase our costs and disrupt our supply chain. Further, if our independent manufacturers or suppliers violate US or foreign trade laws or regulations, we may be subject to extra duties, significant monetary penalties, the seizure, and forfeiture of products we are attempting to import, or the loss of our import privileges, which could have a negative effect on our results of operations.

Transportation and distribution costs may also be adversely affected by fluctuating demand, fuel cost volatility, labor disputes, inflation, and political, social, and economic instability. For example, we continue to experience port congestion, increased lead times, and rising freight and energy costs. Continued global geopolitical uncertainty, rising labor tensions, or climate-related disruptions further add to the complexity of global supply chain planning and resilience, and could increase distribution costs, create further capacity constraints in Europe and adversely affect our results of operations. Additionally, the increased threat of terrorist activity and heightened customs inspections have created delays in bringing imported goods to market and increased our logistics expenses.

While we pursue mitigation strategies, including selective, staggered, and strategic price increases on our products in the US and by negotiating cost-sharing arrangements with our independent manufacturers, we may be unable to offset all resulting increases to our cost of goods sold, which could have a material adverse effect on our business, operations, and financial condition. Further, these risks may have a material adverse impact on demand for our products.

***We rely upon a number of warehouse and distribution facilities to operate our business, and any damage to one of these facilities, or any disruptions caused by incorporating new facilities into our operations, could have a material adverse effect on our business.***

In the United States, we operate our own fulfillment warehouse located in Denver, Colorado, from which we ship the majority of our domestic direct-to-consumer and wholesale orders. Internationally, we distribute products through Skladon, a third-party logistics provider (3PL) located in the Czech Republic, which supports order fulfillment for our European customers. If there was a catastrophic event that resulted in a shutdown of our warehouse facility or damaged goods, we would be unable to ship orders for a period of time. Additionally, we may be forced to renegotiate our contract and our rates with the 3PL, which could hamper our gross margin and potentially force us into searching for a new warehousing and fulfillment partner. We could face significant disruption in our domestic warehouse and distribution center operations if our warehouse management system does not perform as anticipated or ceases to function for an extended period of time, which could occur due to damage to the facility, failure of software or equipment, cyber-security incidents, power outages or similar problems. In addition, if our domestic warehouse and distribution center operations and scaling efforts are impeded or delayed for any reason, it could result in shipment delays or the inability to deliver product at all, which would result in lost sales, strain our relationships with customers and consumers, and cause harm to our reputation, any of which could have a material adverse effect on our business.

We depend on Skladon to manage the operation of its warehouse and distribution center to meet our business needs, performance standards, and expectations, including with respect to data security, compliance with data protection and privacy laws (including the EU General Data Protection Regulation), and provision of quality services on a timely basis at the prices we expect. While we believe we conduct appropriate diligence before entering into service agreements with Skladon, if Skladon fails to manage these responsibilities, or if its operations are disrupted as a result of factors outside of its control — such as labor disruptions, cybersecurity incidents, infrastructure or utility failures, public-health events, regional conflict, or sanctions or trade restrictions that could in the future be imposed by the U.S. government, the European Union, or other authorities — our international distribution operations could face significant disruption. The loss of or disruption to the operations of this facility could adversely affect our sales, business performance, and results of operations. Although we believe we possess adequate insurance to cover the potential effect of a disruption to the operations of this facility, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.

***If the Company encounters problems with its distribution system, the Company's ability to deliver its products to the market could be adversely affected.***

The Company relies on retail stores and third party-operated distribution facilities to warehouse and ship product to the Company customers and consumers. The Company's distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures. Because substantially all of the Company's products are distributed from a relatively small number of locations, the Company's operations could also be interrupted by earthquakes, extreme environmental conditions, fires or other natural disasters or other events outside the Company's control affecting its distribution centers, including political or labor instability. We maintain business interruption insurance under our property and cyber insurance policies, but it may not adequately protect the Company from the adverse effects that could be caused by significant disruptions in the Company's distribution facilities. In addition, the Company's distribution capacity is dependent on the timely performance of services by third parties, including the transportation of product to and from its distribution facilities. If we encounter problems with our distribution system, our ability to meet customer expectations, manage inventory, complete sales and achieve operating efficiencies could be materially adversely affected.

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***Supply chain disruptions could interrupt product manufacturing and global logistics and increase product and transportation costs.***

Our business depends on our ability to source and distribute products in a timely manner. We continue to proactively mitigate any effects of future disruptions by expanding and reallocating production capacity with our existing sourcing partners and onboarding new long-term partners to diversify our country-level manufacturing footprint. We plan to continue growing our distribution network to support our long-term strategic objectives but have experienced and may continue to experience headwinds in connection with these efforts. Failure to adequately produce and timely ship our products to customers could lead to lost potential revenue, failure to meet consumer demand, strained relationships with customers and diminished brand loyalty.

Port congestion, temporary closures, vessel availability and reliability, worker shortages, government-imposed restrictions, such as border closures and shipment restrictions, as well as trade policy changes, may disrupt the operations of our independent manufacturers and suppliers as well as those of our warehouses and distribution centers, and may increase the global lead-time for shipments of our products. In addition, geopolitical conflicts have and could in the future bring about disruption, and volatility in global markets, supply chains, and logistics, which could in turn adversely affect our business operations and financial performance.

Elevated inventory levels, combined with the uneven flow of receipts and shipments, could cause further capacity pressures within our US warehouses suppliers. These pressures may be exacerbated by labor disputes that affect our partners, which create significant risk for our business, particularly if such disputes result in work slowdowns, strikes, or other disruptions. As we manage product availability from disruptions, the timing of sales to our partners and consumers may be affected, which may result in an increased risk of order cancellations.

***The Company's direct-to-consumer business includes risks that could have an adverse effect on its results of operations.***

The Company sells merchandise direct to consumer through retail stores and e-commerce sites. Its direct-to-consumer business is subject to numerous risks that could have a material adverse effect on its results. Risks include, but are not limited to, (i) U.S. or international resellers purchasing merchandise and reselling it outside the Company's control, (ii) failure or interruption of the systems that operate the stores and websites, and their related support systems, including due to computer viruses, theft of consumer information, privacy concerns, telecommunication failures, electronic break-ins and similar disruptions, technical malfunctions, and natural disasters or other causes, (iii) retail and credit card fraud and theft, (iv) risks related to the Company's direct-to-consumer distribution centers and processes, (v) shift in consumer preferences away from retail stores, and (vi) loss of inventory due to damage, theft (including from organized retail crime), and other causes. Risks specific to the Company's e-commerce business also include (i) difficulty in recreating the in-store experience through e-commerce channels, (ii) liability for online content, (iii) changing patterns of consumer behavior and not keeping up with new online selling models, (iv) intense competition from online retailers, and (v) online fraud. The Company's failure to successfully respond to these risks might adversely affect sales in its e-commerce business, as well as damage its reputation and brands.

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***The Company may be unable to protect its trademarks and other intellectual property rights.***

The Company's trademarks and other intellectual property rights are important to its success and its competitive position. The Company is susceptible to others copying its products and infringing its intellectual property rights, especially with the shift in product mix to higher priced brands and innovative new products in recent years. and infringement.

The Company's trademarks, trade names, copyrights, patents, trade secrets and other intellectual property are important to the Company's success. Counterfeiting of the Company's products or infringement on its intellectual property rights could diminish the value of our brands and adversely affect the Company's revenues. Actions we have taken to establish and protect the Company's intellectual property rights may not be adequate in preventing the copying of its products by others or preventing others from seeking to invalidate its trademarks or block sales of the Company's products as a violation of the trademarks and intellectual property rights of others. In addition, unilateral actions in the U.S. or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, could have an impact on the Company's ability to enforce those rights.

The value of the Company's intellectual property could diminish if others assert rights in or ownership of trademarks and other intellectual property rights of the Company, or trademarks that are similar to the Company's trademarks, or trademarks that the Company licenses from others. We may be unable to successfully resolve these types of conflicts to our satisfaction. In some cases, there may be trademark owners who have prior rights to the Company's trademarks because the laws of certain foreign countries may not protect intellectual property rights to the same extent as do the laws of the U.S. In other cases, there may be holders who have prior rights to similar trademarks.

There have been, and there may in the future be, opposition and cancellation proceedings from time to time with respect to some of the Company's intellectual property rights. In some cases, litigation may be necessary to protect or enforce our trademarks and other intellectual property rights. Furthermore, third parties may assert intellectual property claims against us, and we may be subject to liability, required to enter into costly license agreements, if available at all, required to rebrand our products and/or prevented from selling some of our products if third parties successfully oppose or challenge our trademarks or successfully claim that we infringe, misappropriate or otherwise violate their trademarks, copyrights, patents or other intellectual property rights. Bringing or defending any such claim, regardless of merit, and whether successful or unsuccessful, could be expensive and time-consuming and have a negative effect on the Company's business, reputation, results of operations and financial condition.

***We rely on technical innovation to compete in the market for our products.***

Our success relies in part on our continued innovation in both the materials we use and the design of our footwear. In particular, our Xero Shoes® brand maintains its competitiveness through continuous product innovation and timely introduction of new features and technologies that align with current and emerging consumer expectations. Also, we continue to invest in research and development to increasingly incorporate preferred materials in our products as part of our sustainability efforts. Although we continue to refine our materials and develop new properties for specific applications, if we fail to introduce technical innovation in our products or experience issues with the quality of our products or materials, consumer demand for our products could decline and we may experience reputational damage. Further, as our brands transition to suppliers with recycled, renewable, regenerated, and certified/natural materials (preferred materials), we may be subject to increased costs or supply constraints, which could reduce our sales and profitability and have a material adverse effect on our financial condition and results of operations.

***We may not succeed in implementing our growth strategies, in which case we may not be able to take advantage of certain market opportunities and may become less competitive.***

As part of our overall growth strategy, we are continually seeking out opportunities to enhance the positioning of our brands, diversify our product offerings, extend our brands into complementary product categories and markets, expand geographically, optimize our retail presence both in stores and online, and improve our financial performance and operational efficiency. Our future growth depends in part on our expansion efforts outside of North America (international growth strategy). Failure to effectively implement our growth strategies and develop our business in new international markets, or disappointing growth within existing markets, could negatively affect our revenues and rate of growth and result in our business becoming less competitive. In addition, taking steps to implement our growth strategies could have a number of negative effects, including increasing our working capital needs, causing us to incur costs without any corresponding benefits, and diverting management time and resources away from our existing business.

**Risk Factors Related to the Legal Regulatory and Compliance**

***The Company's operations and earnings may be affected by legal, regulatory, political and economic uncertainty and risks.***

Our ability to maintain the current level of operations in our existing markets and to capitalize on growth in existing and new markets is subject to legal, regulatory, political and economic uncertainty and risks. These include the burdens of complying with U.S. and international laws and regulations, and changes in regulatory requirements. Changes in regulatory, geopolitical policies and other factors may adversely affect the Company's business, results of operations and financial condition or may require us to modify our current business practices. While enactment of any such change is not certain, if such changes were adopted or if we failed to anticipate and mitigate the impact of such changes, our costs could increase, which would reduce our earnings. Any such change could adversely affect worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets.

As a result of our global operations, we are subject to a number of risks impacting our employees working outside the U.S., including regulations that may differ from or be more stringent than analogous U.S. regulations, political or economic instability, cross-border political tensions and challenges in effectively managing employees in foreign jurisdictions. The Company is subject to increased tax and regulatory risks related to employees working remotely or otherwise in a tax location other than their normal work location or residential state or country. These changes have created, and continue to create, challenges in managing our tax and regulatory compliance as well as acquiring and retaining cross-border talent, which could adversely affect our business, results of operations and financial condition.

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***Our business is subject to national, state and local laws and regulations for environmental, consumer protection, corporate governance, competition, employment, privacy, safety and other matters. The costs of compliance with, or the violation of, such laws and regulations by the Company or by independent suppliers who manufacture products for the Company could have an adverse effect on our operations and cash flows, as well as on our reputation.***

Our business is subject to comprehensive national, state and local laws and regulations on a wide range of matters such as environmental, climate risk, consumer protection, social, employment, privacy, safety and other matters. The Company could be adversely affected by costs of compliance with or violations of those laws and regulations. In addition, while we do not control their business practices, we require third-party suppliers to operate in compliance with applicable laws, rules and regulations regarding working conditions, safety, employment practices, the environment and other areas. The costs of products purchased by the Company from independent contractors could increase due to the costs of compliance by those contractors.

Failure by the Company or its third-party suppliers to comply with such laws and regulations, as well as with ethical, social, product, safety, labor and environmental standards, or related political considerations, could result in a material adverse effect on our financial condition, results of operations or cash flows, including resulting in interruption of finished goods shipments to the Company, extensive remediation efforts, cancellation of orders by customers and termination of relationships. If the Company or one of our independent contractors violates labor or other laws, implements improper labor or other business practices or takes other actions that are generally regarded as unethical, it could result in unwanted or negative media attention, jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts that may reduce demand for the Company's merchandise. Damage to the Company's reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on the Company's results of operations, financial condition and cash flows, as well as require additional resources to rebuild the Company's reputation.

Our operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act (the "FCPA") and other anti-bribery laws applicable to our operations. Although we have policies and procedures to address compliance with the FCPA and similar laws, there can be no assurance that all of our employees, agents and other partners will not take actions in violation of our policies. Any such violation could subject us to sanctions or other.

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***Changes to U.S. or international trade policy, tariff and import/export regulations or our failure to comply with such regulations may have a material adverse effect on our reputation, business, financial condition and results of operations.***

Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business, as well as any negative sentiment toward the U.S. as a result of such changes, could adversely affect our business. For example, the U.S. government has instituted changes in trade policies imposing higher tariffs on imports into the U.S. Tariffs and other changes in U.S. trade policy have in the past triggered, are currently triggering and could continue to trigger retaliatory actions by affected countries, and certain foreign governments have instituted, considered or are considering imposing retaliatory measures on certain U.S. goods. The Company, similar to many other multinational corporations, does a significant amount of business that is impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations. In addition, the Uyghur Forced Labor Prevention Act and other similar laws may lead to greater supply chain compliance costs and delays to us and to our suppliers and customers.

***Changes in tax laws could increase our worldwide tax rate and tax liabilities and materially affect our financial position and results of operations.***

We are subject to taxation in the U.S. and numerous foreign jurisdictions. Many countries in the EU and around the globe have adopted and/or proposed changes to current tax laws. These changes include rules published by the Organisation for Economic Co-operation and Development ("OECD") to address tax challenges arising from the digitization of the economy (i.e., Global Anti Base Erosion ("GloBE") rules and Subject to Tax Rule ("STTR") or "Pillar Two") and are expected to increase our tax obligations and compliance costs in the countries where the Company operates. Due to the large scale of our U.S. and international business activities, many of these enacted and proposed changes to the taxation of our activities is expected to increase our worldwide effective tax rate and harm our financial position and results of operations.

***We may have additional tax liabilities from new or evolving government or judicial interpretation of existing tax laws.***

As a global company, we determine our income tax liability in various tax jurisdictions based on an analysis and interpretation of U.S. and international tax laws and regulations. This analysis requires a significant amount of judgment and estimation and is often based on various assumptions about the future actions of tax authorities. These determinations are the subject of periodic U.S. and international tax audits and court proceedings. In particular, tax authorities and the courts have increased their focus on income earned in no- or low-tax jurisdictions or income that is not taxed in any jurisdiction. Tax authorities have also become skeptical of special tax rulings provided to companies offering lower taxes than may be applicable in other countries.

Although we accrue for uncertain tax positions, our accrual may be insufficient to satisfy unfavorable findings. Unfavorable audit findings, or court interpretations (involving the Company or other companies with similar tax profiles) may result in payment of taxes, fines and penalties for prior periods and higher tax rates in future periods, which may have a material adverse effect on our financial condition, results of operations or cash flows.

**Risks Related to Technology, Data Security and Privacy**

***The Company relies significantly on information technology. Any inadequacy, interruption, operational failure or security failure of this technology could harm the Company's ability to effectively operate its business.***

Our ability to effectively manage and operate our business depends significantly on information technology systems. We rely heavily on information technology to track sales and inventory and manage our supply chain. We are also dependent on information technology, including the Internet, for our direct-to-consumer sales, including our e-commerce operations and retail business credit card transaction authorization. Despite our preventative efforts, our systems and those of third parties on which we rely are frequently targeted by cyberattacks of varying levels of severity. These systems may be vulnerable to damage, failure or interruption, and the data that they hold may be vulnerable to encryption or theft, due to cyberattacks, malicious programs, data security incidents, technical malfunctions, natural disasters or other causes, or in connection with upgrades to our system or the implementation of new systems. Some of our systems are older and are no longer supported by the original manufacturer. The failure of our systems and those of third parties on which we rely to operate effectively or remain innovative, our inability to keep up with rapid technological change (including the successful utilization of data analytics, artificial intelligence ("AI") and machine learning), problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach in security of these systems has, and in the future could again, adversely impact the operations of the Company's business. These impacts could affect, among other things, our reputation, management of inventory, ordering and replenishment of products, sourcing and distribution of products, retail store and e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media, and did affect our management of inventory, ordering and replenishment of products, sourcing and distribution of products, retail store and e-commerce operations, and corporate email communications. Moreover, failure to provide effective digital (including omni-channel) capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness, leading to loss of revenue and market share and decreased business agility.

Cybersecurity threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of AI. We may fail to adapt as quickly as necessary to meet the rapidly changing threat environment.

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***A security breach or disruption to our IT systems could materially harm our business, disrupt our operations, or result in unauthorized disclosure of sensitive information, which could damage our relationships, expose us to litigation or regulatory proceedings, or harm our reputation, any of which could materially adversely affect our business and results of operations.***

We store and transmit a significant amount of sensitive information, including the personal information of our customers and employees, credit card information, and our proprietary financial, operational, and strategic information. The loss, theft, misuse, or unauthorized disclosure or access to such information could lead to significant reputation or competitive harm, result in litigation, expose us to regulatory proceedings, and cause us to incur substantial losses. As a result, we believe our future success and growth depends, in part, on the ability of our systems, including those utilizing artificial intelligence (AI) such as generative AI, to prevent theft, loss, misuse, or unauthorized access of this information, and to respond quickly and effectively if data security incidents occur. Data privacy and security incidents may prevent us from maintaining the privacy of this information, result in the disruption of our business, and require us to expend significant resources to secure such information and respond to incidents, any of which could materially adversely affect our business, financial condition, or results of operations.

Our success also depends in part on the continued operation of our key business processes, including our IT and global communications systems. We rely on third-party IT service providers for many of our worldwide IT functions, including network, hardware, and software configuration, and on internal networks to support business processes. Any disruption to these systems or networks could, among other things, delay product fulfillment, impede personnel from performing their duties, adversely impact sales, and expose us to significant costs. Further, we could experience information silos and inefficiencies across our organization if we do not invest in appropriate operational systems and processes. If we are unable to structure our systems and processes to respond to changing business needs, or if we or our third-party providers experience a failure in these systems, our ability to accurately forecast sales, report our financial position and results of operations, or otherwise manage and operate our business could be adversely affected.

The frequency, intensity, and sophistication of cyber and data security incidents have significantly increased in recent years. Like other businesses, we have experienced, and are continually at risk of, attacks and incidents. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the current global economic and political environment, our prominent size and scale, the advances in computer capabilities and AI, and the interconnectivity and interdependence of third parties to our systems. We expend significant resources on IT and data security tools, and processes designed to protect our IT systems and information, and to ensure an effective response to any attack or incident. Whether these measures are successful, these expenditures could adversely affect our financial condition and results of operations.

Although we take the security of our IT systems seriously, there can be no assurance the measures we employ will prevent unauthorized access to our systems and information. Because the techniques used to obtain unauthorized access to IT systems are constantly evolving, we may be unable to anticipate these techniques or implement adequate protective measures in response. Cyber-attacks or data incidents could remain undetected for some period, which could result in significant harm to our systems, as well as unauthorized access to the information stored on and transmitted by our systems. A cyber-attack or other data security incident could result in significant disruption of our business such that:

* critical business systems become inoperable or require
considerable time or cost to restore;

* personnel are unable to perform their duties or communicate
with third-party partners;

* it results in the loss, theft, misuse, or unauthorized
disclosure of confidential information;

* we are prevented from accessing information necessary
to conduct our business;

* we are required to make unanticipated investments in
equipment, technology, or security measures;

* customers cannot place or receive orders, and we are
unable to timely ship orders or at all; or

* we become subject to other unanticipated liabilities,
costs, or claims.

If any of these events were to occur, it could have a material adverse effect on our financial condition and results of operations and result in harm to our reputation. In addition, a cyber-attack or other data incident could put us at a competitive disadvantage, result in the deterioration of our customers' confidence in our brands, cause our suppliers to reconsider their relationship with us or impose onerous contractual provisions, and subject us to litigation, liability, fines, and penalties. We could be subject to regulatory or other actions pursuant to domestic and international privacy laws, which could result in costly investigations and litigation, civil or criminal penalties, operational changes, and negative publicity that could adversely affect our reputation, as well as our results of operations and financial condition.

***If we are found to have violated laws concerning the privacy and security of consumers' or other individuals' personal information, we could be subject to civil or criminal penalties, which could increase our liabilities and harm our reputation or our business.***

There are a number of laws protecting the privacy and security of personal information and increased scrutiny by regulators, such as the Federal Trade Commission, and state attorneys general focused on our industry. Such laws include the California Consumer Privacy Act and California Privacy Rights Act, the EU's General Data Protection Regulation and member state directives, Canada's Personal Information Protection and Electronic Documents Acts, and China's Personal Information Protection Law, and limit how we may collect, use, share and store personal information, and they impose obligations to protect that information. Further, we may be subject to new data privacy and security laws and regulations. If we, or any of our service providers who have access to the personal data for which we are responsible, are found to be in violation of the privacy or security requirements of applicable data protection laws, we could be subject to civil or criminal penalties, which could increase our liabilities, harm our reputation, and have a material adverse effect on our business, financial condition, and results of operations. Although we utilize a variety of measures to secure the data that we control, even compliant entities can experience security breaches or have inadvertent failures despite employing reasonable practices and safeguards.

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***If the technology-based systems that give our customers the ability to shop or interact with us online do not function effectively, our results of operations, as well as our ability to grow our e-commerce websites globally or to retain our customer base, could be materially adversely affected.***

Many of our consumers shop with us through our Company-owned e-commerce websites or through third-party digital marketplaces. Consumer expectations and competitive pressures, including speed of product delivery, shipping charges, return privileges, and other evolving expectations, have increased and are expected to continue to increase. Consumers are increasingly using mobile platforms to shop with us and with our competitors, to do comparison shopping, and to engage with us and our competitors. We are increasingly using social media to interact with our consumers and as a means to enhance their shopping experience. Any failure on our part to provide effective, reliable, secure, user-friendly e-commerce websites that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of consumers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation, have an adverse effect on the growth of our e-commerce websites and have an adverse effect on our business and results of operations. In addition, as use of our digital platforms grows, we will need an increasing amount of technical infrastructure. If we fail to effectively scale and adapt our digital platforms to accommodate increased consumer demand, our business may be subject to interruptions, delays or failures and consumer demand for our products and digital experiences could decline. Risks specific to our Company-owned e-commerce websites also include diversion of sales from our Company-owned retail stores and our retailers' brick and mortar stores, difficulty in recreating the in-store experience through direct channels and liability for online content. Our failure to successfully respond to these risks could adversely affect e-commerce sales, as well as damage our reputation and brands.

***If we are unsuccessful at improving our operational and IT systems and our efforts do not result in the anticipated benefits to us or result in unanticipated disruption to our business, our financial condition and results of operations could be adversely affected, and our business may become less competitive.***

We continually strive to improve and automate our operational and IT systems and processes as part of our ongoing effort to improve the overall efficiency and competitiveness of our business. Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources. Implementation is also highly dependent on the coordination of numerous employees, contractors and software and system providers. While these efforts have resulted in improvements to our operational systems, we expect to continue to incur expenses to implement additional improvements and upgrades to our systems. Many of these expenditures have been and may continue to be incurred in advance of the realization of any direct benefits to our business. We cannot guarantee that we will be successful at improving our operational systems, adapting to changes in technology, including the successful utilization of data analytics, AI, and machine learning, or that our efforts will result in the anticipated benefits to us. In addition, the integration of emerging technologies, including data analytics, AI, and machine learning, into our systems and processes may require us to address rapidly developing laws and regulations governing AI. We may also experience difficulties in implementing or operating our new or upgraded operational or IT systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits. If our operational or IT system upgrades, improvements and associated implementation efforts are not successful, our financial condition and results of operations could be adversely affected, and our business may become less competitive.

***The Company is subject to cybersecurity, information security and privacy risks that could negatively affect its business operations, results of operations or reputation.***

In the normal course of business, we collect, retain and transmit certain sensitive and confidential information, including payment information and personal information, over public networks. There is a significant concern by consumers and employees over the security of personal information, identity theft and user privacy. Cybersecurity and information security breaches are increasingly sophisticated and can be difficult to detect for long periods of time. Accordingly, if unauthorized parties gain access to our networks or databases or those of third parties on which we rely, they have, and could continue to, be able to steal, publish, delete, hold ransom or modify our private and sensitive information, including payment information, personal information, and confidential or other proprietary business information.

We are subject to frequent cyberattacks of varying levels of severity and threats to our business from a variety of bad actors, many of whom attempt to gain unauthorized access to, steal or compromise our confidential information and systems. Our facilities and systems, and those of third parties on which we rely, are frequently the target of cyberattacks of varying levels of severity and have been, and may in the future be vulnerable, and we may and have been unable to prevent, anticipate or detect security breaches and data loss.

The Company and its consumers and customers could suffer harm if valuable business data, or employee, consumer, customer and other confidential and proprietary information were corrupted, lost, accessed or misappropriated by third parties due to a cyberattack, a security failure in the Company's systems, or due to one of our third-party service providers or our employees. Any such breach could require significant expenditures to remediate; could cause damage to our reputation, to confidence in our e-commerce platforms and to our relationships with customers, consumers, employees and third parties on whom we rely; could result in business disruption, negative media attention and lost sales; and has and could expose us to risks of litigation, liability and increased scrutiny from regulatory entities.

In addition, as a result of recent security breaches at a number of prominent retailers and other companies, media and public scrutiny of information security and privacy has become more intense, and the regulatory environment has become increasingly uncertain, rigorous and complex. As a result, we may incur significant costs to comply with laws regarding the privacy and security of personal information, and we may not be able to comply with new data protection laws and regulations being adopted around the world. Any failure to comply with the laws and regulations and consumer expectations surrounding the privacy and security of personal information could subject us to legal and reputational risk, including significant fines and/or litigation for non-compliance in multiple jurisdictions, negative media coverage, diminished consumer confidence and decreased attraction to our brands, any of which could have a negative impact on revenues and profits. In addition, while we maintain cyber insurance policies, those existing insurance policies may not adequately protect the Company from all of the adverse effects and damages that could be caused by a security breach. Moreover, if our employees or business partners, intentionally or inadvertently, misuse consumer data or are not transparent with consumers about how we use their data, our brands, reputation and relationships with consumers could be damaged.

**Risks Related to Our Common and Preferred Stock**

***We will incur increased costs as a result of becoming a public company.***

We will be subject to the reporting and compliance requirements of the Securities Exchange Act of 1934 and other federal securities laws. These requirements will increase our legal, accounting, insurance, and compliance costs and may place significant demands on our management and administrative resources. In addition, we may need to hire additional personnel and implement additional financial and management systems, which could increase our operating expenses.

***The is no public market for our common stock; You may not be able to resell your shares.***

There is currently no public trading market for our common stock, and we do not expect a public market to develop in the foreseeable future. Our common stock has not been approved for listing on any national securities exchange or automated quotation system, including the Nasdaq Stock Market or the New York Stock Exchange. Because there is no established public trading market for our common stock, the price of our shares may not be indicative of the price that could be obtained in the future if a trading market develops. In the absence of an active trading market, investors may experience significant difficulty selling or otherwise disposing of their shares. Even if a market for our common stock were to develop, there can be no assurance that it will be sustained or that investors will be able to sell their shares at or above the price they paid. Even if a trading market for our common stock develops in the future, the market price of our shares could be highly volatile and may fluctuate significantly in response to a number of factors, many of which are beyond our control, including changes in our financial performance, industry conditions, market perceptions of our business, or broader economic conditions.

Because there is currently no public market for our securities and no assurance that one will develop, an investment in our common stock should be considered illiquid and speculative, and investors should be prepared to bear the economic risk of their investment for an indefinite period of time.

***The Class B Common Stock is non-voting.***

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The Class B Common Stock is non-voting, so investors in this class of stock will not be able to influence our policies or any other corporate matter, including the election of directors, changes to our Company's governance documents, expanding the employee option pool, and any merger, consolidation, sale of all or substantially all of our assets, or other major action requiring stockholder approval.

***Our management and principal stockholders will continue to control a significant percentage of our voting power.***

Our executive officers, directors, and principal stockholders beneficially own a significant percentage of our outstanding common stock. As a result, these stockholders may have the ability to influence or control matters requiring stockholder approval, including the election of directors, approval of mergers or other significant corporate transactions, and amendments to our organizational documents. This concentration of ownership may delay or prevent a change in control of our Company and may discourage potential acquirers from making an offer to acquire us.

***We do not currently intend to pay dividends on our common stock.***

We currently intend to retain any future earnings to fund the development and growth of our business. As a result, we do not anticipate paying any cash dividends on our common stock in the foreseeable future. Accordingly, investors seeking immediate cash returns on their investment should not purchase our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, and other factors.

**Risks Related to Our Outstanding Preferred Stock**

***Holders of our outstanding preferred stock have rights, preferences, and privileges that are senior to those of our common stock.***

We currently have shares of preferred stock outstanding that have rights, preferences, and privileges that are senior to those of our common stock. These rights may include, among other things, preferential dividend rights, liquidation preferences, conversion rights, voting rights, and other contractual protections. As a result, holders of our preferred stock may receive distributions or other payments before any distributions are made to holders of our common stock.

In the event of our liquidation, dissolution, or winding up, holders of preferred stock will generally be entitled to receive a specified liquidation preference before any payments are made to holders of our common stock. This preference could reduce or eliminate the amount that holders of common stock would otherwise receive upon a liquidation event.

***The conversion of our outstanding preferred stock could significantly dilute the ownership interests of holders of our common stock.***

Our outstanding preferred stock may be convertible into shares of our common stock upon the occurrence of certain events or at the option of the holders of such preferred stock. If the preferred stock is converted into common stock, the number of shares of common stock outstanding would increase, which could result in substantial dilution to the ownership interests and voting power of existing holders of our common stock.

In addition, certain anti-dilution adjustments or other protective provisions contained in the terms of the preferred stock may result in the issuance of additional shares of common stock upon conversion, which could further dilute the ownership interests of our common stockholders.

***Our Series A preferred stockholders may have voting rights that could influence the outcome of matters submitted to stockholders.***

Holders of our Series A preferred stock have voting rights that allow them to vote together with holders of our common stock on certain matters or as a separate class on specified matters. As a result, preferred stockholders may be able to influence the outcome of matters requiring stockholder approval, including the election of directors, amendments to our organizational documents, or approval of significant corporate transactions.

This concentration of voting power could result in decisions that differ from the preferences of holders of our common stock.

***Our outstanding preferred stock could adversely affect the value and market price of our common stock.***

The existence of outstanding preferred stock and the rights associated with such securities may make our common stock less attractive to investors. Investors in our common stock may perceive the preferential rights of the preferred stockholders as increasing the risk associated with an investment in our common stock.

In addition, the potential conversion of preferred stock into common stock and the resulting increase in the number of outstanding shares could place downward pressure on the market price of our common stock if a public trading market develops.

**Item 2**. **Financial Information.**

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere herein and in our consolidated financial statements.*

*In addition to our consolidated financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See "Forward-Looking Statements" and "Item 1A. Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these statements.*

**Results of Operations**

***Components of Results of Operations***

**<u>Revenue</u>**

The Company generates revenue primarily from the sale of footwear and related products, including minimalist casual and performance shoes, boots, sandals, and do-it-yourself sandal kits sold under the Xero Shoes® brand. Revenue is generated through three principal channels: (i) direct-to-consumer sales through the Company's website; (ii) sales through third-party online platforms, principally Amazon; and (iii) wholesale and distribution sales to retailers and international distribution partners. The Company reports revenue across two operating segments: North American operations, which includes all foreign distributors outside of Europe, and European operations, which includes the European Union countries and Middle Eastern wholesale accounts.

Revenue is recognized in accordance with ASC 606, *Revenue from Contracts with Customers*, when control of the promised goods is transferred to the customer, which generally occurs upon shipment, in an amount that reflects the consideration the Company expects to receive in exchange for those goods. Shipping and handling fees billed to customers are included in revenue. Sales taxes collected from customers are excluded from revenue and recorded as a liability until remitted to the applicable taxing authorities. The Company records an accrual for estimated product returns and warranty claims at the time revenue is recognized, based on historical experience, current trends, and management's judgment; this allowance has historically ranged between approximately 12% and 15% of gross revenue.

For certain international distributor orders, customers remit a portion or all of the purchase price in advance of shipment. These advance payments are recorded as contract liabilities (customer deposits) until the related performance obligations are satisfied through shipment.

**<u>Cost of Revenue</u>**

Cost of revenue consists primarily of the cost of finished goods purchased from third-party manufacturers for resale, inbound freight and duties, and inventory adjustments, including write-downs for damaged, obsolete, or slow-moving inventory. Cost of revenue also includes outbound shipping and handling costs, credit card and merchant account processing fees, depreciation expense on the Company's footwear molds and lasts, and warehousing costs associated with the Company's U.S. distribution facility and third-party logistics providers in the Czech Republic, the United Kingdom.

**<u>Gross Profit</u>**

Gross profit is calculated as revenue less cost of revenue. The Company's gross profit and gross margin are influenced by a number of factors, including product mix, channel mix between direct-to-consumer, third-party platform, and wholesale/distributor sales, promotional activity and discounting, inbound freight and duty rates, foreign currency exchange rates, and inventory reserve and write-down activity.

**<u>Operating Expenses</u>**

Operating expenses consist of general and administrative expenses, sales and marketing expenses, research and development expenses, and operations expenses.

*General and Administrative.* General and administrative expenses consist primarily of personnel-related costs (including salaries, benefits, and stock-based compensation) for executive, finance, accounting, legal, human resources, information technology, and other administrative personnel; professional fees for legal, accounting, audit, and consulting services; insurance; facilities and occupancy costs not allocated to cost of revenue or operations; depreciation and amortization (other than depreciation included in cost of revenue); and other general corporate expenses. The Company expects general and administrative expenses to increase in absolute dollars as it incurs the additional costs associated with operating as a public reporting company, including increased legal, audit, insurance, investor relations, and compliance-related expenses.

*Sales and Marketing.* Sales and marketing expenses consist primarily of digital advertising and other paid marketing activities, content creations, affiliate and influencer marketing program costs, trade show and event expenses, personnel-related costs (including salaries, benefits, and stock-based compensation) for employees engaged in marketing, sales, and related overhead. Advertising costs are expensed as incurred.

*Research and Development.* Research and development expenses consist primarily of personnel-related costs for employees engaged in product design, development, and testing, prototype and sample costs, and outside services. Research and development costs are expensed as incurred.

*Operations.* Operations expenses consist primarily of customer service costs and dedicated warehousing expenses required to maintain inventory levels needed to support customer demand. A portion of operations expense related to the handling of incoming inventory is allocated to cost of revenue

**<u>Other Income (Expense), Net</u>**

Other income (expense), net consists primarily of interest expense related to the Company's outstanding borrowings under its credit facility, interest income earned on cash balances, foreign currency transaction gains and losses, gains and losses on the disposal of assets, and management fees paid to TZP Group Investments Manager, LP under the Company's management services arrangement.

**<u>Provision for (Benefit from) Income Taxes</u>**

The Company is subject to income taxes in the United States (federal and state) and in foreign jurisdictions in which its subsidiaries operate, including the Netherlands, the Czech Republic, and the United Kingdom. The provision for (benefit from) income taxes consists of current and deferred federal, state, and foreign income taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The Company evaluates the realizability of its deferred tax assets on a regular basis and establishes a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized.

**Comparison of the Years Ended December 31, 2025 and 2024**

***Year Ended December 31, 2025 Compared with the Year Ended December 31, 2024***

Our operating results for the years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Years Ended** | **Years Ended** | |
|  | **December 31, 2025** | **December 31, 2024** |<br>**Difference** |
| Revenue | $64688005 | $67623883 | $(2935878) |
| Cost of revenue – product costs | 26435483 | 23305460 | 3130023 |
| Cost of revenue – fulfillment costs | 8910540 | 10968491 | (2057951) |
| Operating expense | (29890360) | (33371834) | 3481474 |
| Other income (expense) | (1435543) | (920118) | (515425) |
| Provision for income taxes | 387987 | (178182) | 566169 |
| Net loss | $(2371908) | $(763837) | $(1608070) |

---

*Revenues*

Revenue for the year ended December 31, 2025 was $64,688,005, a decrease of $2,935,878, or 4.3%, compared to $67,623,883 for the year ended December 31, 2024. The decrease primarily reflected lower realized pricing in the Company's North American direct-to-consumer business and a shift in Amazon distribution model, partially offset by growth in the European segment and the wholesale and distribution channel.

By geographic segment, North American revenue decreased $4,314,482, or 7.9%, to $50,173,497 in 2025 from $54,487,979 in 2024. The decline was driven primarily by lower realized pricing on direct-to-consumer sales as the Company liquidated aged and surplus inventory at discounted prices and increased discounting on full-price product during 2025, and by the transition of a portion of the Company's Amazon volume from first-party seller-central sales to sales through a distribution partner at lower per-unit wholesale pricing. European revenue increased $1,378,604, or 10.5%, to $14,514,508 in 2025 from $13,135,904 in 2024, despite the wind-down of the Company's United Kingdom subsidiary during 2025. Revenue attributable to the United Kingdom subsidiary was approximately $1,586,813 in 2025 and $1,077,445 in 2024.

By distribution channel, direct-to-consumer revenue decreased $2,985,011, or 6.7%, to $41,833,872 in 2025 from $44,818,883 in 2024, primarily reflecting the inventory liquidation activity and higher promotional discounting on full-price product described above. Revenue from Amazon and other third-party platforms decreased $717,250, or 9.3%, to $7,024,210 in 2025 from $7,741,460 in 2024, reflecting the Company's transition of its Amazon volume through a distribution partner, which are recognized at lower per-unit wholesale pricing. Wholesale and distributor revenue increased $766,383, or 5.1%, to $15,829,923 in 2025 from $15,063,540 in 2024, reflecting expanded relationships with wholesale and distribution partners, including increased sales to the distributor partner now servicing a portion of the Company's Amazon volume.

Gross product sales (before returns, discounts, and shipping revenue) were $72,965,125 in 2025 compared to $75,828,688 in 2024. Customer returns allowances, and chargebacks decreased to $8,186,705 in 2025 from $9,756,215 in 2024, reflecting a higher proportion of liquidation and promotional sales, which historically experience lower return rates than full-price sales. Discounts were $1,785,921 in 2025 compared to $1,847,877 in 2024. Shipping revenue billed to customers, which is included in revenue, decreased to $1,695,506 in 2025 from $3,399,287 in 2024, reflecting the Company's increased use of free-shipping promotions during 2025 to drive customer engagement and demand.

 

*Cost of Revenues*

Cost of revenue for the year ended December 31, 2025 was $35,346,023, an increase of $1,072,072, or 3.1%, compared to $34,273,951 for the year ended December 31, 2024. Cost of revenue consisted of $26,435,483 of product cost in 2025, compared to $23,305,460 in 2024, and $8,910,540 of fulfillment cost in 2025, compared to $10,968,491 in 2024.

The increase in cost of revenue, against a backdrop of declining revenue, primarily reflected (i) higher tariff and duty costs on imported product during 2025, which placed pressure on the Company's product cost of goods sold; (ii) the Company's inventory liquidation activity during 2025, under which aged and surplus inventory was sold at discounted prices that compressed margins on those units; and (iii) increased fulfillment costs associated with the Company's expanded use of free-shipping promotions during 2025. These increases were partially offset by lower per-unit fulfillment costs on units transitioned from first-party Amazon seller-central sales to sales through a distributor partner, as those units no longer incurred Amazon-related fulfillment fees.

*Operating Expenses*

Total operating expenses for the year ended December 31, 2025 were $29,890,360, a decrease of $3,481,474, or 10.4%, compared to $33,371,834 for the year ended December 31, 2024. The decrease was driven primarily by a comprehensive organizational restructuring undertaken during the first half of 2025, which included workforce reductions designed to align the Company's cost structure, staffing, and strategic initiatives with its long-term operating plan. As part of this restructuring, the Company also evaluated and reorganized its channel strategy, including the transition of its Amazon sales channel from first-party seller-central sales to sales through a distributor partner during the first half of 2025, and the wind-down of direct operations in the United Kingdom (which had been unprofitable) in favor of a distributor partner arrangement.

*General and Administrative.* General and administrative expenses for the year ended December 31, 2025 were $5,734,737, a decrease of $4,415,798, or 43.5%, compared to $10,150,535 for the year ended December 31, 2024. The decrease primarily reflected reduced personnel-related costs resulting from the Company's workforce reductions in the first half of 2025, lower professional fees, and reduced stock-based compensation expense. Stock-based compensation expense, which is included in general and administrative expense, was $43,280 in 2025 compared to $143,871 in 2024.

*Sales and Marketing.* Sales and marketing expenses for the year ended December 31, 2025 were $17,823,520, an increase of $764,963, or 4.5%, compared to $17,058,557 for the year ended December 31, 2024. The increase primarily reflected continued investment in customer acquisition and brand-building activities, including digital advertising and promotional programs, as the Company sought to drive consumer engagement during a period of inventory liquidation and channel transition. Sales and marketing expense as a percentage of revenue was 27.6% in 2025 compared to 25.2% in 2024, reflecting the relatively fixed nature of certain marketing investments against a lower revenue base.

*Research and Development.* Research and development expenses for the year ended December 31, 2025 were $1,754,907, an increase of $55,232, or 3.2%, compared to $1,699,675 for the year ended December 31, 2024. The modest increase reflected continued investment in product design and development activities, including support for the Company's expanding product line of styles, partially offset by personnel-related cost savings from the Company's restructuring activities.

*Operations.* Operations expenses for the year ended December 31, 2025 were $4,577,196, an increase of $114,129, or 2.6%, compared to $4,463,067 for the year ended December 31, 2024. Operations expenses consist primarily of customer service costs and dedicated warehousing expenses required to maintain inventory levels needed to support customer demand. The increase reflected the Company's continued investment in customer service and warehousing capabilities to support its expanded distribution footprint and growing wholesale and distributor partner relationships.

*E-Commerce Platform Migration.* During 2025, the Company completed the migration of its e-commerce direct-to-consumer websites from WooCommerce to Shopify. The migration was undertaken to enhance agility, customer experience and to reduce ongoing costs associated with platform development and maintenance. Costs related to the migration were capitalized or expensed as appropriate during 2025, and the Company expects to realize ongoing operational efficiencies from the new platform in future periods.

*Other expense*

Total other expense, net for the year ended December 31, 2025 was $1,435,543, an increase of $515,425, or 56.0%, compared to $920,118 for the year ended December 31, 2024. The increase was driven primarily by a $713,279 loss on settlement recognized during 2025 in connection with the resolution of a vendor litigation matter, partially offset by lower interest expense on the Company's credit facilities.

*Interest Expense.* Interest expense for the year ended December 31, 2025 was $413,409, a decrease of $139,203, or 25.2%, compared to $552,612 for the year ended December 31, 2024. The decrease primarily reflected lower average outstanding balances on the Company's credit facilities during 2025, including the repayment in full of the Company's term commitment with JPMorgan Chase.

*Loss on Settlement.* During 2025, the Company recognized losses on settlement totaling $713,279, consisting of $406,719 in write-offs of unrecoverable cash, the resolution of a vendor litigation matter and certain other settlement activities. There was no comparable expense in 2024.

*Other Income (Expense).* Other income (expense), net was an expense of $308,855 for the year ended December 31, 2025, compared to a net expense of $367,506 for the year ended December 31, 2024. The change primarily reflected fluctuations in foreign currency transaction gains and losses and gains and losses on disposal of assets, partially offset by management fees paid to TZP Group Investments Manager, LP, which were $200,000 in each of 2025 and 2024.

**Liquidity and Capital Resources**

***Overview***

The Company has historically funded its operations through cash generated from operations, borrowings under its credit facilities, and proceeds from the issuance of equity securities. As of December 31, 2025, the Company had cash and cash equivalents of $10,134,276, compared to $1,982,681 as of December 31, 2024, an increase of $8,151,595. The Company also had $4,000,000 outstanding under its revolving credit facility with JPMorgan Chase as of December 31, 2025, compared to $5,300,000 of total borrowings outstanding as of December 31, 2024.

In March 2025, the Company completed an equity financing in which it issued 500,000 shares of Senior Preferred Stock to TZP Group Investments, L.P. at a purchase price of $10.00 per share, generating net proceeds of $4,859,967. The proceeds were used for general corporate purposes, including working capital and to support the Company's organizational restructuring activities during 2025.

In February 2026, subsequent to year-end, the Company entered into a new credit agreement with Wells Fargo providing for a revolving commitment of $12,000,000 with a maturity date of February 5, 2029. The Company drew $4,000,000 under the new Wells Fargo facility to repay its outstanding revolving commitment with JPMorgan Chase, which had matured in February 2026. The Wells Fargo facility increases the Company's borrowing capacity by $8,000,000 compared to the prior JPMorgan Chase facility and extends the Company's debt maturity profile.

The Company believes that its current cash and cash equivalents, anticipated cash flows from operations, and available borrowing capacity under the Wells Fargo credit facility are sufficient to fund its operations and capital requirements for at least the next twelve months. The Company's future liquidity needs will depend on a number of factors, including the rate of growth in its business, the timing of inventory purchases and other working capital requirements, capital expenditures, debt service obligations, and the costs and timing of any future strategic initiatives.

***Working Capital***

 

As of December 31, 2025, the Company had working capital of $16,425,904, calculated as total current assets of $36,298,372 less total current liabilities of $19,872,468. This compares to working capital of $17,736,850 as of December 31, 2024, calculated as total current assets of $30,244,322 less total current liabilities of $12,507,472. The modest decrease in working capital primarily reflected the reclassification of the JPMorgan Chase revolving credit facility from long-term to current liabilities as the facility approached its February 2026 maturity date, partially offset by the increase in cash and cash equivalents resulting from operating cash flow generation and the Senior Preferred Stock issuance.

 

**Cash Flows**

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| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** |
| Net cash provided by (used in) operating activities | $4562374 | $(2040652) |
| Net cash used in investing activities | (617818) | (581912) |
| Net cash provided by (used in) financing activities | 3559967 | (325000) |
| Effect of foreign currency translation | 647072 | (768344) |
| Change in cash | $8151595 | $(3715908) |

---

Our operations through December 31, 2025 have resulted in cash flows from operations of $4,562,374 as compared to net cash used in operating activities of $2,040,652 in the year before.

Inventory adjustments for the years ended December 31, 2024 and 2025 were $288,515 and $414, respectively. Deferred taxes for the years ended December 31, 2025 and 2024 were $244,657 and $508,206, respectively. In addition, we wrote off $406,719 in cash as unrecoverable as compared to nil in the prior year.

Cash flows were negatively impacted for the year ended December 31, 2025 as a result of a $887,802 increase in accounts receivable as opposed to the prior year when cash collected from customers increased by $1,080,023. Prepaid expenses increased by $244,422 for the year ended December 31, 2025, as compared to an increase of $29,687 in the prior year. Inventory in transit decreased significantly for the year ended December 31, 2025, when we experienced an increase of $48,817 for the year ended December 31, 2025, as compared to an increase of $4,133,193 in the prior year. Operating lease right of use asset negatively impacted cash flows for the year ended December 31, 2025, which decreased to $812,811, as compared to a decrease of $602,821 in the prior year. Cash flow benefited from a $4,464,623 increase in accounts payable and accrued expenses for the year ended December 31, 2025, as compared to an increase of $4,165,186 in the prior year, Income tax payable decreased to $0 for the year ended December 31, 2025, as compared to an increase of $62,550 in the prior year. Deferred revenue reduced operating cash flow for the year ended December 31, 2025 in the amount of $179,426, as compared to a reduction of $102,363 in the prior year.

**Operating Activities**

 

Net cash provided by operating activities for the year ended December 31, 2025 was $4,562,374, compared to net cash used in operating activities of $2,040,652 for the year ended December 31, 2024, an improvement of $6,603,026. The improvement primarily reflected favorable changes in working capital, including a $4,464,623 increase in accounts payable and accrued expenses, an $887,802 decrease in accounts receivable, and a $385,805 decrease in inventory, partially offset by the Company's net loss of $2,371,908 for the year ended December 31, 2025. By contrast, 2024 operating cash flow was negatively impacted by a $4,133,193 increase in inventory in transit and a $1,080,023 increase in accounts receivable. Non-cash items in 2025 included $485,530 of depreciation and amortization, $406,719 related to the write-off of unrecoverable cash, $59,350 of credit loss expense, $43,280 of stock-based compensation, and an increase of $244,657 in deferred tax benefit.

The Company had a net increase in cash from 2024 to 2025 of $8,151,595 and had cash of $10,134,276 on December 31, 2025. We believe this is sufficient reserves to maintain company operations for at least the next twelve months while we work toward being cashflow positive. Therefore, management believes there to be no question as to whether or not we will be able to operate as a going concern as of the date of these financial statements.

We intend to use our current cash reserves to generate additional revenue and believe we may begin to generate positive operating cash flows by the end of 2026. However, there is no assurance we will be able to increase our revenue sufficiently to generate positive operating cash flows within this time frame.

**Investing Activities**

Net cash used in investing activities for the year ended December 31, 2025 was $617,818, compared to $581,912 for the year ended December 31, 2024. Investing activities in 2025 consisted of $345,272 of additions to intangible assets, including capitalized internal-use software costs related to the Company's e-commerce platform migration to Shopify and capitalized costs associated with the Company's continued investment in its patent and trademark portfolio, and $272,546 of purchases of property and equipment, consisting primarily of footwear molds and other manufacturing assets. By comparison, in 2024 the Company invested $226,340 in intangible assets, consisting primarily of patent and trademark filings, and $355,572 in property and equipment.

**Financing Activities**

Net cash provided by financing activities for the year ended December 31, 2025 was $3,559,967, compared to net cash used in financing activities of $325,000 for the year ended December 31, 2024. Financing activities in 2025 consisted of $4,859,967 of net proceeds from the issuance of Senior Preferred Stock to TZP Group Investments, L.P., partially offset by $1,300,000 of repayments on the Company's term loan with JPMorgan Chase. Financing activities in 2024 consisted of $325,000 of repayments on the Company's term loan.

**Off-Balance Sheet Arrangements**

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, results of operations, liquidity, capital expenditure, or capital resources.

**Indebtedness**

On November 12, 2024, the Company entered into a credit agreement with JP Morgan Chase comprised of a term commitment for $2,000,000 and a revolving commitment for $4,000,000. The term commitment had a maturity date of November 12, 2025, at which time payment of the full principal amount was due. The revolving commitment had a maturity on November 12, 2025. On February 2, 2023, the Company drew and utilized the full credit available under the revolving commitment of $4,000,000. In 2025, JPMorgan extended the maturity date of the revolving lines of credit to February of 2026.

The interest rate for both the term and revolving commitment is SOFR plus 3.250%. For the year ended December 31, 2025 the weighted average interest rates for the term and revolving commitments were approximately 7.53% and 7.49%, respectively. For the year ended December 31, 2024, the weighted average interest rates for the term and revolving commitments were approximately 10.25% and 8.30%, respectively. Additionally, a commitment fee of 0.25% is paid on the unused balance of the revolving commitment. Borrowings under this credit agreement are secured by substantially all the assets of the Company.

As of December 31, 2025, the balance of the term commitment was fully repaid and the revolving commitment was $4,000,000. Total interest expense for the years ended December 31, 2025 and 2024 was $451,193 and $509,518, respectively.

On February 5, 2026, the Company entered into a credit agreement with Wells Fargo for a revolving commitment of $12,000,000. The commitment has a maturity of February 5, 2029. The Company utilized $4,000,000 of the credit available under the revolving commitment to repay its maturing commitment to JP Morgan Chase.

**Lease Obligations**

The Company leases its corporate office in Broomfield, Colorado and a warehouse facility in Denver, Colorado, along with certain office equipment under master lease agreements. As of December 31, 2025, the Company had operating lease right-of-use assets of $2,193,211 and total operating lease liabilities of $2,407,302 ($807,749 current and $1,599,553 long-term), with future minimum lease payments totaling $2,956,400 through 2029 and beyond. The Company's operating leases expire at various dates through 2031.

**Contractual Obligations**

The Company's significant contractual obligations as of December 31, 2025 consist of debt obligations under its credit facility, operating lease obligations, and inventory purchase commitments with third-party manufacturers. The Company also has obligations under its management services arrangement with TZP Group Investments Manager, LP, under which the Company paid management fees of $200,000 in each of 2025 and 2024.

**Capital Requirements and Material Cash Requirements**

The Company's principal cash requirements consist of inventory purchases, operating expenses (including personnel, marketing, and technology costs), debt service, lease payments, and capital expenditures (primarily footwear molds and lasts and information technology investments). The Company expects to fund these requirements through a combination of cash on hand, cash flows from operations, and borrowings under its Wells Fargo credit facility.

**Trend Information**

The following trends, events, and uncertainties are known to management and may have a material impact on the Company's future results of operations, liquidity, or financial condition. The discussion below contains forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially from any expectations described or implied below

***Channel Mix and Distributor Partner Strategy***

During 2025, the Company transitioned its Amazon sales channel from first-party seller-central sales to sales through a distributor partner, and wound down its direct operations in the United Kingdom in favor of a distributor partner arrangement. These channel transitions affected year-over-year comparability of revenue and gross margin in 2025 and may continue to affect comparability in 2026. Distributor partner arrangements result in lower per-unit revenue than direct retail or first-party sales but reduce certain operating costs and complexity in markets where the Company does not maintain direct operations. The Company continues to evaluate distributor partner relationships in additional geographies. The actual financial impact of these and any future channel decisions will depend on a number of factors, including the performance of distributor partners, consumer demand, and competitive conditions, many of which are outside the Company's control.

***Tariffs and Global Trade Environment***

The Company sources its products from third-party manufacturers, primarily in Asia. Changes to U.S. trade policy, including tariffs and duties imposed on imported goods, have placed pressure on the Company's product costs during 2025. The magnitude, duration, and ultimate impact of current and any future tariffs is uncertain. The Company evaluates mitigation strategies as conditions develop, but cannot predict whether such strategies will be effective in offsetting tariff-related cost pressures. Continued or expanded tariffs could adversely affect the Company's gross margin in future periods, and any pricing actions taken in response could affect customer demand.

***Inventory Position and Liquidation Activity***

During 2025, the Company undertook inventory liquidation activity to reduce aged and surplus inventory, which compressed direct-to-consumer realized pricing and gross margin. The Company monitors inventory levels and product mix on an ongoing basis. Future changes in consumer demand, market conditions, or product mix could result in additional liquidation activity or inventory adjustments that may affect gross margin.

***Restructuring and Cost Structure***

 ****

The Company completed workforce reductions during the first half of 2025, along with broader organizational restructuring activities, designed to align the Company's cost structure with its long-term operating plan. Reported general and administrative expenses for 2025 included one-time severance and recruiting costs incurred in connection with the restructuring. The Company will also incur incremental costs associated with operating as a public reporting company, including increased legal, audit, insurance, investor relations, and compliance-related expenses.

***E-Commerce Platform***

During 2025, the Company completed the migration of its direct-to-consumer e-commerce websites from WooCommerce to Shopify. The Company undertook the migration to support the customer experience and to address the cost structure associated with platform development and maintenance over time.

***Capital Structure and Liquidity***

In February 2026, the Company refinanced its existing JPMorgan Chase credit facility with a new $12,000,000 revolving facility from Wells Fargo, which matures in February 2029. This refinancing increased the Company's borrowing capacity by $8,000,000 compared to the prior facility and extended the Company's debt maturity profile. The Company evaluates its capital structure and liquidity position on an ongoing basis and may pursue additional financing transactions from time to time.

***Macroeconomic and Consumer Demand Environment***

The Company's business is influenced by general macroeconomic conditions affecting consumer discretionary spending, including inflation, interest rates, employment levels, and consumer confidence. Sustained pressure on consumer discretionary spending could affect direct-to-consumer revenue, average order values, and the pace of growth in future periods.

**Item 3. Properties.**

On April 8, 2021, Feel the World, Inc. (d/b/a Xero Shoes), a wholly owned subsidiary of the Company, entered into a lease with SPF 55th Avenue LLC for 86,200 rentable square feet (Suite 200) at 11777 E. 55th Avenue, Denver, Colorado 80239, used for warehouse and distribution. The term commenced on September 1, 2021 and expires on January 31, 2027. Monthly base rent, after a four-month abatement, escalates from $34,121 (months 1–16) to $38,431 (months 53–64), plus 50% proportionate share of operating costs and taxes. The Company paid a security deposit of $59,000.

On January 7, 2023, Feel the World, Inc. entered into a lease with WAITT Interlocken Office 320, LLC for 15,615 rentable square feet (Suite 100, 38.14% of building) at 320 Interlocken Parkway, Broomfield, Colorado 80021, which the Company uses for general office purposes. The term commenced September 1, 2023, and expires November 30, 2028, with one three-year extension option at market rent. Monthly base rent, after a three-month abatement, starts at $24,723.75 and increases 3% annually, plus 38.14% proportionate share of operating expenses. The Company paid a security deposit of $25,000.

Both leases are net leases with standard terms for assignment (landlord consent required), insurance, defaults (5–30 day cures), remedies, maintenance (tenant interior, landlord exterior/structure), and casualty abatement.

**Item 4. Security Ownership of Certain Beneficial Owners and Management.**

The following table sets out certain information with respect to the beneficial ownership of the voting securities of the Company, as of March 31, 2026, for:

· Each person who we know beneficially owns more than five percent of any class of our voting securities.

· Each of our director and director nominees.

· Each of our executive officers.

· All of our directors, director nominees and executive officers as a group.

We have determined beneficial ownership in accordance with the rules of the Commission. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to applicable community property laws.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Title of class** | **Name and address<br> of beneficial owner (1)** | **Amount<br> and<br> nature of<br> beneficial<br> ownership** |  | **Amount<br> and<br> nature of<br> beneficial<br> ownership acquirable** | **Percent of<br> Class** |
| **Class A Voting Common Stock (2)** |  |  |  |  |  |
|  | Lena Phoenix | 4900629 | (3) |  | 91.24% |
|  | Steven Sashen | 4900629 | (4) |  | 91.24% |
|  | Marc Schneider |  |  | 32500 | \*% |
| **All officers and directors as a group (10 people)** |  | 4903129 |  | 73125 | 92.64% |
| **Series A Preferred Stock (5)** |  |  |  |  |  |
|  | TZP (6) | 4137059 |  |  | 98.8% |
|  | Marc Schneider (7) | 44175 |  |  | 1.2% |
| **All officers and directors as a group (10 people)** |  | 44175 |  |  | 1.2% |

---

\* Less than 1%.

(1) Unless otherwise indicated, the address of all listed stockholders is c/o Feel The World, Inc., 320 Interlocken Parkway, Suite 100, Broomfield, Colorado 80021.

(2) Other than Lena Phoenix and Marc Schneider, none of the Company's directors owns or has rights to acquire shares of Class A Voting Common Stock.

(3) Includes (a) 1,200,000 shares of Class A Voting Stock Common Stock held by Autumn Moon LLC, a Wyoming limited liability company, (b) 1,163,753 shares of Class A Voting Common Stock held by Lena Phoenix and (c) 2,539,376 shares beneficially owned by Steven Sashen, Ms. Phoenix's spouse. Ms. Phoenix holds voting and dispositive power over the shares of Class A Voting Stock held by Autumn Moon.

(4) Includes (a) 1,600,000 shares of Class A Voting Common Stock held by Summer Dojo LLC, a Wyoming limited liability company, (b) 500,000 shares of Class A Voting Common Stock held by Rose Violet LLC, a Wyoming limited liability company, (c) 436,876 shares of Class A Voting Common Stock held by Steven Sashen and (d) 2,363,753 shares beneficially owned by Lena Phoenix, Mr. Sashen's spouse. Mr. Sashen has voting and dispositive power over the shares of Class A Voting Stock held by Summer Dojo LLC and Rose Violet LLC

(5) None of the Company's executive officers owns or has rights to acquire shares of Series A Preferred Stock.

(6) Represents holdings of TZP Group Investments, L.P. and TZP Group Holdings, L.P. The general partners of such funds may be deemed to have voting and dispositive power over the shares held by these funds. Each of Mr. Leon, Ms. Kruse, and Mr. Beer, members of our board of directors, does not individually own any securities of the Company and disclaims beneficial ownership of such shares held by TZP Group Investments, L.P. and TZP Group Holdings, L.P. The address of TZP is 7 Times Square - Suite 4307, New York, New York 10036.

(7) Represents holdings of JKLM Advisors, LLC, of which Marc Schneider is the principal and CEO and has voting and dispositive power over the shares of JKLM. Mr. Schneider is also a Senior Advisor-in-Residence for TZP Group. The address of JKLM Advisors is 526 Boston Post Rd, Madison, Connecticut 06443.

**Item 5. Directors and Executive Officers.**

As of March 31, 2026, our directors, executive officers and significant employees were as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Position** | **Age** | **Term of Office** |
| &nbsp;&nbsp;Sue Rechner | &nbsp;&nbsp;Chief Executive Officer | 63 | November 2024 – Present |
| &nbsp;&nbsp;Heidi Huntington | &nbsp;&nbsp;Chief Financial Officer | 52 | May 2025 – Present |
| &nbsp;&nbsp;Michael Pao | &nbsp;&nbsp;Chief Product Officer | 52 | July 2023 - Present |
| &nbsp;&nbsp;Stephan Ostrander | &nbsp;&nbsp;Vice President of Operations & IT | 39 | October 2024 - Present |
| &nbsp;&nbsp;Rachel Wilke | &nbsp;&nbsp;Chief Growth Officer | 38 | September 2025 - Present |
| &nbsp;&nbsp;Chris Melton | &nbsp;&nbsp;Head of Global B2B | 46 | November 2025 - Present |
| &nbsp;&nbsp;Lena Phoenix | &nbsp;&nbsp;Board Member | 58 | December 2010 - Present |
| &nbsp;&nbsp;Perry Leon\* | &nbsp;&nbsp;Board Member | 36 | March 2025 - Present |
| &nbsp;&nbsp;Jo-Anne Kruse\* | &nbsp;&nbsp;Board Member | 60 | March 2025 - Present |
| &nbsp;&nbsp;Marc Schneider\* | &nbsp;&nbsp;Board Member | 66 | December 2020 - Present |
| &nbsp;&nbsp;Marc Beer | &nbsp;&nbsp;Board Member | 61 | February 2026 - Present |

---

Each elected board member will serve a one-year term and must be re-elected yearly by the Common Stock Class A voting stockholders.

\* Perry Leon, Jo-Anne Kruse, and Marc Schneider are employed by TZP Group, et. al.

**Sue Rechner** has served as Interim Chief Executive Officer of Xero Shoes from November 2024 through March 2025 and was named CEO at that time. She is a seasoned operating executive with extensive experience leading consumer-facing businesses through strategic and operational transformation. From June 2023 to April 2024, she served as the interim CEO of the Rifle Paper Co. Prior to that she served as CEO for WD Lab Grown Diamonds (September 2019 through December 2022). From May 2017 through September 2019, she was the Global President of Merrell (a division of Wolverine Worldwide), where she led a significant turnaround that delivered nine consecutive quarters of growth, and President, CEO and Director of Confluence Outdoor, where she executed a financial and operational turnaround of a distressed PE-owned business. Sue currently serves as an Independent Director at Eden Brothers and previously served on the Boards of Active Brands, AS, Anything Possible Brands, PrimaLoft and Montana Silversmiths, as well as on nonprofit boards for the Outdoor Industry Association and the Outdoor Foundation. She holds a B.S. in Health and Physical Education from Rutgers University.

**Heidi Huntington**, Chief Financial Officer. Heidi has over 14 years of executive finance experience, including extensive work in mergers and acquisitions, financial modeling, and operations management across industries such as consumer products, manufacturing, SaaS, and professional services. She has served as CFO for high-growth companies, advised venture capital firms, and led strategic initiatives that improved financial performance and operational efficiency. She served as CFO to The Feed and to AVL Growth Partners from September 2021 through January 2025 and from March 2016 to December 2021, respectively. She holds a BA in accounting from the University of Puget Sound.

**Stephan Ostrander**, Vice President of Operations and IT at Xero Shoes, leading strategic technology and operational initiatives. With over a decade of transformative leadership experience, he drives technological innovation and operational efficiency in high-growth environments. From March 2023 through November 2024, he was the Director of IT at the Rifle Paper Co. and prior to that from May 2021 to March 2023, he served as s Director of Program and Project Management at 101 Solution Consulting. Stephan has a degree in English from Appalachian State University, as well as a Project Management Professional (PMP) certification from the Project Management Institute. Stephan joined Xero in October 2024.

**Michael Pao,** Chief Product Officer. Michael brings over two decades of leadership experience developing and implementing product strategies for leading sportswear and casual brands. After 6 years as a professional soccer player, he transitioned into a business career in sportswear with a focus on product management and progressed to his most recent roles leading product teams for global fashion and lifestyle brands. From March 2022 to July 2023, he was Vice President of Global Marketing at Timberland, from February 2017 to April 2022, he was Vice President of Global Product Management at Crocs. Prior to that he spent five years as a Senior Vice President at Clarks. Michael has a degree in Biology from Vanderbilt University and an MBA from the Darla Moore School of Business at the University of South Carolina.

**Rachel Wilke**, Chief Growth Officer. Rachel brings nearly two decades of experience driving digital transformation, revenue growth, and operational scale across global consumer brands. From September 2025 to present, Rachel has served as Chief Growth Officer at Xero Shoes. From September 2023 to September 2025, Rachel served as Chief Digital Officer at Rifle Paper Co., where she was responsible for enterprise-wide digital strategy across eCommerce, Amazon, CRM, paid media, and customer experience. From July 2022 to October 2023, Rachel served as Chief Digital & Ecommerce Officer at ALEX AND ANI, where she led digital commerce, marketing, CRM, merchandising, and licensing functions. From March 2021 to July 2022, Rachel served as Vice President of Ecommerce, North America at MAC Cosmetics (The Estée Lauder Companies), where she oversaw ecommerce operations and full-funnel digital marketing strategy for a $1B+ brand,. Prior to that, Rachel served as Senior Director, Ecommerce (Head of Digital) at Merrell (Wolverine Worldwide) from December 2017 to March 2021, where she led global direct-to-consumer strategy, digital marketing, and ecommerce operations. Rachel holds an MBA from Davenport University and a Bachelor of Science in Marketing from Oakland University.

**Chris Melton,** Head of Global B2B. Chris brings more than two decades of leadership experience across the footwear, apparel, and consumer goods industries, with deep expertise in global wholesale, distribution, product strategy, merchandising, sales, finance, and operations. Chris has spent his career leading wholesale organizations, strengthening distributor networks, and revitalizing challenged businesses across both established and emerging markets. Prior to joining Xero Shoes, he was Director of Global B2B at Vivobarefoot from May 2024 to November 2025, where he led wholesale and distributor strategy across key international markets. Prior to that Chris was at inov-8, where he served from 2022 to 2024 as Global Business Unit Director for the Gym Category and Head of Western U.S. and Latin America Sales. This marked his second tenure with the brand, having previously led inov-8 from 2011 to 2014 as General Manager of the Americas. From 2014 to 2019, Chris served as Business Unit Director for Finished Goods at Vibram Group, where he led U.S. sales as well as distribution across Canada, Latin America, Japan, and Australia. Chris began his footwear career at Converse in 2007, first as a Financial Analyst before moving into an Associate Product Line Management role. He holds a Bachelor of Science in Business Administration from the College of Charleston, and an MBA from Assumption University.

**Lena Phoenix,** Co-Founder and Board Member. Lena Phoenix is a Co-Founder of the Company and has served as a member of the Board of Directors since December 2010 as well as serving as Co-Chief Executive Officer from December 2010 through February 2025. A fourth-generation entrepreneur, Ms. Phoenix has more than 15 years of experience founding and leading consumer-facing and service businesses. Prior to co-founding the Company, she founded and subsequently sold a mortgage company, and later served as President of a management, internet marketing, and publishing company, where she oversaw operations, marketing strategy, and editorial direction. Ms. Phoenix is also an award-winning author. She attended Reed College and holds a B.A. from Naropa University.

**Perry Leon**, TZP Group Principal/Board Member. Prior to being a Principal at TZP, from 2019 to 2021 Perry was a Vice President at AEA Growth where he sourced and executed growth equity and buyout investments across a variety of industries including tech-enabled business services, consumer, fintech, healthcare, and technology. Prior to joining AEA Growth Perry was an investment professional at Platinum Equity from 2016 to 2019 and M/C Partners from 2014 to 2016, where he sourced, executed, and monitored various investments across the TMT and industrials verticals. Perry began his career as an investment banker at Barclays and graduated from the University of Pennsylvania with a B.S. in Economics.

**Jo-Anne Kruse**, TZP Group Partner/Board Member. Jo-Anne has over a thirty-five year career as a Human Resource executive that covers a wide array of industries, including financial services, consumer products, technology and travel. Jo-Anne serves on the boards of Force Management and TruBlue Technologies. Her corporate career includes HR leadership roles with brand giants like American Express, Travelport, Cendant, PepsiCo, Clairol and the Chase Manhattan Bank. Jo-Anne also spent nearly six years as a small-business entrepreneur, building her own HR and talent development consulting firm, HC Partners, with a diverse client portfolio ranging from the Fortune 100 to technology start-ups. Jo-Anne received a Master of Arts in Organizational Psychology from Columbia University and a Bachelor of Science in Industrial and Labor Relations from Cornell University.

**Marc Schneider**, TZP Group Senior Advisor/Board Member. Marc Schneider is a veteran in retail and wholesale space with over 35 years of experience in building brands and global businesses. Mr. Schneider was most recently CEO of Kenneth Cole Productions. Prior to joining Kenneth Cole Productions, Inc., he was Group President of the Heritage Brands at PVH Corp. He is currently a Board Member at RG. Barry and the Saatva Company. He is a graduate of the University of Massachusetts Amherst with a B.B.A. in Business Administration & Management.

**Marc Beer,** Board Member. Marc Beer has served as the Non-executive Chairman of BioTE since July 2025 and was previously the Executive Chairman from May 2022 to July 2025 and chairman of the board of managers of Holdings from January 2021 to May 2022. Mr. Beer has also served as the chairman of the board of Origami Surgical LLC since April 2020 and as the chairman of the board of LumeNXT LLC since August 2018. Prior to that, Mr. Beer co-founded Renovia Inc. in August 2016, where he previously held the positions of chairman of the board and chief executive officer and continues to serve as a strategic advisor. Before starting Renovia Inc., Mr. Beer was the chairman of the board of Minerva Neurosciences, Inc. (Nasdaq: NERV) from December 2013 to January 2018.

**Item 6. Executive Compensation.**

*The following discussion and analysis of compensation arrangements should be read with the compensation tables and related disclosures set forth below. This discussion contains forward looking statements that are based on our current plans and expectations regarding future compensation programs. The actual compensation programs that we adopt may differ materially from the programs summarized in this discussion.*

This section describes the material elements of the compensation awarded to, earned by, or paid to our Chief Executive Officer, Sue Rechner, and our three most highly compensated executive officers (including our Chief Executive Officer), our former President & former Chief Financial Officer, David Barnhill who left in January 2025; Michael Pao, our Chief Product Officer, and Chief of Growth Rachel Wilkie as of December 31, 2025 and December 31<sup>,</sup> 2024

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and principal position** | **Year** | **Salary<br> ($)** | **Bonus<br> ($)** | **Stock awards<br> ($)** | **Option awards<br> ($)** | **Nonequity incentive plan<br> compensation<br> ($)** | **All other<br> compensation<br> ($)** | **Total<br> ($)** |
| Sue Rechner, Chief Executive Officer | 2025 | $360000 | $— | $– $|  | $– $– $| 14994 | $374994 |
|  | 2024 | $45000 | $— | $– $|  | $– $– $| 1133 | $36133 |
| Heidi Huntington Chief Financial Officer (1) | 2025 | $154583 | $— | $– $| 88705.82 | $– $– $| 3102 | $246391 |
| Michael Pao, Chief Product Officer | 2025 | $275000 | $— | $– $|  | $– $– $| 11399 | $286399 |
|  | 2024 | $275000 | $33660 | $– $|  | $– $– $| 19964 | $328624 |
| Rachel Wilkie, Chief Growth Officer (2) | 2025 | $80208 | $— | $– $| 87746 | $– $– $| 18 | $167972 |
| David Barnhill, Former President and Former Chief Financial Officer | 2025 | $23333 | $37692 | $– $|  | $– $– $| 1909 | $62935 |
|  | 2024 | $280000 | $68254 | $– $|  | $– $– $| 21407 | $369661 |
| Lena Phoenix Former Chief Executive Officer | 2025 | $150000 | $— | $– $|  | $– $– $| 11831 | $— |
|  | 2024 | $150000 | $801 | $– $|  | $– $– $| 4475 | $165277 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Ms.
 Huntington joined the Company in 2025.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Ms. Wilkie joined the Company in 2025.

We do not compensate our directors for attendance at meetings. We reimburse our officers and directors for reasonable expenses incurred during the course of the performance of their duties.

***Principal Elements of Compensation***

The compensation of the Company's executive officers comprises of the following major elements: (a) base salary; (b) an annual, discretionary cash bonus; and (c) long-term equity incentives, consisting of stock options, restricted stock awards, performance compensation awards and/or other applicable awards granted under the Company's equity incentive plan (the "2016 Stock Incentive Plan") and any other equity plan that may be approved by the Board from time to time. These principal elements of compensation are described below.

*Base Salaries*

Base salary is provided as a fixed source of compensation for our executive officers. Adjustments to base salaries will be reviewed annually and as warranted throughout the year to reflect promotions or other changes in the scope of breadth of an executive officer's role or responsibilities, as well as to maintain market competitiveness.

*Annual Bonuses*

Annual bonuses may be awarded based on qualitative and quantitative performance standards and will reward performance of our executive officers individually. The determination of an executive officer's performance may vary from year to year depending on economic conditions and conditions in the cannabis industry and may be based on measures such as stock price performance, the meeting of financial targets against budget, the meeting of acquisition objectives and balance sheet performance.

*2016 Stock Incentive Plan*

The 2016 Stock Incentive Plan provides continual motivation for our officers, employees, consultants and directors to achieve our business and financial objectives and align their interests with the long-term interests of our shareholders. The purpose of our 2016 Stock Incentive Plan is to promote greater alignment of interests between employees and shareholders, and to support the achievement of our longer-term performance objectives, while providing a long-term retention element. See "-- Stock Incentive Plan" below.

***Employment Agreement***

On November 25, 2024, the Company entered into an offer letter agreement with Sue Rechner pursuant to which Ms. Rechner serves as Chief Executive Officer, reporting to the Company's Board of Directors.

Under the terms of the agreement, Ms. Rechner receives a base salary at a rate of $30,000 per month. She is also eligible to participate in the Company's employee benefit plans, including health and welfare benefits and paid time off, subject to the terms and conditions of such plans, as may be amended from time to time.

Ms. Rechner's employment is at-will and may be terminated by either party at any time. The agreement includes customary provisions relating to duties, confidentiality, and compliance with Company policies, as well as a requirement that Ms. Rechner execute a proprietary information and inventions agreement. The Company has also agreed to indemnify Ms. Rechner in connection with certain claims arising from her prior employment under specified circumstances.

***Stock Incentive Plan***

In May 2016, the Company implemented the 2016 Stock Incentive Plan, which was approved by the Company's board and stockholders. The 2016 Stock Incentive Plan authorized the issuance of 818,181 shares of Class A Voting Common Stock. The Company's Board of Directors amended the 2016 Stock Incentive Plan to reduce the number of authorized options from 818,181 to 733,424 per the terms of the December 2, 2020, stock purchase and exchange agreement. The 2016 Stock Incentive Plan permits us to provide equity-based compensation in the form of stock options and restricted stock.

Shares Reserved for Issuance

A total of 733,424 shares of our common stock are reserved for issuance under the 2016 Stock Incentive Plan. The share reserve will be reduced by:

* one share for each share of common stock issued pursuant to stock options or stock appreciation
rights, and

* one share for each share of common stock issued pursuant to restricted stock, restricted stock
units or other stock awards.

The shares reserved for issuance may consist of authorized but unissued shares, treasury shares, or shares purchased on the open market. If an award expires, terminates or is forfeited without being exercised or settled in full, the underlying shares will again become available for issuance under the plan.

Administration

The 2016 Stock Incentive Plan is administered by our board of directors or a committee of the board, which we refer to as the plan administrator. Subject to the terms of the 2016 Stock Incentive Plan, the plan administrator has the authority to: (a) select participants who will receive awards; (b) determine the type and size of awards; (b) determine the terms and conditions of awards; (c) interpret the plan and award agreements; and (d) establish rules for the administration of the plan. The plan administrator's determinations are final and binding.

Eligibility

Participants eligible to receive awards under the 2016 Stock Incentive Plan include: employees, officers, directors, consultants and advisors.

Types of Awards

The 2016 Stock Incentive Plan permits the grant of the following types of equity awards:

Stock Options. The plan administrator may grant Incentive stock options ("ISOs") intended to qualify under Section 422 of the Internal Revenue Code. The exercise price of a stock option may not be less than 100% of the fair market value of our common stock on the grant date, except as permitted under applicable law. Stock options generally expire no later than ten years from the date of grant.

Restricted Stock. Restricted stock awards are grants of shares subject to forfeiture restrictions and vesting conditions determined by the plan administrator. Participants generally have the right to vote the shares and receive dividends, subject to the plan's terms.

Vesting

Awards granted under the 2016 Stock Incentive Plan may vest based on continued service, performance goals, or other criteria established by the plan administrator. The specific vesting schedule applicable to an award will be set forth in the applicable award agreement.

Term of Awards

Stock options granted under the 2016 Stock Incentive Plan generally may not have a term longer than ten years from the date of grant, subject to earlier termination upon termination of service.

Transferability

Awards granted under the 2016 Stock Incentive Plan are generally not transferable, except by will or the laws of descent and distribution, or as otherwise permitted by the plan administrator.

Adjustment Provisions

In the event of certain corporate transactions affecting our capitalization, including stock splits, stock dividends, recapitalizations, mergers or similar transactions, the plan administrator may make appropriate adjustments to:

* the number and type of shares available for issuance under the plan; and

* the number and exercise price of shares subject to outstanding awards.

Amendment and Termination

Our board of directors may amend, suspend or terminate the 2016 Stock Incentive Plan at any time, subject to stockholder approval where required by applicable law or stock exchange rules. No amendment may materially impair the rights of a participant with respect to an outstanding award without the participant's consent, unless otherwise permitted by the plan.

***Outstanding Equity Awards at Fiscal Year-End***

The following table sets forth information regarding the Company's 2016 Equity Compensation Plan.

---

| | | | |
|:---|:---|:---|:---|
| **Plan category** | **Number of<br> securities<br> to be issued<br> upon <br> exercise of<br> outstanding<br> options, <br> warrants<br> and rights** | **Weighted-<br> average<br> exercise<br> price of<br> outstanding<br> options, <br> warrants<br> and rights** | **Number of <br> securities<br> remaining <br> available for <br> future issuance <br> under equity <br> compensation <br> plans (excluding <br> securities <br> reflected in <br> column (a))** |
| Equity compensation plans approved by security holders | 242500 | $5.64 | 175924 |
| Equity compensation plans not approved by security holders |  | $— |  |
| Total | 242500 | $5.64 | 175924 |

---

***Long-Term Incentive Plans***

The Company maintains the Xero Shoes Second Amended and Restated Long-Term Incentive Plan (the "Incentive Plan"), which was adopted by the Company's Board of Directors on November 19, 2022. The Incentive Plan is designed to attract and retain employees and other service providers, align their interests with those of the Company's stockholders, and incentivize contributions to the Company's long-term performance and strategic objectives.

The Incentive Plan is administered by the Board of Directors or a designated committee or administrator, which has broad discretion to interpret the plan, determine eligibility, calculate awards, and make all determinations necessary for administration. Participation in the Incentive Plan is generally limited to employees who have completed at least 18 months of continuous service as of the date of a qualifying transaction. The Board may also designate non-employee directors, independent contractors, and other service providers as participants with respect to certain portions of the plan. Certain senior executives and founders are excluded from participation.

In the event of a qualifying liquidity event, including a sale of the Company, merger, or initial public offering, the Incentive Plan provides for the creation of an incentive award pool equal to approximately 5% of the net proceeds distributed to stockholders in connection with such transaction, subject to adjustment by the plan administrator.

The incentive award pool is divided into two components:

* **Base Portion (50%)**, which is allocated among eligible participants;
and

* **Supplemental Portion (50%)**, which is contingent upon the achievement
of specified investor return thresholds.

Awards under the Incentive Plan are generally determined promptly following a liquidity event and are payable within a specified period thereafter. Payments may be made in cash, equity securities, or a combination thereof, as determined by the plan administrator. Any equity delivered will be fully vested upon issuance.

Participants must generally remain employed or engaged through the date of the liquidity event to be eligible to receive an award. Individuals who terminate service prior to such event are not entitled to participate in the plan.

The Board retains the authority to amend, modify, or terminate the Incentive Plan at any time, subject to limitations on adversely affecting participant rights without consent. The Incentive Plan is filed as an exhibit to this Registration Statement.

***Compensation Committee***

We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

***Compensation of Directors***

For the years ended December 31, 2025 and 2024 no members of our board of directors received compensation in their capacity as directors.

**Item 7. Certain Relationships and Related Transactions, and Director Independence.**

The Company does not have a standing nominating or compensation committee. Our Board of Directors performs the functions of these committees. We do not believe that our Board of Directors needs to appoint such committees because the low volume of matters that come before our Board of Directors permits the directors to give sufficient time and attention to such matters. We are not required to have such committees since the Company's stock is not listed on a national securities exchange. The Company has an audit committee composed of 3 members, Marc Schneider, Perry Leon and Lena Phoenix.

***Director Independence***

As of the date of this Form 10, the Company has one independent director, Marc Beer, under the corporate governance rules of The Nasdaq Stock Market LLC (Nasdaq).

***Related Party Transactions***

<u>Equity Sale to TZP</u>

On March 21, 2025, the Board of Directors approved an equity financing and issued 500,000 shares of Senior Preferred Stock to TZP Group Investments, L.P. at a purchase price of $10.00 per share, including participation by an entity affiliated with directors Jo-Anne Kruse and Marc Schneider, who are affiliated with TZP Group Holdings, L.P. and its related entities; after considering the terms of the financing and the related party relationships involved, the Board determined that the transaction is fair and in the best interests of the Company and its stockholders and was conducted on terms consistent with those that would be expected in an arm's-length transaction.

<u>Management fees</u>

During each of the years ended December 31, 2025 and 2024, the Company paid $200,000 to TZP Group Investments Manager, LP for management fees. These expenses are included in other income (expense) on the Company's consolidated statements of operations. A copy of the Management Services Agreement with TZP is filed as an exhibit to this Form 10.

**Item 8. Legal Proceedings.**

The Company is, from time to time, involved in ordinary course commercial, accessibility, and marketing-related disputes and claims, including the website-accessibility and telemarketing demand letters and lawsuits, none of which, if resolved adversely, is currently expected based on the information available to management to have a material adverse effect on its business, financial condition or results of operations.

**Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters.**

***Market Information***

The Common Stock of the Company is not quoted on any national securities exchange, alternative trading system branded or over-the-counter market quotation system. Because the stock is not quoted, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

***Last Reported Price***

Not applicable.

***Holders***

 ****

As of March 31, 2026, there were 5,289,980 shares of Class A Voting Common Stock, which were held by approximately 23 stockholders of record and 175,707 shares of Non-Voting Class B Common Stock, which were held by approximately 1,076 stockholders of record. In addition, there were 3,681,234 shares of our Series A Preferred Stock outstanding, which shares were held by three (3) stockholders of record and there were 500,000 shares of our Senior Preferred Stock outstanding, which shares were held by one (1) stockholder of record.

**Dividends**

We have not declared or paid any cash dividends on our Common Stock and we currently intend to retain any future earnings to finance the operation and expansion of our business, and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Any future determination regarding the declaration and payment of dividends will be made at the discretion of our board of directors and will depend on a number of factors, including:

* our results of operations and financial condition;

* our capital requirements and growth plans;

* contractual restrictions, if any;

* restrictions imposed by applicable law; and

* other factors that our board of directors may deem relevant.

The holders of Series A Preferred Stock are entitled to dividend preferences over holders of Common Stock and to preferred dividends at a rate of 10% per annum of the original issue price ($12,500,000 as of December 31, 2025 and 2024), compounded annually. Accrued dividends are payable only when, as, and if declared by the Board of Directors. As of December 31, 2025 and 2024, accrued dividends of $7,791,322 and $5,957,474, respectively, and were outstanding but undeclared. The dividend rates are subject to dilution protections.

**Item 10. Recent Sales of Unregistered Securities.**

Since March 31, 2023, the Company has engaged in the following offerings of securities:

The Company completed a Senior Preferred Stock ("Senior Preferred") financing on March 21, 2025 (the "Financing") in which it issued 500,000 shares of non-convertible, non-voting Senior Preferred Stock for $5 million in a private placement pursuant to Rule 506(b) of Regulation D.

**Item 11. Description of Registrant's Securities to be Registered.**

We are registering on this Form 10 only our Class B Non-Voting Common Stock, the terms of which are described below. However, because our preferred stock will remain outstanding following the effectiveness of this Form 10, we also describe below the terms of our preferred stock to the extent such terms qualify the rights of our Class A Voting Common Stock and Class B Non-Voting Common Stock.

As of March 31, 2026, the Company's authorized capital stock consists of 20,000,000 shares of Common Stock, $0.0001 par value per share, and 4,181,234 shares of Preferred Stock, of which 3,681,234 shares are designated as "Series A Preferred Stock", and 500,000 shares that are designated "Senior Preferred Stock". The first series of Common Stock is designated "Class A Voting Common Stock" and consists of 19,824,168 shares, and the second series of Common Stock is designated "Class B Non-Voting Common Stock" and consists of 175,832 shares, all of which are outstanding as of the date hereof. As of March 31, 2026, there are 5,289,980 shares of Class A Voting Common Stock, 175,707 shares of Class B Non-Voting Common Stock, 3,681,234 shares of Series A Preferred Stock and 500,000 shares of Senior Preferred Stock outstanding.

**Common Stock**

***General***

The following description summarizes important terms of our capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of our Third Amended and Restated Certificate of Incorporation ("Certificate of Incorporation") and our Amended and Restated Bylaws ("Bylaws"), copies of which have been filed as Exhibits to this Form 10. Please review these documents for a complete description of our capital stock, as well as applicable provisions of the Delaware General Corporation Law.

***Voting Rights***

The holders of the Class A Voting Common Stock are entitled to one (1) vote for each share of Class A Voting Common Stock held at all meetings of stockholders (and written actions in lieu of meetings). Except as specifically required by the General Corporation Law, shares of Class B Non-Voting Common Stock shall not entitle the holders thereof to vote on any matter coming before the stockholders of the Company. To the extent the holders of Class B Non-Voting Common Stock are entitled to vote on a matter pursuant to the General Corporation Law, and except as otherwise provided in the Certificate of Incorporation or as required by law, the Class B Non-Voting Common Stock shall vote together with the Class A Voting Common Stock and not as a separate class, and may act by written consent in the same manner as the Class A Voting Common Stock.

Except as otherwise required by law, holders of Common Stock, shall not be entitled to vote on any amendment to the Company's Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Series A Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the then existing Certificate of Incorporation or pursuant to the General Corporation Law. There shall be no cumulative voting.

***Key Holder Protection Provisions***

 ****

Pursuant to the Amended and Restated Voting Agreement, dated March 21, 2025, among the Company, holders of the Series A Preferred Stock, holders of the Senior Preferred Stock and certain holders of Class A Common Stock (the "Voting Agreement", Key Holders (as defined below) of the Class A Voting Stock have certain protections. At any time when any shares of Class A Voting Common Stock are held by any Key Holder, the Company shall not take any of the following actions without the written approval of the Key Holders holding a majority of the shares of Class A Voting Common Stock:

&nbsp;&nbsp;&nbsp;&nbsp;· consummate a sale of the Company prior to March 21, 2027, where the Company
is generating revenue from operations sufficient to fund its expenses in the ordinary course of business, and that results in amounts
paid or payable to the holders of shares of the Company's Common Stock of less than or equal to fifteen million dollars ($15,000,000),
a "Common Approved Company Sale";

&nbsp;&nbsp;&nbsp;&nbsp;· change the composition of the Board or otherwise make any change to the
manner in which directors of the Company are appointed or elected;

&nbsp;&nbsp;&nbsp;&nbsp;· take any material change to the Company's Long-Term Incentive
 Plan, Quarterly Team Bonus Plan, or Employee Shoe Benefit
Plan, issue or sell any shares of any capital stock or other equity
 securities of the Company a principal purpose of which is to raise capital for the Company, (ii) sell any material assets outside of
 the Company's ordinary course of business, or (iii) sell or exclusively license any Company intellectual property outside of
 the Company's ordinary course of business, in each case, except to the extent that any such transaction would constitute a
 sale of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;· invest in or acquire (i) the stock or other equity interest of any entity,
other than a subsidiary or affiliate, or (ii) the assets of any entity, other than a subsidiary or other affiliate of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;· enter into or modify any transaction or arrangement with TZP Group Investments,
L.P., TZP Group Holdings, L.P. and/or any of their affiliates; provided, however, affiliates does not include portfolio companies that
TZP Group Investments, L.P. and/or TZP Group Holdings, L.P. do not control; or

&nbsp;&nbsp;&nbsp;&nbsp;· modify the rights of the Key Holders under the Voting Agreement or enter
into any transaction or take any action that would result in the termination of the rights of the Key Holders under the Voting Agreement.

A copy of the Voting Agreement has been filed as an exhibit to this Form 10.

 ****

***Right to Receive Liquidation Distributions***

In the event of our liquidation, dissolution, or winding up, after the payment of all of our debts and other liabilities and the satisfaction of the liquidation preferences granted to the holders of Preferred Stock, the holders of Common Stock and the holders of Preferred Stock (calculated on an as-converted to Common Stock basis) will be entitled to share ratably in the net assets legally available for distribution to stockholders.

***Dividend Rights***

Holders of Common Stock are entitled to receive dividends, as may be declared from time to time by the board of directors out of legally available funds, unless a dividend is paid with respect to all outstanding shares of Preferred Stock in an amount equal or greater than the amount those holders would receive on an as-converted basis to Common Stock. We have never declared or paid cash dividends on any of our capital stock and currently do not anticipate paying any cash dividends in the foreseeable future

 ****

***Other Rights and Preferences***

Holders of the Company's Common Stock have no preemptive, conversion, or other rights, and there are no redemptive or sinking fund provisions applicable to the Company's Common Stock. The holders of record of the shares of Class A Voting Common Stock, exclusively and as a separate class, are entitled to elect two (2) directors of the Company appointed by Lena Phoenix and Steven Sashen (including entities controlled by Mr. Sashen and Ms. Phoenix, respectively) as the holders of the Company's Class A Voting Common Stock (such Class A Voting Common Stock holders collectively, the "Key Holders").

**Preferred Stock**

We have authorized the issuance of 4,181,234 shares of Preferred Stock, of which 3,681,234 shares are designated as "Series A Preferred Stock", and 500,000 shares that are designated "Senior Preferred Stock". The Series A Preferred Stock and the Senior Preferred Stock enjoy substantially similar rights, preferences, and privileges.

***Conversion Rights***

Senior Preferred stockholders do not have any rights to convert the Senior Preferred Stock into shares of Class A Voting Common Stock or Class B Non-Voting Common Stock. Each share of Series A Preferred Stock is convertible, at the option of the holder thereof into shares of Class A Voting Common Stock as is determined by dividing the applicable original Issue price by the Conversion Price (initially be equal to $3.3956 but subject to adjustment) in effect at the time of conversion.

Additionally, each share of the Series A Preferred Stock will automatically convert into Class A Voting Common Stock upon either (a) (i) immediately prior to the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 where the per share offering price is at least $6.79 per share (as adjusted for recapitalization events) and the aggregate proceeds are greater than or equal to $30,000,000 and such Common Stock is listed for trading on the Nasdaq Stock Market's National Market, the New York Stock Exchange or another exchange or marketplace approved the Board of Directo, or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the Requisite Holders (as defined in the Certificate of Incorporation).

 ****

***Dividend Rights***

Holders of Preferred Stock are entitled to receive dividends, as may be declared from time to time by the board of directors out of legally available funds. Such dividends are non-cumulative and no right shall accrue to holders of Preferred Stock for undeclared dividends. Unpaid and undeclared dividends shall not bear or accrue interest. Holders of Preferred Stock are entitled to at least their share proportionally (calculated on an as-converted to Common Stock basis) in any dividends paid to the holders of Common Stock. We have never declared or paid cash dividends on any of our capital stock and currently do not anticipate paying any cash dividends in the foreseeable future.

***Series A Preferred Stock Dividend Rights***

From and after the date of the issuance of any shares of Series A Preferred Stock, dividends at the rate per annum of ten percent (10%) of the Applicable Original Issue Price (as defined in the Certificate of Incorporation) of such shares, plus the amount of all previously accrued dividends, compounded annually, shall accrue on each share of Series A Preferred Stock then outstanding (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock) (the "Accruing Dividends"). The Accruing Dividends shall accrue from day to day, whether or not declared; provided, however, that such Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors and the Company shall be under no obligation to pay such Accruing Dividends. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of Common Stock payable in shares of Common Stock) unless the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock as more fully set out in the Certificate of Incorporation.

***Voting Rights***

Holders of Series A Preferred Stock are entitled to vote on all matters submitted to a vote of the stockholders, including the election of directors, as a single class with the holders of Common Stock. Senior Preferred Stock shall not be entitled to vote on any matter coming before the stockholders of the Company.

**Series A Preferred Stock Protection Provisions**

Specific matters submitted to a vote of the stockholders require the approval of a majority of the holders of Series A Preferred Stock voting as if their shares had been converted into Common Stock. These matters include any vote to:

&nbsp;&nbsp;&nbsp;&nbsp;· liquidate, dissolve or wind-up the business and affairs of the Company,
effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;· amend, alter or repeal any provision of the Certificate of Incorporation
or Bylaws of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;· (i) create, or authorize the creation of, or issue or obligate itself to
issue shares of, or reclassify, any capital stock, or (ii) increase the authorized number of shares of Series A Preferred Stock or any
additional class or series of capital stock of the Company unless the same ranks junior to the Series A Preferred Stock with respect to
its rights, preferences and privileges;

&nbsp;&nbsp;&nbsp;&nbsp;· purchase or redeem (or permit any subsidiary to purchase or redeem) or pay
or declare any dividend or make any distribution on, any shares of capital stock of the Company subject to certain exceptions (as defined
in the Certificate of Incorporation).

&nbsp;&nbsp;&nbsp;&nbsp;· create, adopt, amend, terminate or repeal any equity (or equity-linked)
compensation plan

&nbsp;&nbsp;&nbsp;&nbsp;· create, or authorize the creation of, or issue, or authorize the issuance
of any debt security or create any lien or security interest (except in the ordinary course of business) or incur other indebtedness for
borrowed money, or permit any subsidiary to do the same; provided, however, such consent shall not be required for the Company to draw
upon any credit facility previously approved by the Board of Directors, including at least one Preferred Director;

&nbsp;&nbsp;&nbsp;&nbsp;· create, or hold capital stock in, any subsidiary that is not wholly owned
(either directly or through one (1) or more other subsidiaries) by the Company, or permit any subsidiary to create, or authorize the creation
of, or issue, any shares of any class or series of capital stock, or sell, transfer or otherwise dispose of any capital stock of any direct
or indirect subsidiary of the Company, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise
dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;· enter into, or amend, alter, supplement or terminate, any transaction or
commercial arrangement with any officer, director, employee, or stockholder of the Company or any of its subsidiaries, or any family member,
or affiliate of any such person or entity; or

&nbsp;&nbsp;&nbsp;&nbsp;· enter into, settle or otherwise engage and/or dispose of any litigation
involving, or with respect to, the Company and including a claim in excess of $100,000.

**Senior Preferred Stock Protection Provisions**

Specific matters submitted to a vote of the stockholders require the approval of a majority of the holders of Senior Preferred Stock, including to:

&nbsp;&nbsp;&nbsp;&nbsp;· amend, alter or repeal any provision of the Certificate of Incorporation
or Bylaws of the Company in a manner that adversely affects the special rights, powers and preferences of the Senior Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;· solely with respect to the special rights, powers and preferences specific
to the Senior Preferred Stock, amend, alter, repeal or waive such rights as set forth in the Certificate of Incorporation;

&nbsp;&nbsp;&nbsp;&nbsp;· or increase or decrease the authorized number of shares of Senior Preferred
Stock.

***Right to Receive Liquidation Distributions***

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Senior Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined in the Certificate of Incorporation), the holders of shares of Senior Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds (as defined in the Certificate of Incorporation), as applicable, before any payment shall be made to the holders of Series A Preferred Stock or Common Stock in an amount per share equal to two and a half times (2.5x) the Senior Original Issue Price, plus any dividends declared but unpaid thereon ("Senior Liquidation Amount").

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders after the payment in full of all Senior Liquidation Amounts required to be paid to the holders of shares of Senior Preferred Stock but before any distribution or payment shall be made to any holders of Common Stock.

***Drag Along Rights***

Holders of Preferred Stock are subject to a drag-along provision, pursuant to which each holder of Preferred Stock and each Key Holder agrees that, in the event that the Company's Board, the holders of a majority of the shares of Series A Preferred Stock or Class A Voting Common Stock issued upon conversion of the shares of Preferred Stock and the holders of a majority of the Company's Class A Voting Stock held by Key Holders, in the event of a common approved company sale (defined in the Amended and Restated Voting Agreement), vote in favor of a sale of the Company, then such holder of Series A Preferred Stock and the Key Holders will vote in favor of the transaction if such vote is solicited, refrain from exercising dissenters' rights with respect to such sale of the Company, and deliver any documentation or take other actions reasonably required. The drag-along provision is set forth in the Voting Agreement.

***Right of First Refusal, Participation and Tag Along Rights***

Pursuant to a Right of First Refusal and Co-Sale Agreement, dated December 2, 2020, as amended, among the Company, the investors in the Series A Preferred Stock and certain holders of the Class A Voting Common Stock (the "ROFR Agreement"), all holders of Senior Preferred Stock and Key Holders are entitled to tag along rights if any holders of Series A Preferred Stock propose to sell any of their respective holdings. Pursuant to an Investors' Rights Agreement dated December 2, 2020, as amended, among the Company, the investors in the Series A Preferred Stock and certain holders of the Class A Voting Common Stock, all holders of Senior Preferred Stock and Key Holders are entitled to participation rights in certain future offerings and registration rights. The holders of Preferred Stock and Key Holders have agreed to sign lock-up agreements in connection with a future IPO of the Company. The ROFR Agreement, Investors' Rights Agreement and the omnibus amendment to such agreements have been filed as exhibits to this Form 10.

***Other Rights and Preferences***

 ****

The holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect three (3) directors of the Company (the "Preferred Directors").

***"Make Whole" Provision***

The Voting Agreement contains a "Make Whole" provision providing that, if an acquisition of the Company (that is not a Common Approved Company Sale) is consummated, and such acquisition does not return to each Regulation A investor (who holds Company stock through the date of such acquisition) the full amount of such investor's capital invested in the Company's Regulation A financing ("Invested Capital"), the holders of the Company's Series A Preferred Stock, Senior Preferred, and the Key Holders shall share responsibility for returning to each such investor the full amount of such investor's Invested Capital (such amount as reduced by any amounts received by such investors in the acquisition itself) (such amount in aggregate, as reduced, the "Make Whole Amount").

The Make Whole provision is subject to certain qualifications and limitations, including the following:

* The holders of Series A Preferred Stock and Senior Preferred do not have
obligations with respect to the Make Whole provision unless and until such holders receive a full return of their own invested capital
in such acquisition (excluding any dividends or liquidation preference or other similar return multiplier).

* The Key Holders do not have obligations with respect to the Make Whole
provision unless and until such Key Holders receive sale proceeds in connection with such acquisition, in which case the Key Holders are
only obligated to contribute up to 50% of the Make Whole Amount.

* The Key Holders are not required to contribute to the Make Whole Amount
more than 50% of the amount that the Key Holders receive in such acquisition with respect to their shares of Class A Voting Common Stock.

**Item 12. Indemnification of Directors and Officers.**

Our Certificate of Incorporation and bylaws both provide for the indemnification of our officers and directors to the fullest extent permitted by the Delaware General Corporation Law. Our Certificate of Incorporation states that a director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. The Company is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents through bylaw provisions, agreements with agents, vote of stockholders or disinterested directors, or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the Delaware General Corporation Law.

The bylaws state that the Company shall, to the fullest extent permitted by the Delaware General Corporation Law, indemnify each of its directors and officers against expenses, liabilities and losses (including attorneys' fees judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement, reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Company.

The Company has entered into indemnification agreements with its directors. The indemnification agreements require the Company to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities and expenses incurred in connection with their service to the Company or at the Company's request for another entity. The agreements provide indemnification for expenses, judgments, fines, penalties and settlement amounts incurred in connection with actual or threatened civil, criminal, administrative, investigative or other proceedings arising by reason of the indemnitee's corporate status.

The indemnification agreements also require the Company to advance expenses incurred by an indemnitee in connection with covered proceedings, subject to receipt of an undertaking to repay such amounts if it is ultimately determined that the indemnitee is not entitled to indemnification. In addition, the agreements provide that, where an indemnitee is successful in defense of a proceeding or claim, the indemnitee is entitled to mandatory indemnification of expenses incurred in connection with such matter.

The agreements establish procedures for determining entitlement to indemnification and create certain presumptions in favor of the indemnitee, including presumptions that the indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company. The agreements also provide certain rights to seek judicial enforcement of indemnification and advancement rights.

The indemnification agreements are not exclusive of other rights to which directors may be entitled under the Company's certificate of incorporation, bylaws, the Delaware General Corporation Law or otherwise. The agreements also provide that the Company will maintain directors' and officers' liability insurance, if available on commercially reasonable terms.

The indemnification agreements generally continue for a specified period after the indemnitee ceases to serve the Company and apply to proceedings arising out of acts or omissions occurring during the indemnitee's service. The agreements contain customary exceptions to indemnification, including claims for which payment has been made under insurance policies or other indemnification arrangements, claims relating to short-swing profit recovery under Section 16(b) of the Exchange Act, and certain proceedings initiated by the indemnitee without authorization

**Item 13. Financial Statements and Supplementary Data.**

The financial statements of the Company appear at the end of this report beginning on page F-1.

**Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.**

Not applicable.

**Item 15. Financial Statements and Exhibits**.

(a) Financial Statements.

Our audited consolidated financial statements for the years ended December 31, 2025 and 2024 appear at the end of this Registration Statement on pages F-1 though F-25

(b) Exhibits

The documents listed in the Exhibit Index of this Registration Statement are incorporated by reference or are filed with this Registration, in each case as indicated below.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit No.** | <br>**Exhibit Description** | **Form** | **Date Filed** | **Number** |
| 3.1 | [Third Amended and Restated Certificate of Incorporation](https://www.sec.gov/Archives/edgar/data/1690455/000107997320001056/ex2x1.htm) | 1-U/A | 4/14/2025 | 3.1 |
| 3.2 | [Second Amended and Restated Bylaws](https://www.sec.gov/Archives/edgar/data/1690455/000107997320001056/ex2x2.htm) | 1-U | 12/8/2020 | 2.2 |
| 4.1 | [Investors' Rights Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000107997320001056/ex3x2.htm) | 1-U | 12/8/2020 | 3.2 |
| 4.2 | [Amended and Restated Voting Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000107997325000626/ex1x2.htm) | 1-U/A | 4/14/2025 | 1.2 |
| 4.3 | [Right of First Refusal and Co-Sale Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000107997320001056/ex3x4.htm) | 1-U | 12/8/2020 | 3.4 |
| 4.4 | [Management Rights Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000107997320001056/ex3x5.htm) | 1-U | 12/8/2020 | 3.5 |
| 4.5 | [Omnibus Amendment Agreement to Investors' Rights Agreement and Right of First Refusal and Co-Sale Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000107997325000626/ex1x3.htm) | 1-U/A | 4/14/2025 | 1.3 |
| 10.1 | [2016 Stock Incentive Plan](https://www.sec.gov/Archives/edgar/data/1690455/000106299317000432/exhibit5.htm) | 1-A | 1/30/2017 | 5 |
| 10.2 | [Fulfillment Services Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000169045517000005/fivelogistics.htm) | 1-U | 5/18/2017 | 1.1 |
| 10.3 | [Management Services Agreement](https://www.sec.gov/Archives/edgar/data/1690455/000107997320001056/ex6x1.htm) | 1-U | 12/8/2020 | 6.1 |
| 10.4 | [Form of Indemnification Agreement](ex10x4.htm) |  |  | Filed |
| 10.5+\* | Employment Agreement of Sue Rechner |  |  |  |
| 10.6 | [Second Amended and Restated Long-Term Incentive Plan](ex10x6.htm) |  |  | Filed |
| 21.1 | [Subsidiaries of the Company](ex21x1.htm) |  |  | Filed |

---

+ Management contract or compensatory plan or arrangement.

\* To be filed by amendment.

**SIGNATURES**

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **FEEL THE WORLD, INC.** | **FEEL THE WORLD, INC.** |
| Date: May 14, 2026 | By: | /s/ Sue Rechner |
|  |  | Sue Rechner<br>CEO |

---

**Index to Consolidated Financial Statements**

**Feel The World, Inc.**

**D.B.A. Xero Shoes**

**Consolidated Financial Statements**

---

| | |
|:---|:---|
|  | **Page<br> Number** |
| [Report of Independent Registered Accounting Firm](#a_017) (PCAOB ID Number 7403) | F-2 |
| [Consolidated balance sheets as of December 31, 2025 and 2024](#a_018) | F-3 |
| [Consolidated statements of operations and comprehensive income/(loss) for the years ended December 31, 2025 and 2024](#a_019) | F-4 |
| [Consolidated statements of changes in stockholders' equity for the years ended December 31, 2025 and 2024](#a_020) | F-5 |
| [Consolidated statements of cash flows for the years ended December 31, 2025 and 2024](#a_021) | F-6 |
| [Notes to consolidated financial statements](#a_022) | F-7 |

---

<br> ![](image_001.jpg)

To the Board of Directors of

Feel The World, Inc.

Broomfield, CO

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Opinion on the Financial Statements**

We have audited the accompanying consolidated financial statements of Feel The World, Inc. and subsidiaries (collectively, the "Company") which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income/(loss), changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024 and the results of its consolidated operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

**/s/ Artesian CPA, LLC**

Denver, Colorado

May 14, 2026

We have served as the Company's auditor since 2016.

**Artesian CPA, LLC**

1312 17th Street, #462 \| Denver, CO 80202

p: 877.968.3330 f: 720.634.0905

info@ArtesianCPA.com \| www.ArtesianCPA.com

 **FEEL THE WORLD, INC.**

**CONSOLIDATED BALANCE SHEETS**

**As of December 31, 2025 and 2024**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
| ASSETS | **2025** | **2024** |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | $10134276 | $1982681 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 2561561 | 3915432 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | 15423514 | 15809733 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory in transit | 6908124 | 6859307 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable | 858965 | 1474659 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 411932 | 202510 |
| Total current assets | 36298372 | 30244322 |
| Property and equipment, net | 1012288 | 1163990 |
| Intangible assets, net | 1103074 | 784084 |
| Deposits | 118770 | 88548 |
| Deferred tax assets | 1239485 | 994828 |
| Operating lease right-of-use assets | 2193211 | 3006022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $41965200 | $36281794 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | $14584878 | $10120255 |
| &nbsp;&nbsp;&nbsp;&nbsp;Customer deposits | 433234 | 63113 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 46607 | 226033 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax liability |  | 62550 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability, current portion | 807749 | 735521 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lines of credit, current portion | 4000000 | 1300000 |
| Total current liabilities | 19872468 | 12507472 |
| Long-term liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lines of credit |  | 4000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability, net current portion | 1599553 | 2459554 |
| Total long-term liabilities | 1599553 | 6459554 |
| Total liabilities | 21472021 | 18967026 |
| Commitments and contingencies |  |  |
| Series A Preferred stock, $0.0001 par, 3,681,234 shares authorized, issued and outstanding, liquidation preferences of $20,291,321 and $18,457,474 as of December 31, 2025 and 2024, respectively | 368 | 368 |
| Stockholders' equity: |  |  |
| Senior Preferred Stock, $0.0001 par, 500,000 shares authorized, 500,000 and 0 shares issued and outstanding, liquidation preference of $12,500,000 and $0 as of December 31, 2025 and 2024, each respectively | 50 |  |
| Class A common stock, $0.0001 par, 19,824,168 shares authorized, 5,289,980 shares issued and outstanding as of December 31, 2025 and 2024 | 529 | 529 |
| Class B common stock, $0.0001 par, 175,832 shares authorized, 175,707 shares issued and outstanding as of December 31, 2025 and 2024 | 18 | 18 |
| Additional paid-in capital | 13505912 | 8602715 |
| Treasury stock | (4424) | (4424) |
| Retained earnings | 7387469 | 9759377 |
| Accumulated other comprehensive income/(loss) | (396743) | (1043815) |
| Total stockholders' equity | 20493179 | 17314768 |
| Total liabilities and stockholders' equity | $41965200 | $36281794 |

---

*See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.* 

**FEEL THE WORLD, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

**For the years ended December 31, 2025 and 2024**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended**<br> **December 31,** | **For the Years Ended**<br> **December 31,** |
|  | **2025** | **2024** |
| Revenues, net | $64688005 | $67623883 |
| Cost of revenue - product costs | (26435483) | (23305460) |
| Cost of revenue - fulfillment costs | (8910540) | (10968491) |
| Gross profit | 29341982 | 33349932 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 5734737 | 10150535 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 17823520 | 17058557 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 1754907 | 1699675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operations | 4577196 | 4463067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 29890360 | 33371834 |
| Loss from operations | (548378) | (21902) |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income |  | 868 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (413409) | (552612) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on settlement | (713279) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense | (308855) | (368374) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense) | (1435543) | (920118) |
| Net loss before income taxes | (1983921) | (942019) |
| Provision for (benefit from) income taxes | 387987 | (178182) |
| Net loss | $(2371908) | $(763837) |
| Other comprehensive income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation gain (loss) | 647072 | (768344) |
| Total comprehensive loss | $(1724836) | $(1532181) |
| Weighted average common shares outstanding, basic and diluted | 5465687 | 5465687 |
| Net loss per share, basic and diluted | $(0.43) | $(0.14) |

---

*See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.*

 

**FEEL THE WORLD, INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

**For the years ended December 31, 2025 and 2024**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Temporary Equity** | **Stockholders' Equity** | **Stockholders' Equity** | **Stockholders' Equity** | **Stockholders' Equity** | **Stockholders' Equity** | **Stockholders' Equity** | **Stockholders' Equity** | **Stockholders' Equity** |
|  | **Series A Preferred Stock** | **Senior Preferred Stock** | **Class A Common**<br> **Stock** | **Class B Common Stock** | **Treasury**<br> **Stock** | **Additional paid-in capital** | **Accumulated Other Comprehensive Income (Loss)** | **Retained Earnings** | **Total Stockholders' Equity** |
|  | **Shares** | $**Shares** | $**Shares** | $**Shares** | $**Shares** |  |  |  |  |
| Balances, December 31, 2023 | 3681234 |  | 5289980 | 175707 | 1125) | $8458844 | $(275471) | $10523214 | $18703078 |
| Stock compensation |  |  |  |  |  | 143871 |  |  | 143871 |
| Other comprehensive loss |  |  |  |  |  |  | (768344) |  | (768344) |
| Net loss |  |  |  |  |  |  |  | (763837) | (763837) |
| Balances, December 31, 2024 | 3681234 |  | 5289980 | 175707 | 1125) | $8602715 | $(1043815) | $9759377 | 17314768 |
| Shares issued for senior preferred stock sale, net of offering costs |  | 500000 |  |  |  | 4859917 |  |  | 4859967 |
| Stock compensation |  |  |  |  |  | 43280 |  |  | 43280 |
| Other comprehensive income |  |  |  |  |  |  | 647072 |  | 647072 |
| Net loss |  |  |  |  |  |  |  | (2371908) | (2371908) |
| Ending balance, December 31, 2025 | 3681234 | 500000 | 5289980 | 175707 | 1125) | $13505912 | $(396743) | $7387469 | $20493179 |

---

 

 

*See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.*

 

**FEEL THE WORLD, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the years ended December 31, 2025 and 2024**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Cash flows from operating activities: |  |  |
| Net loss | $(2371908) | $(763837) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;Amortization of loan fees |  | 43094 |
| &nbsp;&nbsp;Depreciation and amortization | 485530 | 526036 |
| &nbsp;&nbsp;Inventory adjustments | 414 | 288515 |
| &nbsp;&nbsp;Deferred taxes | (244657) | (508206) |
| &nbsp;&nbsp;Stock based compensation | 43280 | 143871 |
| &nbsp;&nbsp;Write-off of unrecoverable cash | 406719 |  |
| &nbsp;&nbsp;Credit loss expense | 59350 | 279394 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;Accounts receivable | 887802 | (1080023) |
| &nbsp;&nbsp;Prepaid expenses | (244422) | (29687) |
| &nbsp;&nbsp;Income tax receivable | 958316 | (935307) |
| &nbsp;&nbsp;Deposits | (30222) | 3867 |
| &nbsp;&nbsp;Inventory | 385805 | 34857 |
| &nbsp;&nbsp;Inventory in transit | (48817) | (4133193) |
| &nbsp;&nbsp;Operating lease right-of use asset | 812811 | 602821 |
| &nbsp;&nbsp;Accounts payable and accrued expenses | 4464623 | 4165186 |
| &nbsp;&nbsp;Income tax payable | (405172) | 62550 |
| &nbsp;&nbsp;Customer deposits | 370121 | (18108) |
| &nbsp;&nbsp;Operating lease liability | (787773) | (620118) |
| &nbsp;&nbsp;Deferred revenue | (179426) | (102363) |
| Net cash provided by (used in) operating activities | 4562374 | (2040651) |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;Additions to intangible assets | (345272) | (226340) |
| &nbsp;&nbsp;Purchase of property and equipment, net | (272546) | (355572) |
| Net cash used in investing activities: | (617818) | (581912) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;Repayments on term loans |  | (325000) |
| &nbsp;&nbsp;Repayments on lines of credit | (1300000) |  |
| &nbsp;&nbsp;Proceeds from the sale of senior preferred stock, net | 4859967 |  |
| Net cash provided by (used in) financing activities | 3559967 | (325000) |
| Effect of foreign currency translation | 647072 | (768344) |
| Net increase (decrease) in cash | 8151595 | (3715908) |
| Cash, beginning of year | 1982681 | 5698589 |
| Cash, end of year | $10134276 | $1982681 |
| Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;Cash paid for interest | $451193 | $509518 |
| &nbsp;&nbsp;Cash paid for income taxes | $14422 | $1081411 |

---

*See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.*

 

 

**FEEL THE WORLD, INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**As of December 31, 2025 and 2024 and for the years then ended**

**NOTE 1: DESCRIPTION OF BUSINESS**

<u>Nature of Business</u>

Feel The World, Inc. (the "Company"), is a corporation organized on December 17, 2010, under the laws of Delaware. The Company sells footwear to retailers, distributors, and direct to consumers. Feel the World EU B.V., a private limited liability company formed under the laws of the Netherlands on September 5, 2019, is a wholly owned subsidiary of the Company. Xero Shoes EU s.r.o., a private limited liability company formed under the laws of the Czech Republic on July 15, 2021, is a wholly owned subsidiary of Feel the World EU B.V. Feel the World UK Ltd. is a private limited liability company formed on September 7, 2023 under the law of the United Kingdom. Feel The World, Inc. and its subsidiaries are collectively referred to as the "Company", "we", "our", and "us" in this report.

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

<u>Basis of Presentation and Basis of Consolidation</u>

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP").

The Company adopted the calendar year as its basis of reporting.

The Company prepares consolidated financial statements in accordance with GAAP. These consolidated financial statements include all accounts of Feel the World, Inc., along with its fully owned subsidiaries, Feel the World EU B.V, Feel the World U.K, and Xero Shoes EU s.r.o. All transactions and balances between and among the aforementioned companies have been eliminated in consolidating the accounts for consolidated financial statement presentation. The accounting and reporting policies of the Company conform to GAAP.

<u>Foreign Currency</u>

The consolidated financial statements are presented in United States Dollars, ("USD"), which is the reporting currency and the functional currency of the Company's U.S. operations. The functional currency of the subsidiaries is their local currency. In accordance with ASC 830, Foreign Currency Matters, foreign denominated monetary assets and liabilities are translated to their USD equivalents using foreign exchange rates which prevailed at the consolidated balance sheet date. Non-monetary assets and liabilities are translated at the exchange rate prevailing at the transaction date. Revenue and expenses were translated at the prevailing rate of exchange at the date of the transaction. When it is impractical to track the exchange rates at the date of transactions, weighted average rates were applied as permitted by Topic 830. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included other income/(expense) on the consolidated statements of operations and comprehensive income/(loss) . For the year ended December 31, 2025, the foreign currency translation gain was $647,072. For the year ended December 31, 2024, the foreign currency translation loss was $768,344.

<u>Cash Equivalents and Concentration of Cash Balance</u>

The Company's cash and cash equivalents in bank deposit accounts, at times, may exceed insured limits provided by the Federal Deposit Insurance Corporation ("FDIC") and its international equivalents. On December 31, 2025 and 2024, the Company's cash balances exceeded such insured limits by $9,768,831 and $1,544,443, respectively. The Company has not experienced any losses as a result of these excess amounts.

<u>Accounts Receivable and Allowance for Credit Losses</u>

Accounts receivable are comprised of amounts billed and currently due from customers. Accounts receivable are amounts related to any unconditional right the Company has for receiving consideration and are presented as accounts receivable in the consolidated balance sheets. The Company maintains an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments. The Company employs the practical expedient to estimate expected credit losses for current accounts receivable by utilizing subsequent cash collections. The evaluation of subsequent cash collections was performed through May 8, 2026, for the annual reporting period ended December 31, 2025.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** |
| Beginning balance | $3915432 | $3114803 |
| Revenues, net | 64688005 | 67623883 |
| Collections, net | (65972892) | (66763712) |
| Ending Balance | 2630545 | 3974974 |
| Allowances | (68984) | (59542) |
| Accounts Receivable, Net | $2561561 | $3915432 |

---

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current industry trends, changes in customer payment terms, and specific customer situations. The Company's normal collection cycle ranges between 30 and 60 days. Estimated uncollectible amounts are charged to earnings and a credit to allowance. Balances which remain outstanding after reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable. The Company recorded an allowance for credit losses of $68,984 and $59,542 as of December 31, 2025 and 2024, respectively.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** |
| Beginning Balance | $59542 | $— |
| Provision for credit losses | 68792 | 338936 |
| Recoveries |  |  |
| Write-offs | (59350) | (279394) |
| Ending Balance | $68984 | $59542 |

---

<u>Inventory Assets</u>

Inventory is stated at the lower of cost or market and accounted for using the weighted average cost method. The inventory balances as of December 31, 2025 and 2024 consist of products purchased for resale and any materials the Company purchased to modify the products. The Company operates a warehouse to process sales, returns and exchanges in the United States and maintains agreements with third-party logistics providers in the Czech Republic, United Kingdom and the People's Republic of China. The inventory held in the warehouses is finished goods available for resale. The Company regularly evaluates inventory for possible impairment and estimate inventory market value based on several subjective assumptions including estimated future demand and market conditions, as well as other observable factors such as current sell-through of the Company's products, recent changes in product demand, global and regional economic conditions, historical experience selling through liquidation and price discounted channels, and the amount of inventory on hand. If the estimated inventory market value is less than the carrying value, the carrying value is adjusted to market value and the resulting impairment charge is recorded in cost of goods sold in the consolidated statements of operations and comprehensive income/(loss). The Company wrote off inventory worth $414 and $288,515 for the years ended December 31, 2025 and 2024, respectively. The write-off amount for both years includes inventory impairment, loss, disposal for damaged inventory due to returns or quality control issues. Some of these shoes were destroyed, and the majority were donated to charity. Once an inventory write-down is recorded, it is not reversed even if the net realizable value subsequently increases.

<u>Inventory in Transit</u>

Inventory in transit includes products manufactured for sale that have been shipped by the suppliers but have not yet been received at our warehouses.

<u>Property and Equipment</u>

Property and equipment are recorded at cost. Depreciation is recorded for property and equipment using the straight-line method over the estimated useful lives of assets. The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. Depreciation for footwear molds and lasts of $299,504 and $370,467 are included in cost of revenue for the years ended December 31, 2025 and 2024, respectively. The balances as of December 31, 2025 and 2024 mainly consist of footwear manufacturing assets and equipment assets with 3-10 year lives.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

Capital assets and depreciation expense as of December 31, 2025 and 2024(full year depreciation) are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Footwear molds | $2493312 | $2289057 |
| Footwear lasts | 21840 | 21840 |
| Furniture and equipment | 826400 | 767000 |
| Trade show booth | 37066 | 29755 |
| Website | 30000 | 30000 |
| Leasehold improvements | 158768 | 158768 |
|  | 3567386 | 3296420 |
| Accumulated depreciation | (2555098) | (2132431) |
| Property and equipment, net | $1012288 | $1163990 |
| Depreciation expense | $424248 | $498197 |

---

<u>Leases and Leasehold Improvements</u>

We determine if an arrangement is, or contains, a lease at inception of the contract. As a lessee, we consider a contract to be, or contain, a lease if the contract conveys the right to control the use of an identified asset in exchange for consideration. We recognize in the consolidated balance sheets the obligation to make lease payments and a right-of-use ("ROU") asset representing our right to use the underlying asset for the lease term. As an accounting policy election, we do not record leases with an initial term of 12 months or less on the consolidated balance sheets, instead we recognize lease expense for these leases on a straight-line basis over the lease term. Additionally, we elected the practical expedients made available under the updates as our accounting policy to not separate lease and non-lease components by class of underlying asset. For leases that commenced before January 1, 2023, we have applied the modified retrospective transition method which resulted in comparative information not being restated. The new lease accounting standard, ASC Topic 842, Leases, provides several optional practical expedients for transition. We elected the package of practical expedients, which permits us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs.

Right-of-use assets and liabilities are initially measured at the present value of lease payments over the lease term, discounted using the interest rate implicit in the lease at the commencement date. ROU assets are adjusted for any lease payments made prior to lease commencement, lease incentives, and accrued rent. If the rate implicit in the lease cannot be readily determined, we discount the lease using our incremental borrowing rates. Our leases may include options to extend or terminate the lease. When it is reasonably certain that we will exercise such an option, the lease term includes those periods. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable costs, such as maintenance expenses, property taxes, property insurance, transaction-based lease payments and index-based rate increases, are expensed as incurred. Right-of-use assets are reviewed for impairment when events or circumstances indicate that the carrying amount may not be recoverable. For operating leases, if deemed impaired, the ROU asset is written down and the remaining balance is subsequently amortized on a straight-line basis.

Any leasehold improvements made by the Company to the underlying assets for the need of our operations are capitalized and recognized separately from the ROU assets. The leasehold improvements are subsequently amortized over the shorter of the useful life of leasehold improvements or the remaining lease term.

<u>Intangible Assets and Impairment of Long-Lived Assets</u>

There are numerous patents and trademarks important to the Company's business. Most of our trademarks are registered. As long as the Company intends to continue using its trademarks, they are renewed indefinitely. The Company files for and actively defends its patents. Patents are amortized over a 20-year useful life with patent amortization expense of $48,186 and $27,839 for the years ended December 31, 2025 and 2024, respectively. Internal-use software is amortized over a 3-5 year useful life with amortization expense of $13,096 and $0 for the years ended December 31, 2025 and 2024, respectively.

The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of an asset is less than its carrying amount, then the Company records impairment of the asset.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

<u>Fair Value of Financial Instruments</u>

Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, management considers the principal or most advantageous market in which it would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

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

· Level 2 - Observable inputs other than quoted prices in active markets for
identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3 - Inputs that are generally unobservable and typically reflect management's
estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amounts reported in the consolidated balance sheets approximate their fair value.

<u>Concentration of Credit and Other Risks</u>

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company's evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. The Company performs ongoing internal credit evaluations of its customers' financial condition, obtains deposits and limits the amount of credit extended when deemed necessary but generally requires no collateral.

Significant customers are those which represent more than 10% of the Company's revenue for each period presented, or the Company's accounts receivable balance as of each respective consolidated balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Revenue<br> For the years ended<br> December 31,** | **Revenue<br> For the years ended<br> December 31,** | **<br> Accounts Receivable<br> December 31,** | **<br> Accounts Receivable<br> December 31,** |
| **<br>** <br>**Customers** | **2025** | **2024** | **2025** | **2024** |
| Customer A | 10% | —% | 37% | 3% |
| Customer B | 5% | 6% | 25% | 24% |
| Customer C | 2% | 16% | —% | 8% |

---

<u>Accounts Payable</u>

Any contractual obligations for payments stemming from goods and services delivered by our suppliers and vendors are recognized in the reporting periods when costs and expenses are incurred but no payment arrangements have been made.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

<u>Customer Deposits</u>

At the time an order is placed, some international distributors pay a portion of their order or full amount based on the payment terms and conditions stipulated in their contracts with the Company. In accordance with revenue recognition policies (see below), these amounts are recorded as a liability until all revenue recognition conditions have been met.

<u>Contract Balances</u>

Contract assets arise when the revenue associated prior to the Company's unconditional right to receive a payment under a contract with a customer (*i.e*., unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received. There were no contract assets as of December 31, 2025 and 2024.

Contract liabilities arise when customers remit cash payments for orders in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied through the shipment of customer orders. Contract liabilities are almost exclusively related to remittances of online direct to consumer product sales and are typically satisfied within one week of occurrence. Contract liabilities were $46,607 and $226,033 as of December 31, 2025 and 2024, respectively. All revenue associated with contract liabilities as of December 31, 2024 were recognized during 2025.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** |
| Beginning Balance | $226033 | $328396 |
| Prior year contract liabilities recognized as revenue in current year | (226033) | (328396) |
| Cash received in advance of performance | 46607 | 226033 |
| Other significant changes |  |  |
| Ending Balance | $46607 | $226033 |

---

<u>Revenue Recognition</u>

The Company recognizes revenue in accordance with ASC 606 when shipment of goods to its customers has occurred satisfying its performance obligations, acceptance has been approved by its customers, the fee is fixed or determinable, and collection of any related receivable is probable. ASC Topic 606, Revenue from Contracts with Customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.

Sales tax is collected on sales in all states with a sales tax and the District of Columbia. These taxes are recorded as a liability until remittance. Liabilities are recorded for store credit issued to customers.

The Company generates revenues in two business segments: (1) the North American operations which includes all foreign distributors outside of Europe, and (2) European operations which includes the European Union countries and the Middle Eastern wholesale accounts. The Company primarily sells through three channels: direct-to-consumer, third-party platforms such as Amazon, and wholesale/distribution.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

The following tables present the Company's revenues disaggregated by reportable operating segments and distribution channel:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
| **Net revenue by geography:** | **2025** | **2024** |
| North America | $50173497 | $54487979 |
| Europe | 14514508 | 13135904 |
| Total | $64688005 | $67623883 |
| **Net revenue by channel:** | **2025** | **2024** |
| Direct-to-consumer | $41833872 | $44818883 |
| Wholesale/Distributor | 15829923 | 15063540 |
| Amazon | 7024210 | 7741460 |
| Total | $64688005 | $67623883 |
| **Product sales** | **2025** | **2024** |
| Gross product sales | $72965125 | $75828688 |
| &nbsp;&nbsp;&nbsp;&nbsp;Returns, allowances and chargebacks | (8186705) | (9756215) |
| &nbsp;&nbsp;&nbsp;&nbsp;Discounts | (1785921) | (1847877) |
| Net product sales | 62992499 | 64224596 |
| Shipping revenue | 1695506 | 3399287 |
| Total | $64688005 | $67623883 |

---

The Company records an accrual for estimated product returns and warranty claims at the time revenue is recognized, in accordance with its returns and warranty policies. The accrual is based on historical experience, current trends, and management's judgment. Historically, this allowance has ranged between approximately 12% and 15% of gross revenue. The allowance is reviewed monthly and adjusted as necessary to reflect management's best estimate of future returns and warranty obligations.

<u>Merchant Account Fees</u>

The Company includes credit card merchant account fees as cost of goods sold in the consolidated statements of operations and comprehensive income/(loss). For the years ended December 31, 2025 and 2024, the Company had merchant account fees of $1,318,257 and $1,431,235, respectively.

<u>Shipping and Handling Costs and Fees</u>

Shipping and handling costs are expensed as incurred and are included in cost of goods sold in the consolidated statements of operations and comprehensive income/(loss). Shipping and handling fees billed to customers are included in revenues.

<u>Advertising</u>

Advertising costs are expensed as incurred.

<u>Research and Development</u>

Research and development costs are expensed as incurred.

<u>Income Taxes</u>

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "*Income Taxes*." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025 and 2024, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets.

ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.

<u>Stock-Based Compensation</u>

The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.

The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award.

Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company's common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company's common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the requisite service period. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted in the period of change and recorded on the consolidated statements of operations and the remaining unrecognized stock-based compensation is recorded over the remaining requisite service period. Refer to Note 8.

<u>Loss Per Share</u>

The Company computes earnings (loss) per share in accordance with ASC 260, "*Earnings per Share*" which requires presentation of both basic and diluted earnings (loss) per share ("EPS") on the face of the consolidated statements of operations and comprehensive income/(loss). Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2025 and 2024, the Company had 242,500 and 326,657, respectively, common stock equivalents outstanding.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

<u>Indemnification</u>

The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company's software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its consolidated financial statements.

As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company's request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors' and officers' liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention.

<u>Contingencies</u>

The Company records a liability when the Company believes that it is both probable that a loss has been incurred, and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount.

Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period.

<u>Use of Estimates</u>

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to the allowance for credit losses, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Actual results could differ materially from those estimates

<u>Recently Issued Accounting Pronouncements</u>

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

In November 2023, the FASB issued ASU 2023-07, "*Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to enhance the reportable segment disclosures"*. The guidance requires additional disclosures about significant segment expenses. The guidance is effective for the public companies with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted. The adoption did not have an impact on its consolidated financial statements.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

In July 2025, the FASB issued ASU 2025-05, "*Financial Instruments—Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets*" ("ASU 2025-05"). The amendments in this update provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under FASB ASC 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient. ASU 2025-05 is effective for annual periods, including interim reporting periods within annual reporting periods, beginning after December 15, 2025 with early adoption permitted. The Company has chosen to adopt this standard as of December 31, 2025. The adoption did not have an impact on its consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, "*Compensation - Stock Compensation (Topic 718): Scope application for profits interest and similar awards*" ("ASU 2024-01"). This update adds an illustrative example to demonstrate how an entity should apply the scope guidance to determine whether profits interest and similar awards ("profits interest awards") should be accounted for in accordance with Topic 718. ASU 2024-01 is effective for fiscal years beginning after December 15, 2025 or the interim period in which the Company loses emerging growth company status. Early adoption is permitted. ASU 2024-01 should be applied retrospectively to all prior periods presented in the financial statements or prospectively. The Company has chosen to adopt this standard for the year ended December 31, 2025. The adoption did not have an impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "*Income Taxes (Topic 740): Improvements to Income Tax Disclosures*", which focuses on the rate reconciliation and income taxes paid. This ASU requires disclosure, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, the ASU requires disclosure of income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The ASU is effective for public business entities for annual periods beginning after December 15, 2024 and effective for all other business entities one year later. Entities should adopt this guidance on a prospective basis, though retrospective application is permitted. The Company has elected to adopt this standard for the year ended December 31, 2025. The adoption did not have an impact on its consolidated financial statements.

**NOTE 3: RELATED PARTY TRANSACTIONS**

<u>Equity Sale to TZP</u>

On March 21, 2025, the Board of Directors approved an equity financing and issued 500,000 shares of Senior Preferred Stock to TZP Group Investments, L.P. at a purchase price of $10.00 per share, including participation by an entity affiliated with directors Jo-Anne Kruse and Marc Schneider, who are affiliated with TZP Group Holdings, L.P. and its related entities; after considering the terms of the financing and the related party relationships involved, the Board determined that the transaction is fair and in the best interests of the Company and its stockholders and was conducted on terms consistent with those that would be expected in an arm's-length transaction.

<u>Management Fees</u>

During each of the years ended December 31, 2025 and 2024, the Company paid $200,000 to TZP Group Investments Manager, LP for management fees. These expenses are included in other income (expense) on the Company's consolidated statements of and other comprehensive income/(loss).

**NOTE 4: INTANGIBLE ASSETS**

The Company capitalizes costs associated with software developed for internal use, including payroll for employees directly involved in development and external consulting fees, once the project has reached the application development stage in accordance with ASC 350-40. Amortization is computed using the straight-line method over an estimated useful life of 3–5 years. During the year ended December 31, 2025, the Company amortized $13,096 in costs related to new software development.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

Patent and trademark values are reviewed annually for potential impairment. The Company determined that no impairment is currently warranted. The intangibles carrying amount and amortization expense as of December 31, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Patents | $536341 | $433989 |
| Trademarks | 393426 | 386934 |
| Internal-use software | 271428 |  |
| Intangible assets | 1201195 | 820923 |
| Accumulated amortization | (98121) | (36839) |
| Intangible assets, net | $1103074 | $784084 |
| Amortization expense | $61282 | $27839 |

---

**NOTE 5: BUSINESS LOANS AND LINES OF CREDIT**

The Company's outstanding borrowings consisted of the following as of December 31, 2025 and December 31, 2024:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| JPMorgan Chase Loan | $— | $1300000 |
| JPMorgan Chase Line of Credit | 4000000 | 4000000 |
| Total Borrowings | $4000000 | $5300000 |

---

On November 12, 2024, the Company entered into a credit agreement with JP Morgan Chase comprised of a term commitment for $2,000,000 and a revolving commitment for $4,000,000. The term commitment had a maturity date of November 12, 2025, at which time payment of the full principal amount was due. The revolving commitment had a maturity on November 12, 2025. On February 2, 2023, the Company drew and utilized the full credit available under the revolving commitment of $4,000,000. In 2025, JPMorgan extended the maturity date of the revolving lines of credit to February of 2026.

The interest rate for both the term and revolving commitment is OFR plus 3.250%. For the year ending December 31, 2025, the weighted average interest rates for the term and revolving commitments were approximately 7.53% and 7.49%, respectively. For the year ended December 31, 2024, the weighted average interest rates for the term and revolving commitments were approximately 10.25% and 8.30%, respectively. Additionally, a commitment fee of 0.25% is paid on the unused balance of the revolving commitment. Borrowings under this credit agreement are secured by substantially all the assets of the Company.

The credit agreement requires the Company to maintain a minimum total leverage ratio of 2.50 and a minimum fixed-charge coverage ratio of 1.20. Additionally, the credit agreement limits the Company's indebtedness, in addition to various covenants. As of December 31, 2025, the Company was in compliance with all financial covenants under the credit agreement.

As of December 31, 2025, the balance of the term commitment was fully repaid and the revolving commitment was $4,000,000. Total interest expense for the years ended December 31, 2025 and 2024 was $413,409 and $509,518, respectively.

Future minimum principal payments on the Company's outstanding debts as of December 31, 2025 are as follows:

---

| | |
|:---|:---|
| | **Minimum Payments** |
| 2026 | $4000000 |
| Total Borrowings | $4000000 |

---

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

**NOTE 6: LEASES**

The Company operates in one leased location for office in Broomfield, Colorado and one leased warehouse location in Denver, Colorado. We also entered into master lease agreements for certain office equipment. Our operating leases expire at various dates through the year 2031 and generally include options for renewal. The exercise of lease renewal options is at the Company's sole discretion. Our operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2025, we had operating lease right-of-use assets and operating lease liabilities of $2,193,211 and $2,407,302, respectively. As of December 31, 2024, we had operating lease right-of-use assets and operating lease liabilities of $3,006,022 and $3,195,075, respectively.

Lease expense is recognized in Operations expense within the consolidated statements of operations and comprehensive income/(loss) and primarily consisted of operating lease costs of $924,928 and $928,277, short-term lease costs of $33,349 and $30,197, and variable lease costs of $14,593 and $74,058 for the reporting years ended December 31, 2025 and 2024, all respectively.

The following table includes supplemental information related to operating leases:

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating lease | $960271 | $941819 |
| Weighted average remaining lease terms (years): Operating leases | 4.28 | 4.81 |
| Weighted average discount rate: Operating leases | 8.48% | 7.83% |

---

The undiscounted cash flows for future maturities of the Company's operating lease liabilities and the reconciliation to the operating lease liabilities recognized in the consolidated balance sheets are as follows:

---

| | |
|:---|:---|
|  | **December 31, 2025** |
| 2026 | $983035 |
| 2027 | 560236 |
| 2028 | 347676 |
| 2029 | 355143 |
| Thereafter | 710310 |
| Total Lease Payments | 2956400 |
| Less: Imputed Interest | (549098) |
| Present Value of Lease Liabilities | $2407302 |

---

**NOTE 7: STOCKHOLDERS' EQUITY**

<u>Capital Stock</u>

The Company's amended Articles of Incorporation authorized 19,824,168 shares of Class A Voting Common Stock ($0.0001 par), 175,832 shares of Class B Non-Voting Common Stock ($0.0001 par), 3,681,234 shares of Series A Preferred Stock ($0.0001 par), and 500,000 shares of Senior Preferred Stock ($0.0001 par).

As of December 31, 2025 and 2024, the Company had 5,289,980 shares of Class A Voting Common Stock issued and outstanding. As of December 31, 2025 and 2024, the Company had 175,707 shares of Class B Non-Voting Common Stock issued and outstanding. The Company had 3,681,234 shares of Series A Preferred Stock issued and outstanding as of December 31, 2025 and 2024. Additionally, the Company has reserved 733,424 shares of Class A Voting Common Stock ($0.0001 par) for issuance under the 2016 Employee Stock Incentive Plan, of which 175,924 remain available for issuance as of December 31, 2025. 500,000 and 0 shares of Senior Preferred Stock were issued and outstanding as of December 31, 2025 and 2024, respectively.

The Class A Voting Common Stock and the Class B Non-Voting Common Stock are identical in all respects except that each holder of the Class A Voting Common Stock shall be entitled to cast one vote for each outstanding share while Class B Common Stock do not have voting rights. No holder of shares of Class A Voting Common Stock or Class B Non-Voting Common Stock shall be entitled to preemptive or subscription rights. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Stock of the Company are expressly made subject and subordinate to those that may be fixed with respect to any shares of the Preferred Stock of the Company.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

The holders of Series A Preferred Stock are entitled to various protective provisions and preferences. Holders of Series A Preferred Stock are entitled to vote on an as-converted basis with holders of Class A Common Stock and to appoint directors.

The holders of Series A Preferred Stock are entitled to dividend preferences over holders of Common Stock and to preferred dividends at a rate of 10% per annum of the original issue price ($12,500,000 as of December 31, 2025 and 2024), compounded annually. Holders of Senior Preferred Stock are entitled to dividends on an as-converted basis, when and if declared by the Board of Directors. Accrued dividends are payable only when, as, and if declared by the Board of Directors. As of and December 31, 2025 and 2024, accrued dividends of $7,791,322 and $5,957,474, respectively, and were outstanding but undeclared. The dividend rates are subject to dilution protections.

The holders of Series A Preferred Stock are entitled to a liquidation preference over holders of Common Stock but subordinate to Senior Preferred Stock, at the original issuance price ($3.3956) per share plus any accrued and unpaid dividends, providing a total liquidation preference of $20,291,321 and $18,457,474, as of December 31, 2025 and 2024, respectively. The Series A Preferred Stock are convertible, at the holder's election, into Class A Common Stock at a dilution protected rate that is currently 1:1. The Series A Preferred Stock are mandatorily convertible into Class A Common Stock if and upon a qualifying initial public offering, as defined in the articles of incorporation.

The Series A Preferred Stocks are subject to optional redemption at the holder's election on or after December 2, 2024, at a price of the greater of the original issuance price ($3.3956 per share) plus any accrued and unpaid dividends or the fair value at the redemption date as agreed between the Company and the holders or based upon a third-party appraisal. As a result of its redemption provisions, the Series A Preferred Stock was not classified as part of stockholders' equity in the accompanying consolidated balance sheets in accordance with ASC 480-10-S99, "*SEC Materials*", and instead is excluded from stockholders' equity and presented as temporary equity.

Senior Preferred Stock is non-voting and is not convertible into common stock. Senior Preferred Stock is entitled to various rights, protections, and preferences, including a liquidation preference of 2.5 times the original issuance price of $10.00 per share, equating to $12,500,000 and $0 as of December 31, 2025 and 2024, respectively. During 2025, the Company issued 500,000 shares of Senior Preferred Stock for gross proceeds of $5,000,000.

On November 30, 2022, Lena Phoenix, the Company's Co-CEO and Steven Sashen, Co-CEO, each transferred their ownership of 1,600,000 and 1,200,000 Common Stock Voting Class A shares to Summer Dojo LLC, and Autumn Moon LLC, respectively, for estate planning purposes. Summer Dojo LLC, and Autumn Moon LLC, are private equity investment entities and both transferees become the principal owners (defined as holding more than 10% of the Company's equity) of Feel the World, Inc. after receiving the transferred shares.

**NOTE 8: EMPLOYEE STOCK INCENTIVE PLAN**

In May 2016, the Company implemented the 2016 Employee Stock Incentive Plan (the "Plan") for employees and reserved 818,181 shares of Class A Voting Common Stock for issuance under the Plan. The Company's Board of Directors amended the stock option Plan to reduce the number of authorized options from 818,181 to 733,424 per the terms of the December 2, 2020, stock purchase and exchange agreement. As of December 31, 2025 and 2024, there remains 175,924 and 91,767 shares, respectively, available for issuance under the Plan.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

The following table is the summary of stock option activities for the years ended on December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Number of shares subject to options** | **Weighted-average exercise price** | **Number of shares subject to options** | **Weighted-average exercise price** |
| Outstanding - beginning of year | 326657 | $5.12 | 261657 | $4.69 |
| Granted | 112500 | 5.22 | 65000 | 6.87 |
| Exercised |  |  |  |  |
| Forfeited | (196657) | 4.54 |  |  |
| Expired |  |  |  |  |
| Outstanding - end of year | 242500 | $5.64 | 326657 | $5.12 |
| Exercisable - end of year | 80495 | $5.26 | 181437 | $4.22 |

---

The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of stock options, which requires the use of assumptions, including the expected term of the option, expected volatility of its stock price, and the risk-free interest rate, among others. These assumptions reflect best estimates, however; they involve inherent uncertainties including market conditions and employee behavior that are generally outside of the Company's control. Generally, once stock option values are determined, accounting practices do not permit them to be changed, even if the estimates used are different from actual results. All stock-based compensation is expensed when awarded to employees based on the grant date fair value of the awards over the requisite service period, adjusted for forfeitures. Stock compensation expense of $43,280 and $143,871 was recognized for the years ended December 31, 2025 and 2024, respectively. The intrinsic value of the options outstanding as of December 31, 2025, was $2,743 with an unamortized compensation expense of $475,813 to be recorded over the next three and a half years.

Key data inputs (estimates or assumptions) used to determine the fair value of stock options under the Black-Scholes option-pricing model is summarized in the following table:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| Risk-free interest rate | 4.06% - 4.23 | 4.30 - 4.39% |
| Expected dividend yield | —% | —% |
| Expected volatility | 23.74% - 35.98% | 31.80% |
| Term | 7 years | 7 years |
| Fair value of common stock | $5.22 | $3.56 - $3.58 |

---

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

The Company's outstanding Options at December 31, 2025 are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Options Outstanding** | **Options Outstanding** | **Options Outstanding** | **Options Outstanding** | **Options Exercisable** | **Options Exercisable** | **Options Exercisable** |
| **Exercise Price Range** | **Number Outstanding** | **Weighted Average Remaining Contractual Life (in years)** | **Weighted Average Exercise Price** | **Number Exercisable** | **Weighted Average Exercise Price** | **Intrinsic Value** |
| $3.40 - $6.87 | 242500 | 8.58 | $5.64 | 80495 | $5.26 | $2743 |

---

The Company's outstanding Options at December 31, 2024 are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Options Outstanding** | **Options Outstanding** | **Options Outstanding** | **Options Outstanding** | **Options Exercisable** | **Options Exercisable** | **Options Exercisable** |
| **Exercise Price Range** | **Number Outstanding** | **Weighted Average Remaining Contractual Life (in years)** | **Weighted Average Exercise Price** | **Number Exercisable** | **Weighted Average Exercise Price** | **Intrinsic Value** |
| $3.40 - $6.87 | 326657 | 7.74 | $5.12 | 181437 | $4.22 | $572159 |

---

Stock compensation is included in general and administrative expense in the Company's consolidated statements of and comprehensive income/(loss).

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Stock-based compensation expense | $43280 | $143871 |

---

Stock compensation is included in general and administrative expense in the Company's consolidated statements of and comprehensive income/(loss).

The Company has a Long-Term Incentive Plan that sets aside 5% of net proceeds from a liquidity event to be paid to the Company's employees.

**NOTE 9: NET LOSS PER SHARE**

Basic net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock outstanding during each period. Diluted net income, when applicable, per share is computed by dividing net income for the period by the weighted average shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company uses the treasury stock method to determine whether there is a dilutive effect of outstanding option grants.

The following securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive. Therefore, basic earnings per share is the same as fully dilutive earnings per share:

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** |
|  | **2025** | **2024** |
| Stock options | 242500 | 326657 |
| Total common stock equivalents | 242500 | 326657 |

---

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

**NOTE 10: INCOME TAX**

The provision for income taxes for the years ended December 31, 2025 and 2024 are as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Current |  |  |
| &nbsp;&nbsp;Federal | $338048 | $104811 |
| &nbsp;&nbsp;State | 13262 | 41290 |
| &nbsp;&nbsp;Foreign | 11107 | 183922 |
| Total current | 362417 | 330023 |
| Deferred |  |  |
| &nbsp;&nbsp;Federal | (295650) | (336997) |
| &nbsp;&nbsp;State | (625) | (75798) |
| &nbsp;&nbsp;Foreign | (43792) | (95410) |
| Total deferred | (340067) | (508205) |
| Provision for (benefit from) income taxes | 22350 | (178182) |
| Return to provision adjustment | 365637 |  |
| Total provision for (benefit from) income taxes | $387987 | $(178182) |

---

Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of other assets and liabilities. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which result in taxable or deductible amounts in the future. During 2025, the Company finalized certain transfer pricing analyses related to prior-year intercompany transactions, resulting in adjustments recorded as tax expense in the current year in the amount of $365,637. The effective tax rate for 2025 was impacted by the return to provision adjustments related to prior-year tax return filings, including transfer pricing adjustments.

Deferred tax assets and liabilities as of December 31, 2025 and 2024, are as follows:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **Deferred tax assets:** |  |  |
| Employee stock option | $89174 | $78484 |
| Lease liability | 592646 | 786227 |
| Capitalized Section 174 Expenses | 313419 | 900243 |
| Interest Expense Limitation | 97910 | 95521 |
| Charitable Contributions | 131461 | 44882 |
| Net Operating Loss | 936163 | 185691 |
| R&D Credit |  | 7038 |
|  | 2160773 | 2098086 |
| **Deferred tax liabilities:** |  |  |
| Property and equipment | (267938) | (257742) |
| Amortization | (24853) | (21715) |
| Right of Use Asset | (539940) | (733520) |
|  | (832731) | (1012977) |
| Valuation Allowance | (88557) | (90281) |
| **Net deferred tax asset** | $1239485 | $994828 |

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**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

The following table reconciles the statutory federal income tax rate to actual rates based on net income or loss before income taxes as of December 31, 2025 and 2024 respectively:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| U.S. federal taxes at statutory rate | 21.00% | 21.00% |
| State income taxes, net of federal tax benefit | -0.50% | 2.89% |
| Effect of non-U.S. operations | -0.36% | -2.09% |
| Permanent differences | -10.22% | 4.00% |
| Research and development credits | —% | 7.01% |
| NOLs & Valuation Allowance | 0.00% | 0.53% |
| Return to Provision | -34.19% | -14.44% |
| Other | 4.71% | 0.00% |
| Effective income tax rate | -19.56% | 18.90% |

---

The Company is not presently subject to any income tax audit in any taxing jurisdiction. Tax returns for periods before December 31, 2020 are no longer open for audit. The Company has a net operating loss in the Netherlands of approximately $466,000 and in the Czech Republic of approximately $0 that can be carried forward five years. A valuation allowance has been established on the net operating loss generated in the Netherlands as it is more-likely-than not that this deferred tax asset will not be realized.

**NOTE 11: CONTINGENCIES**

In the normal course of business, the Company may become involved in legal proceedings and claims. In accordance with ASC 450, Contingencies, the Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. When a range of reasonably possible loss exists, the Company accrues the most probable amount within the range. If no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. Such accruals may include estimates of potential damages, external legal fees, and other directly related costs expected to be incurred.

Legal Proceedings

*Tazinique Echols v. Feel the World, Inc. (pre-litigation ADA demand):*

On January 20, 2026, Feel the World, Inc. received a pre-suit demand letter from Equal Access Law Group PLLC on behalf of Tazinique Echols, a visually impaired individual, alleging that accessibility barriers on xeroshoes.com violated Title III of the ADA by preventing her from completing an online purchase; the letter states an intent to seek injunctive relief, statutory damages where available, interest, and attorneys' fees if litigation is filed, and offers to resolve the matter in exchange for remediation of the website and a $15,000.00 dollar payment and release.

*Anthony Devies v. Feel the World, Inc. d/b/a Xero Shoes (threatened TCPA class action):* 

On October 26, 2025, the class action firm Shamis & Gentile, P.A. sent a certified-mail demand letter to Feel the World, Inc. d/b/a Xero Shoes asserting that automated telemarketing text messages were sent from short code 65099 to consumer Anthony Devies'cellular telephone without prior express consent and despite his registration on the National Do Not Call Registry, and stating that, absent a response by November 16, 2025, counsel will pursue a putative class action under the Telephone Consumer Protection Act seeking monetary and injunctive relief. As of March 17, 2026, Feel The World, Inc.'s attorney filed a motion-to-dismiss and the Plaintiff's opposition briefing is still to come.

As of December 31, 2025, the Company has not recorded any accruals for loss contingencies. While certain threatened litigation matters exist, these matters are in the early stages, and management is unable to determine whether a loss is probable or reasonably possible, or to reasonably estimate the amount or range of potential loss, if any. Accordingly, no provision has been recorded in the accompanying consolidated financial statements. The Company will continue to evaluate these matters as additional information becomes available.

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

**NOTE 12: SEGMENT REPORTING**

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): *"Improvements to Reportable Segment Disclosures to enhance the reportable segment disclosures."* The guidance requires additional disclosures about significant segment expenses.

As noted above, the Company is footwear brand focusing on natural movement, quality craftsmanship, and affordability. Xero Shoes® product lines currently include minimalist casual and performance shoes, boots, and sandals, as well as do-it-yourself (DIY) sandal kits. Its products are sold directly to customers through its own website, via third party sites such as Amazon, in certain retail stores, and to international wholesale and distribution partners.

The Company generates revenues in two business segments: (1) the North American operations which includes all foreign distributors outside of Europe, and (2) European operations which includes the European Union countries and the Middle Eastern wholesale accounts. The Company primarily sells through three channels: direct-to-consumer, third-party platforms such as Amazon, and wholesale/distribution.

The Company's Chief Executive Officer is the Chief Operating Decision Maker ("CODM"). The CODM manages the Company's business activities as multiple operating and reportable segments. The CODM uses consolidated profit and loss to evaluate and measure performance. The following tables set forth significant segment assets and expenses.

---

| | | | |
|:---|:---|:---|:---|
| <br>**December 31, 2025** | **North**<br>**America** |<br>**Europe** |<br>**Total** |
| Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | $7138940 | $2995336 | $10134276 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 1835566 | 725995 | 2561561 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 411932 |  | 411932 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable | 750996 | 107969 | 858965 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | 9288699 | 6134815 | 15423514 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory in transit | 5250067 | 1658057 | 6908124 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 993964 | 18324 | 1012288 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets, net | 1103074 |  | 1103074 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | 84000 | 34770 | 118770 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets | 1193042 | 46443 | 1239485 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 2193211 |  | 2193211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets | $30243491 | $11721709 | $41965200 |

---

---

| | | | |
|:---|:---|:---|:---|
| <br>**For the Year ended December 31, 2025** | **North**<br>**America** |<br>**Europe** |<br>**Total** |
| Revenue | $50414059 | $14273946 | $64688005 |
| Cost of revenue - product costs | (21413254) | (5022229) | (26435483) |
| Cost of revenue - fulfillment costs | (6952276) | (1958264) | (8910540) |
| Gross profit | 22048529 | 7293453 | 29341982 |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 4620165 | 1114572 | 5734737 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 14114836 | 3708684 | 17823520 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 1726879 | 28028 | 1754907 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operations | 4419385 | 157811 | 4577196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 24881265 | 5009095 | 29890360 |
| Income (loss) from operations | (2832736) | 2284358 | (548378) |
| Other income (expense) |  |  |  |
| Interest income |  |  |  |
| Interest expense | (413409) |  | (413409) |
| Gain/(Loss) on settlement | (977301) | 264022 | (713279) |
| Other income (expense) | (99290) | (209565) | (308855) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense) | (1490000) | 54457 | (1435543) |
| Net income (loss) before income taxes | (4322736) | 2338815 | (1983921) |
| Provision for (benefit from) income taxes | 55034 | 332953 | 387987 |
| Net income (loss) | $(4377770) | $2005862 | $(2371908) |

---

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

---

| | | | |
|:---|:---|:---|:---|
| <br>**December 31, 2024** | **North**<br>**America** |<br>**Europe** |<br>**Total** |
| Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | $1010918 | $971763 | $1982681 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 2139243 | 1776189 | 3915432 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 189269 | 13241 | 202510 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable | 1167293 | 307366 | 1474659 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | 11579470 | 4230263 | 15809733 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory in transit | 2901414 | 3957893 | 6859307 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 1142267 | 21723 | 1163990 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets, net | 784084 |  | 784084 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | 84000 | 4548 | 88548 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets | 899418 | 95410 | 994828 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 2980884 | 25138 | 3006022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets | $24878260 | $11403534 | $36281794 |

---

---

| | | | |
|:---|:---|:---|:---|
| <br>**For the Year ended December 31, 2024** | **North**<br>**America** |<br>**Europe** |<br>**Total** |
| Revenue | $54487979 | $13135904 | $67623883 |
| Cost of revenue - product costs | (16351196) | (6954264) | (23305460) |
| Cost of revenue - fulfillment costs | (9281520) | (1686971) | (10968491) |
| Gross profit | 28855263 | 4494669 | 33349932 |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 7982022 | 2168513 | 10150535 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 14374351 | 2684206 | 17058557 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 1672396 | 27279 | 1699675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operations | 4422985 | 40082 | 4463067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 28451754 | 4920080 | 33371834 |
| Income (loss) from operations | 403509 | (425411) | (21902) |
| Other income (expense) |  |  |  |
| Interest income | 868 |  | 868 |
| Interest expense | (552612) |  | (552612) |
| Other income (expense) | (243792) | (124582) | (368374) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense) | (795536) | (124582) | (920118) |
| Net income (loss) before income taxes | (392027) | (549993) | (942020) |
| Provision for (benefit from) income taxes | (266694) | 88512 | (178182) |
| Net loss | $(125333) | $(638505) | $(763838) |

---

**FEEL THE WORLD, INC.**<br>**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**<br>**As of December 31, 2025 and 2024 and for the years then ended**<br>

**NOTE 13: SUBSEQUENT EVENTS**

The Company has evaluated all events that occurred after the consolidated balance sheet date through the date when the consolidated financial statements were issued to determine if they must be reported. Management has determined that except as disclosed below, there were no additional reportable subsequent events to be disclosed.

<u>Debt Agreements</u>

On February 5, 2026, the Company entered into a credit agreement with Wells Fargo for a revolving commitment of $12,000,000. The commitment has a maturity on February 5, 2029. The Company utilized $4,000,000 of the credit available under the revolving commitment to repay its maturing commitment to JP Morgan Chase.

<u>Legal Proceedings - Leon Weingrad v. Feel the World, Inc.</u>

A putative class action was filed on January 1, 2026, alleging violations of the Telephone Consumer Protection Act (TCPA) for sending unsolicited marketing text messages to individuals on the Do-Not-Call Registry and/or after opt-out requests. The Company has filed a motion to dismiss and/or strike the class allegations. No settlement discussions have occurred, and the plaintiff has not provided a demand. It is too early to determine the outcome, and the probability of loss cannot be assessed at this stage (neither probable nor remote).

<u>Options Issuance</u>

In February 2026, the Company issued an aggregate of 212,500 options at exercise prices ranging from $5.22 - $6.87 pursuant to the Companies 2016 Stock Incentive Plan.

## Exhibit 10.4

**EXHIBIT 10.4**

**Indemnification Agreement**

THIS INDEMNIFICATION AGREEMENT (the "***Agreement***"), effective as of ______________, is made by and between **Feel the World, Inc.**, a Delaware corporation (the "***Company***"), and __________________ ("***Indemnitee***").

WITNESSETH THAT:

**WHEREAS**, highly competent persons have become more reluctant to serve corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

**WHEREAS**, the Board of Directors of the Company (the "***Board***") has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Bylaws (the "***Bylaws***") of the Company require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware ("***DGCL***"). The Bylaws and Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

**WHEREAS**, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

**WHEREAS**, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

**WHEREAS**, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

**WHEREAS**, this Agreement is a supplement to and in furtherance of the Bylaws and Certificate of Incorporation of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

**WHEREAS**, Indemnitee does not regard the protection available under the Company's Bylaws and Certificate of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as a director without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be so indemnified; and

**WHEREAS**, Indemnitee has certain rights to indemnification and/or insurance provided by TZP Group Investments, L.P. and its affiliates ("***TZP***") which Indemnitee and TZP intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company's acknowledgement and agreement to the foregoing being a material condition to Indemnitee's willingness to serve on the Board.

**NOW, THEREFORE**, in consideration of Indemnitee's agreement to serve as a director from and after the date hereof, the parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Indemnity of Indemnitee</u>. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Proceedings Other Than Proceedings by or in the Right of the Company</u>. Indemnitee shall be entitled to the rights of indemnification provided in this <u>Section l(a)</u> if, by reason of his or her Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this <u>Section 1(a)</u>, Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her, or on his or her behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee's conduct was unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Proceedings by or in the Right of the Company</u>. Indemnitee shall be entitled to the rights of indemnification provided in this <u>Section 1(b)</u> if, by reason of his or her Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this <u>Section 1(b)</u>, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee's behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; *provided*, *however*, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Indemnification for Expenses of a Party Who is Wholly or Partly Successful</u>. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a party to (or participant in) and is successful, on the merits or otherwise, in any Proceeding, he or she shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or her, or on his or her behalf, in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one (1) or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her, or on his or her behalf, in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Indemnification of Appointing Stockholder</u>. If (i) Indemnitee is or was affiliated with one (1) or more venture capital funds that has invested in the Company (an "***Appointing Stockholder***"), and (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding, and (iii) the Appointing Stockholder's involvement in the Proceeding (A) arises primarily out of, or relates to, any action taken by the Company that was approved by the Company's Board, and (B) arises out of facts or circumstances that are the same or substantially similar to the facts and circumstances that form the basis of claims that have been, could have been or could be brought against the Indemnitee in a Proceeding, regardless of whether the legal basis of the claims against the Indemnitee and the Appointing Stockholder are the same or similar, then the Appointing Stockholder shall be entitled to all rights and remedies, including with respect to indemnification and advancement, provided to the Indemnitee under this Agreement as if the Appointing Stockholder were the Indemnitee. The rights provided to the Appointing Stockholder under this <u>Section 1(d)</u> shall (i) be suspended during any period during which the Appointing Stockholder does not have a representative on the Company's Board, and (ii) terminate on an initial public offering of the Company's Common Stock; <u>provided</u>, <u>however</u>, that in the event of any such suspension or termination, the Appointing Stockholder's rights to indemnification and advancement of expenses will not be suspended or terminated with respect to any Proceeding based in whole or in part on facts and circumstances occurring at any time prior to such suspension or termination regardless of whether the Proceeding arises before or after such suspension or termination. The Company and Indemnitee intend and agree that the Appointing Stockholder is an express third party beneficiary of the terms of this <u>Section 1(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Partial Indemnification</u>. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Additional Indemnity</u>. In addition to, and without regard to any limitations on, the indemnification provided for in <u>Section 1</u> of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her, or on his or her behalf, if, by reason of his or her Corporate Status, he or she is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company's obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in <u>Sections 6</u> and <u>7</u> hereof) to be unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Contribution</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Whether or not the indemnification provided in <u>Sections 1</u> and <u>2</u> hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action, suit or proceeding arose; <u>provided</u>, <u>however</u>, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors, or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) To the fullest extent permissible under applicable law and without diminishing or impairing the obligations of the Company set forth in the preceding subparagraphs of this <u>Section 3</u>, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Indemnification for Expenses of a Witness</u>. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her, or on his or her behalf in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Advancement of Expenses</u>. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee's Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this <u>Section 5</u> shall be unsecured and interest free. This <u>Section 5</u> shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to <u>Section 9</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Procedures and Presumptions for Determination of Entitlement to Indemnification</u>. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company. The Company will be entitled to participate in the Proceeding at its own Expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of <u>Section 6(a)</u> hereof, a determination with respect to Indemnitee's entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (i) by a majority vote of the disinterested directors, even though less than a quorum, (ii) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum, (iii) if there are no disinterested directors or if the disinterested directors so direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (iv) if so directed by the Board, by the stockholders of the Company. For purposes hereof, disinterested directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to <u>Section 6(b)</u> hereof, the Independent Counsel shall be selected as provided in this <u>Section 6(c)</u>. The Independent Counsel shall be selected by the Board. Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; <u>provided</u>, <u>however</u>, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "***Independent Counsel***" as defined in <u>Section 13</u> of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to <u>Section 6(a)</u> hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under <u>Section 6(b)</u> hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to <u>Section 6(b)</u> hereof, and the Company shall pay all reasonable fees and expenses incurred by the Company and the Indemnitee incident to the procedures of this <u>Section 6(c)</u>, regardless of the manner in which such Independent Counsel was selected or appointed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. The provisions of this <u>Section 6(e)</u> shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this <u>Section 6(e)</u> are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If the person, persons or entity empowered or selected under <u>Section 6</u> to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; <u>provided</u>, <u>however</u>, that such sixty (60)-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and <u>provided</u>, <u>further</u>, that the foregoing provisions of this <u>Section 6(f)</u> shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to <u>Section 6(b)</u> of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee's entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) In the event that any action, suit or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, suit or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Remedies of Indemnitee</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event that (i) a determination is made pursuant to <u>Section 6</u> of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to <u>Section 5</u> of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to <u>Section 6(b)</u> of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to <u>Section 6</u> of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee's entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this <u>Section 7(a)</u>. The Company shall not oppose Indemnitee's right to seek any such adjudication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that a determination shall have been made pursuant to <u>Section 6(b)</u> of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this <u>Section 7</u> shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under <u>Section 6(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If a determination shall have been made pursuant to <u>Section 6(b)</u> of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this <u>Section 7</u>, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event that Indemnitee, pursuant to this <u>Section 7</u>, seeks a judicial adjudication of his or her rights under, or to recover damages for breach of, this Agreement, or to recover under any directors' and officers' liability insurance policies maintained by the Company, the Company shall pay on his or her behalf, in advance, any and all expenses (of the types described in the definition of Expenses in <u>Section 13</u> of this Agreement) actually and reasonably incurred by him or her in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this <u>Section 7</u> that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-laws, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation, By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors' and officers' liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by TZP and certain of its or their affiliates (collectively, the "***Fund Indemnitors***"). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Certificate of Incorporation or Bylaws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this <u>Section 8(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as provided in paragraph (c) above, in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Fund Indemnitors), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Except as provided in paragraph (c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Except as provided in paragraph (c) above, the Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Exception to Right of Indemnification</u>. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in <u>Section 8(c)</u> above; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) except as provided in <u>Section 7(e)</u> of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) such payment arises in connection with any mandatory counterclaim or cross claim brought or raised by Indemnitee in any Proceeding (or any part of any Proceeding) or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Duration of Agreement</u>. All agreements and obligations of the Company contained herein shall continue during the period ending three (3) years after the Indemnitee ceases to serve as a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under <u>Section 7</u> hereof) by reason of his or her Corporate Status, whether or not he or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Security</u>. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company's obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Enforcement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company shall not seek from a court, or agree to, a "bar order" which would have the effect of prohibiting or limiting the Indemnitee's rights to receive advancement of expenses under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Definitions</u>. For purposes of this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "***Corporate Status***" describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the request of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "***Disinterested Director***" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "***Enterprise***" shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "***Expenses***" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent (ii) Expenses incurred in connection with recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, advancement or Expenses or insurance recovery, as the case may be, and (iii) for purposes of <u>Section 7(e)</u> only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement, the Certificate of Incorporation, the Bylaws or under any directors' and officers' liability insurance policies maintained by the Company, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "***Independent Counsel***" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither at present is, nor in the past five (5) years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "***Proceeding***" includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of his or her Corporate Status, by reason of any action taken by him or her, or of any inaction on his or her part, while acting in his or her Corporate Status; in each case whether or not he or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to <u>Section 7</u> of this Agreement to enforce his or her rights under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Severability</u>. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Further, the invalidity or unenforceability of any provision hereof as to either Indemnitee or Appointing Stockholder shall in no way affect the validity or enforceability of any provision hereof as to the other. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee [and Appointing Stockholder indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Modification and Waiver</u>. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Notice By Indemnitee</u>. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>Notices</u>. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To Indemnitee at the address set forth below Indemnitee signature hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the Company at:

Feel the World, Inc.<br> 320 Interlocken Parkway, Suite 100<br> Broomfield, CO 80021<br> Attention: CEO

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <u>Counterparts</u>. This Agreement may be executed by electronic signature and in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one (1) and the same instrument. Counterparts may be delivered by facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, *e.g.*, www.docusign.com) or other transmission method, and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. <u>Headings</u>. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. <u>Governing Law and Consent to Jurisdiction</u>. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the "***Delaware Court***"), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

***SIGNATURE PAGE TO FOLLOW***

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

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| | |
|:---|:---|
|  | **FEEL THE WORLD, INC.**<br>By:____________________________________<br> Name: Sue Rechner<br> Title: Chief Executive Officer |
| Address: | 320 Interlocken Parkway, Suite 100 <br>Broomfield, CO 80021 |
|  | **INDEMNITEE**<br>______________________________________<br> Name: |
| Address: | ______________________________________ |
|  | ______________________________________ |

---

## Exhibit 10.6

**EXHIBIT 10.6**

**XERO SHOES**

**<br>SECOND AMENDED AND RESTATED<br> LONG-TERM INCENTIVE PLAN**

**November 19, 2022**

**XERO SHOES**

**SECOND AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN** 

**ARTICLE I ESTABLISHMENT; OVERVIEW**

1.1. <u>Establishment of Plan; Restatement</u>. Feel the World, Inc., d/b/a Xero Shoes (the "Company") has previously adopted this amended Xero Shoes Long-Term Incentive Plan (the "Plan"), the purpose of which is to attract and retain highly-qualified employees and other service providers who will contribute to the Company's long-term success, provide incentives that align the interests of employees and other service providers with those of the Company's shareholders and promote the success of the Company's long-term business objectives. The Plan is hereby amended and restated as of November 19, 2022.

1.2. <u>Plan Overview</u>. In the event of a qualifying sale transaction or initial public offering, the Plan provides for the establishment of an incentive bonus pool (the "Incentive Award Pool") pursuant to Article V below, with 50% of the Incentive Award Pool to be distributed to certain longer tenured employees in accordance with the provisions of Section 6.2 below (the "Base Portion"), and the other 50% of the Incentive Award Pool to be distributed to certain designated participants contingent upon the Investor's achievement of a minimum Total Return, in accordance with Section 6.3 below (the "Supplemental Portion"). Bonus amounts payable under the Plan ("Awards") are then paid in accordance with Article VII, below.

**ARTICLE II DEFINITIONS**

2.1. <u>Definitions</u>. The following capitalized terms shall have the meanings ascribed to them below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.1. "<u>Affiliate</u>" means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.2. "<u>Board</u>" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.3. "<u>Code</u>" means the Internal Revenue Code of 1986, as amended, and the applicable rules , notices and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.4. "<u>Eligible Employees</u>" means those U.S. domestic employees of the Company or any Affiliate who have been employed with the Company or any Affiliate for at least eighteen (18) continuous months measured as of the date of the Liquidity Event, other than (i) leased employees,

(ii) temporary employees, (iii) individuals who are classified by the Company or any Affiliate as independent contractors, even if they are later adjudicated to be common law employees of the Company or such Affiliate, (iv) employees holding vested options, or options that will vest, upon

a Liquidity Event; and (v) employees holding vested shares of the Company, or shares that will vest, upon a Liquidity Event if such shares were received upon exercise or in satisfaction of any compensatory stock rights (*i.e*., stock options, stock appreciation rights or stock units).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.5. "<u>Investor</u>" means TZP Group LLC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.6. "<u>Investor's Aggregate Investment</u>" means an initial amount equal to the aggregate purchase price paid by the Investor with respect to its equity interest in the Company, which shall be increased by an amount equal to the sum of any additional equity investments in the Company by the Investor after December 2, 2020, the initial investment date (if any).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.7. "<u>Liquidity Event</u>" means (i) the acquisition (whether by purchase, merger, consolidation, combination or other similar transaction) by any individual, entity or group of beneficial ownership of more than fifty percent (50%) (on a fully diluted basis) of the combined voting power of the then outstanding voting securities of the Company; (ii) the sale , transfer or other disposition of all or substantially all of the assets of the Company to any individual, entity or group other than an Affiliate; or (iii) an initial public offering of the Company's shares of common stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act of 1933, as amended; provided, however, that a transaction shall not constitute a Liquidity Event if (A) its primary purpose is to obtain funding for the Company in a financing that is approved by the Board or to create a holding company that will be owned in substantially the same proportions by the persons who hold the Company's securities immediately prior to such transaction, or (B) the transaction is a recapitalization after which Steve Sashen and Lena Phoenix collectively retain twenty percent (20%) (on a fully diluted basis) or more of beneficial ownership of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.8. "<u>Participant</u>" means, as of the date of a Liquidity Event, (i) each Eligible Employee with respect to the 80% Formula Base Portion, and (ii) such other employees, non-employee directors, independent contractors and other service providers as designated by the Board in its sole discretion with respect to the 20% Discretionary Base Portion and the Supplemental Portion; provided that, notwithstanding the foregoing, the following individuals shall not be eligible to participate in the Plan: (a) Steven Sashen and (b) Lena Phoenix. No individual shall become a Participant with respect to either the Base Portion or the Supplemental Portion unless and until a Liquidity Event occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.9. "<u>Total Return</u>" means the sum of all amounts received by the Investor (if any) from December 2, 2020 (the Investor's initial investment date) through the date of the Liquidity Event (including any amounts payable in the Liquidity Event) in respect of its equity interest in the Company. For purposes of calculating Total Return, no payment which is not directly in respect of equity held by the Investor (such as management fees, consulting fees or expenses reimbursements) shall be included in the calculation.

2.2. <u>Other Definitions</u>. The following terms are defined in the following Sections of the Plan document, as follows:

---

| | |
|:---|:---|
| *Capitalized Term* | *Section Defined* |
| "Administrator" | Article III |
| "Award" | 1.2 |
| "Base Portion" | 1.2 |
| "Company" | 1.1 |
| "Excise Tax" | 9.1 |
| "Incentive Award Pool" | 1.2 |
| "Net Proceeds" | Article V |
| "Plan" | 1.1 |
| "Plan Effective Date" | 1.1 |
| "Supplemental Portion" | 1.2 |

---

**ARTICLE III<br>ADMINISTRATION OF THE PLAN**

This Plan shall be administered by the Board or by such other person or committee as may be designated by the Board to administer the Plan or any portion thereof (the Board, or such person or committee (to the extent of such delegation), as applicable, the "Administrator"). The Administrator shall have full power, discretion and authority to construe and interpret this Plan; to resolve any ambiguity in the Plan; to resolve any questions concerning the amount of benefits payable to a Participant; to make all other determinations required by this Plan; and to make and publish forms, rules and procedures for the administration of this Plan. Any provision of the Plan that depends upon a determination or discretion of the Administrator shall vest in the Administrator the authority to make such determination in its sole and absolute discretion, which determination shall be binding upon the Participants. The Administrator may appoint agents and delegate to those agents such powers and duties in connection with the administration of this Plan as the Administrator may from time to time prescribe. In no event shall the Administrator be liable to any Participant or beneficiary (or to any person claiming to be a Participant or beneficiary) for any actions or omissions taken in good faith, and the Company shall indemnify the Administrator to the full extent permitted by law for any such action or omission.

**ARTICLE IV <br>PARTICIPATION**

Each Eligible Employee at the time of the Liquidity Event shall automatically be a Participant in the Plan. In addition, the Administrator may designate non-employee directors and independent contractors or other service provider of the Company or any Affiliate as of the date of the Liquidity Event as Participants in the Plan, provided that non-employee Participants shall be eligible to participate solely in the Supplemental Portion of the Incentive Award Pool.

**ARTICLE V <br>INCENTIVE AWARD POOL**

The amount of the Incentive Award Pool shall initially be set at 5% of the "Net Proceeds" from the Liquidity Event; provided, however, that the percentage of "Net Proceeds" set aside for the Incentive Award Pool shall be adjusted by the Administrator in its discretion to prevent the dilution or enlargement of benefits provided hereunder as a result of any capital raising activity, recapitalization, reorganization, merger, amalgamation, or similar corporate event. For purposes

of this Plan, "Net Proceeds" shall mean the net proceeds distributable to the stockholders of the company (determined on a fully diluted basis) in their capacity as shareholders as a result of the Liquidity Event, after deducting the costs and expenses the Company incurs in connection with the Liquidity Event, which shall include, but not be limited to, any payments under this Plan, closing costs, attorney fees, investment banking fees, accounting fees and other professional fees, all as determined by the Administrator in its sole and absolute discretion. For purposes of clarity, Net Proceeds shall not include privately-held securities issued by any acquiring entity or Affiliate thereof representing rollover of Company stockholder ownership interests. Notwithstanding anything to the contrary in this paragraph, if the Liquidity Event is an initial public offering of the Company's common stock, the "Net Proceeds" attributable to such Liquidity Event shall mean the total market capitalization of the Company calculated by reference to the initial public offering price of the Company's common stock. Because the payments owed under this Plan are transaction expenses that affect the determination of Net Proceeds and the Investor's Total Return, the Administrator shall use such iterative methods as it deems appropriate due to the nature of Net Proceeds and Total Return being dependent upon the payments under this Plan and vice versa.

**ARTICLE VI <br>DETERMINATION OF INDIVIDUAL AWARDS**

6.1. <u>General</u>. As soon as administratively practicable following the occurrence of a Liquidity Event (but in no event more than five (5) calendar days thereafter), the Administrator shall determine in writing the Awards (if any) to which each Participant is entitled, which Awards shall be equal to the amounts distributable to such Participant pursuant to Sections 6.2 and 6.3, as applicable.

6.2. <u>Base Portion of Incentive Award Pool</u>. The Base Portion of the Incentive Award Pool shall be comprised of fifty percent (50%) of the Incentive Award Pool.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.1. Eighty percent (80%) of the Base Portion (hereinafter, the "80% Formula Base Portion") shall be allocated to Participants who are Eligible Employees as of the date of the consummation of the Liquidity Event. Each such Participant's share of the 80% Formula Base Portion shall be determined on a proportional basis based on the number of credited hours of service of each Participant during the eighteen (18) month period ending on the date of the Liquidity Event, disregarding for this purpose any overtime hours. Each Participant's credited hours of service shall be determined by the Administrator based on a full-time equivalent of 3,120 hours of service during the eighteen (18) month look back period. Thus, full-time Participants will generally be expected to be credited with 3,120 hours of service during such period (and in no event may any Participant be credited with in excess of 3,120 hours of service during such period). Part-time Participants shall be credited with a ratably reduced number of hours based on the number of part-time regular hours they worked as compared to a full-time schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.2. Twenty percent (20%) of the Base Portion (hereinafter, the "20% Discretionary Base Portion") shall be allocated to Participants at the sole discretion of the Administrator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.3. All calculations shall be made by the Administrator in accordance with reasonable conventions determined by the Administrator.

6.3. <u>Supplemental Portion of Incentive Award Pool</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.1. The Supplemental Portion of the Incentive Award Pool shall be comprised of 50% of the Incentive Award Pool; however, no portion (0%) of the Supplemental Portion shall be paid unless the Total Return to the Investor is at least 3.9 times (3.9x) the Investor's Aggregate Investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.2. If the Investor's Total Return is at least 3.9x, after giving effect to the Supplemental Portion, then the Supplemental Portion shall be granted and allocated to Participants at the sole discretion of the Administrator.

**ARTICLE VII <br>PAYMENT OF AWARDS**

7.1. <u>Payment Timing</u>. Settlement of Awards will occur on or within thirty (30) days following the Liquidity Event.

7.2. <u>Form of Payment</u>. Awards will be payable in (i) cash, (ii) shares of common stock of the Company or equity of any successor (or parent thereof), or (iii) a combination thereof, as determined in the sole discretion of the Administrator; provided, however, that any Company stock (or equity of any successor or parent thereof) distributed as payment under the Plan shall be fully vested and shall not be subject to forfeiture by the Participant based on the Participant's termination of employment or failure to meet other business goals.

7.3. <u>Release</u>. Any and all amounts payable under this Plan shall only be payable if the Participant delivers to the Company and does not revoke a general release of claims in favor of the Company in substantially the form attached hereto as Exhibit A, which release must be executed and must have become irrevocable prior to the latest date on which payment could be made in accordance with Section 7.1.

**ARTICLE VIII <br>TERMINATION OF EMPLOYMENT**

No Award will be paid to any individual who fails to remain an employee of or service provider to the Company or any Affiliate continuously through the date of the Liquidity Event. If an individual terminates employment of service for any reason prior to a Liquidity Event, then such individual shall have no right to an Award hereunder.

**ARTICLE IX <br>GOLDEN PARACHUTE PROVISIONS**

9.1. <u>Limitation</u>. If it is determined that any payment or benefit provided to or for the benefit of any Participant, whether paid or payable or distributed or distributable pursuant to the terms of this Program or otherwise (a "Payment"), would be subject to the excise tax imposed by Code section 4999 or any interest or penalties with respect to such excise tax (such excise tax together with any such interest and penalties, shall be referred to as the "Excise Tax"), then such Payments

shall be reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax.

9.2. <u>Reduction of Payments</u>. In the event Payments must be reduced pursuant to Section 9.1, the Participant may select the order of reduction; provided, however, that none of the selected Payments may be "nonqualified deferred compensation" subject to Code Section 409A. In the event the Participant fails to select an order in which Payments are to be reduced, or cannot select such an order without selecting payments that would be "nonqualified deferred compensation" subject to Code Section 409A, the Company shall (to the extent feasible) reduce cash Payments and in the order in which such payments would be made (with payments made closest to the Liquidity Event being reduced first).

9.3. <u>Performance of Calculations</u>. The calculations in Sections 9.1 and 9.2 above shall be made by a certified public accounting firm , executive compensation consulting firm, or law firm designated by the Company in its sole and absolute discretion and may be determined using reasonable assumptions and approximations concerning applicable taxes and relying on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The costs of performing such calculations shall be borne exclusively by the Company.

9.4. <u>Stockholder Vote</u>. The limitation set forth in Section 9.1 shall not apply in the event that a sufficient amount of the Payments are approved by the stockholders of the Company pursuant to Section 280G(b)(5) of the Code and the Treasury Regulations thereunder, such that no Payment or portion thereof is subject to the excise tax imposed by Code section 4999.

**ARTICLE X <br>BENEFICIARIES**

This Plan does not provide death benefits for any Participant. However, to the extent that a Participant has earned an Award under this Plan by remaining employed through the date of the Liquidity Event, and dies prior to the time such Award is paid, the earned Award shall be distributed in accordance with this Article X. A Participant may designate a beneficiary or beneficiaries to receive the earned but unpaid Award by delivering a signed written beneficiary designation to the Company prior to the Participant's death. Such designation of beneficiary may be replaced by a new designation or may be revoked by the Participant at any time by delivering a new signed written designation or signed written revocation to the Company prior to the Participant's death. In the case of the Participant's death, the earned but unpaid Award shall be distributed in accordance with the Plan to the Participant's designated beneficiary or beneficiaries. In the event Participant does not have a valid beneficiary designation on file, the earned but unpaid Award shall be distributed to the Participant's estate. If there shall be any question as to the legal right of any beneficiary to receive an earned but unpaid Award under the Plan, the amount in question may be paid to the estate of the Participant, in which event the Company shall have no further liability with respect to such amount.

**ARTICLE XI<br>AMENDMENT AND TERMINATION OF THE PLAN**

The Board shall have complete and exclusive power and authority to amend, modify, or terminate the Plan in any or all respects, in its sole and absolute discretion; provided, however, that no such amendment shall adversely affect the rights of any Participant with respect to his or her participation in the Plan without the consent of such Participant. Notwithstanding the foregoing, to the extent a Liquidity Event involves the payment of delayed consideration (such as an escrow or an earnout) and also qualifies as a "change in control event" pursuant to Treasury Regulation Section 1.409A-3(i)(5)(v) or (vii), the Company shall have the right to amend the Plan to provide that a portion of the Awards shall similarly be paid on a delayed basis upon the same schedule and under the same terms and conditions as the consideration to be received in the Liquidity Event. It is the intent of the Company that any such amendment complies with the requirements set forth in Treasury Regulation 1.409A-3(i)(5)(iv)(A) with regards to the payment of "transaction-based compensation."

**ARTICLE XII <br>MISCELLANEOUS**

12.1. <u>Tax Withholding</u>. The Company shall have the right to deduct from any Award all applicable federal, state, and local income and employment tax withholdings.

12.2. <u>Service Not Guaranteed</u>. Nothing in this Plan shall confer upon any individual any right to continue in service for any period or otherwise restrict the rights of the Company (or Affiliate) or such individual to terminate such individual's employment or service at any time, and for any reason, subject to the terms of any applicable employment or other services contract that may then be in effect.

12.3. <u>Governing Law</u>. This Plan shall be interpreted and enforced under the laws of the State of Colorado, without regard to principles thereof regarding conflicts of laws.

12.4. <u>Participation in Other Plans</u>. Nothing in this Plan shall affect any right which any individual may otherwise have to participate in any plan or agreement adopted by the Company or Affiliate or which may be adopted hereafter.

12.5. <u>409A</u>. It is the intention of the Company that payments or benefits payable under this Plan not be subject to the additional tax imposed pursuant to Section 409A of the Code, and the provisions of this Plan shall be construed and administered in accordance with such intent. To the extent such payments or benefits could potentially become subject to Code Section 409A, the Company shall be entitled to amend the Plan (retroactively, if necessary) with the goal of giving the Participants the economic benefits described herein in a manner that does not result in such tax being imposed. Notwithstanding the foregoing, in no event shall the Company be liable to any Participant for any tax, penalty, or interest imposed on such Participant as a result of the application of Code Section 409A to any Award payable hereunder. Each payment or benefit under this Plan shall be considered a separate payment for purposes of Section 409A of the Code.

12.6. <u>No Separate Fund or Trust</u>. The amounts payable under the Plan are payable out of the general assets of the Company and are subject to the general creditors of the Company. There will be no separate fund or trust for any amounts payable hereunder and no amounts hereunder shall be assignable or otherwise subject to creditors of Participants.

**IN WITNESS WHEREOF**, the Company has caused the Plan to be executed by its duly authorized officer as of the date set forth below.

---

| | |
|:---|:---|
| **FEEL THE WORLD INC., DBA XERO SHOES** | **FEEL THE WORLD INC., DBA XERO SHOES** |
| By: | /s/ Lena Phoenix |
| Name: <br> Title:<br> Date:  | Lena Phoenix<br>President<br> November 19, 2022 |

---

**Exhibit A**

**<u>GENERAL RELEASE OF CLAIMS</u>**

This General Release of Claims (this "Release") is entered into as of this day of _________, 20___, by and between Feel the World, Inc., d/b/a Xero Shoes (the "Company") and ________________, an employee or other service provider of the Company (the "Service Provider") (collectively, the "Parties").

WHEREAS, the Service Provider is a participant in the Xero Shoes Long-Term Incentive Plan (the "Plan"); and

WHEREAS, pursuant to the terms of the Plan, the Company has agreed to provide the Service Provider certain benefits and payments under the terms and conditions specified therein (the "Benefits"), provided that the Service Provider has executed and not revoked a general release of claims in favor of the Company.

NOW, THEREFORE, in consideration of these Recitals and the promises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are expressly acknowledged, the Parties, intending to be legally bound , agree as follows:

1. <u>Effective Date</u>. Provided that it has not been revoked pursuant to Section 4 hereof, this Release
 will become effective on the eighth (8th) day after the date of its execution by the Service
 Provider (the "Effective Date").

2. <u>Effect of Revocation</u>. The Service Provider acknowledges and agrees that if the Service Provider
 revokes this Release pursuant to Section 4 hereof , the Service Provider will have no right
 to receive the Benefits.

3. <u>General Release</u>. In consideration of the Company's obligations, the Service Provider hereby
 releases, acquits and forever discharges the Company and each of its subsidiaries and affiliates
 and each of their respective officers, employees, directors, successors and assigns (collectively,
 the "Released Parties") from any and all claims, actions or causes of action
 in any way related to his employment with the Company or the termination thereof, whether
 arising from tort, statute or contract, including, but not limited to, claims of defamation,
 claims arising under the Employee Retirement Income Security Act of 1974, as amended, the
 Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection
 Act of 1990, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities
 Act, the Family and Medical Leave Act, the discrimination and wage payment laws of Colorado
 and any other federal, state or local statutes or ordinances of the United States, it being
 the Service Provider's intention and the intention of the Company to make this release
 as broad and as general as the law permits. The Service Provider understands that this Release
 does not waive any rights or claims that may arise after his execution of it and does not
 apply to claims arising under the terms of the Plan with respect to payments the Service
 Provider may be owed pursuant to the terms thereof.

Exh A-1

4. <u>Review and Revocation Period</u>. The Service Provider acknowledges that the Company has advised the Service Provider that the Service
 Provider may consult with an attorney of the Service Provider's own choosing (and at the Service Provider's expense)
 prior to signing this Release and that the Service Provider has been given at least twenty-one (21) days during which to consider
 the provisions of this Release, although the Service Provider may sign and return it sooner. The Service Provider further
 acknowledges that the Service Provider has been advised by the Company that after executing this Release, the Service Provider will
 have seven (7) days to revoke this Release, and that this Release shall not become effective or enforceable until such seven (7) day
 revocation period has expired. The Service Provider acknowledges and agrees that if the Service Provider wishes to revoke this
 Release, the Service Provider must do so in writing, and that such revocation must be signed by the Service Provider and received by
 [__________] no later than 5:00 p.m. Mountain Time on the seventh (7th) day after the Service Provider has executed this Release. **The Service Provider further acknowledges and agrees that, in the event that the Service Provider revokes this Release, the Service Provider will have no right to receive any benefits hereunder, including the Benefits.** The Service Provider represents that the
 Service Provider has read this Release and understands its terms and enters into this Release freely, voluntarily and without
 coercion.

5. <u>Non-Admission of Liability</u>. Nothing in this Release will be construed as an admission of liability
 by the Service Provider or the Released Parties; rather, the Service Provider and the Released
 Parties are resolving all matters to date arising out of the relationship between the Service
 Provider and the Company and all other relationships between the Service Provider and the
 Released Parties.

6. <u>Nondisparagement</u>.
 The Service Provider agrees not to make negative comments or otherwise disparage the Company,
 its subsidiaries or any of their respective officers, directors, employees, shareholders
 or agents, in any manner likely to be harmful to them or their business, business reputation
 or personal reputation. The Company agrees that the members of the Company's Board
 of Directors (the "Board") and officers of the Company as of the date hereof
 will not, while employed by the Company or serving as a Director of the Company, as the case
 may be, make negative comments about the Service Provider or otherwise disparage the Service
 Provider in any manner that is likely to be harmful to the Service Provider's business
 or personal reputation. The foregoing shall not be violated by truthful statements in response
 to legal process or required governmental testimony or filings, and the foregoing limitation
 on the Company's directors and officers will not be violated by statements that they
 in good faith believe are necessary or appropriate to make in connection with performing
 their duties for or on behalf of the Company.

7. <u>Binding Effect</u>. This Release will be binding upon the Parties and their respective heirs, administrators,
 representatives, executors, successors and assigns, and will inure to the benefit of the
 Parties and their respective heirs, administrators, representatives, executors, successors
 and assigns.

8. <u>Governing Law</u>. This Release will be governed by and construed and enforced in accordance with the
 laws of the State of Colorado applicable to agreements negotiated, entered into and wholly
 to be performed therein, without regard to its conflicts of law or choice
of law provisions which would result in the application of the law of any otherjurisdiction.

Exh A-2

9. <u>Severability</u>.
 Each of the respective rights and obligations of the Parties hereunder will be deemed independent
 and may be enforced independently irrespective of any of the other rights and obligations
 set forth herein. If any provision of this Release should be held illegal or invalid, such
 illegality or invalidity will not affect in any way other provisions hereof, all of which
 will continue, nevertheless, in full force and effect.

10. <u>Counterparts</u>.
 This Release may be signed in counterparts. Each counterpart will be deemed to be an original,
 but together all such counterparts will be deemed a single agreement.

11. <u>Entire Agreement; Modification</u>. This Release constitutes the entire understanding between the
 Parties with respect to the subject matter hereof and may not be modified without the express
 written consent of both Parties. This Release supersedes all prior written and/or oral and
 all contemporaneous oral agreements, understandings and negotiations regarding its subject
 matter. This Release may not be modified or canceled in any manner except by a writing signed
 by both Parties.

12. <u>Acceptance</u>.
The Service Provider may confirm acceptance of the terms and conditions of this Release by signing and returning two (2) original copies
of this Release to [___________] no later than 5:00 p.m. Mountain Time on [______________].

THE SERVICE PROVIDER ACKNOWLEDGES AND REPRESENTS THAT THE SERVICE PROVIDER HAS FULLY AND CAREFULLY READ THIS RELEASE PRIOR TO SIGNING IT AND UNDERSTANDS ITS TERMS. THE SERVICE PROVIDER FURTHER ACKNOWLEDGES AND AGREES THAT THE SERVICE PROVIDER HAS BEEN, OR HAS HAD THE OPPORTUNITY TO BE, ADVISED BY INDEPENDENT LEGAL COUNSEL OF THE SERVICE PROVIDER'S OWN CHOICE AS TO THE LEGAL EFFECT AND MEANING OF EACH OF THE TERMS AND CONDITIONS OF THIS RELEASE, AND IS ENTERING INTO THIS RELEASE FREELY AND VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN AS SET FORTH IN THIS RELEASE.

**IN WITNESS WHEREOF**, the Company and the Service Provider have duly executed this Release as of the date first above written.

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| | |
|:---|:---|
| **FEEL THE WORLD, INC., D/B/A XERO SHOES** | **SERVICE PROVIDER** |
| By: ____________________ | ______________________ |
|  | Name |

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Exh A-3

## Exhibit 21.1

**EXHIBIT 21.1**

Subsidiaries of the Company

Feel the World EU B.V.

Xero Shoes EU s.r.o.

Feel the World UK Ltd.