Barnes & Noble Education, Inc.

Our primary sources of cash are net cash flows from operating activities, funds available under our A&R Credit Agreement, and short-term vendor financing. Our liquidity is highly dependent on the seasonal nature of our business, particularly with respect to course material sales, as sales are generally highest in the second and third fiscal quarters, when college students purchase textbooks for the upcoming Fall and Spring semesters, respectively. As of January 31, 2026, we had $18.4 million of cash on hand, including $8.3 million of restricted cash primarily related to segregated funds for commission due to Lids for logo merchandise sales as per the F/L Relationship-related agreements.

On June 10, 2024, we completed the Transactions to substantially deleverage our Consolidated Balance Sheet. These transactions also raised additional capital for repayment of indebtedness and provide additional flexibility for future working capital needs. Additionally, on September 19, 2024 and December 20, 2024, we entered into the September ATM Sales Agreement and the December ATM Sales Agreement, respectively, with BTIG, under which we sold our Common Stock from time to time through BTIG as the sales agent (See Note 6. Equity for additional information).

We believe that our future cash from operations, access to borrowings under the Credit Facility Refinancing, and short-term vendor financing will provide adequate resources to fund our operating and financing needs for the next twelve months and beyond. To the extent that available funds are insufficient to fund our future activities, we may need to raise additional funds through public or private financing of debt or equity. Our access to, and the availability of, financing in the future will be impacted by many factors, including the liquidity of the overall capital markets and the current state of the economy. There can be no assurances that we will have access to capital markets on acceptable terms.

Liquidity

Sources and Uses of Cash Flows

As of January 31, 2026 and January 25, 2025, we had restricted cash of $8.3 million and $7.5 million, respectively, comprised of $5.9 million and $5.2 million, respectively, in prepaid and other current assets in the condensed Consolidated Balance Sheets related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement and $2.4 million and $2.3 million, respectively, in other noncurrent assets in the condensed Consolidated Balance Sheets related to amounts held in trust for future distributions related to employee benefit plans.

Cash Flow from Operating Activities

Our business is highly seasonal. Cash flows from operating activities are typically a source of cash in the second and third fiscal quarters, when students generally purchase and rent textbooks and other course materials for the upcoming semesters based on the typical academic semester. Given the growth of our BNC First Day® programs, the timing of cash collection from our school partners may shift to periods subsequent to when the revenue is recognized. When a school adopts our BNC First Day® affordable access course material program offerings, cash collection from the school generally occurs after the institution's drop/add dates, which is later in the working capital cycle, particularly in our third quarter given the timing of the Spring Term and our quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor. As a higher percentage of our sales shift to BNC First Day® affordable access course material program offerings, we are focused on efforts to better align the timing of our cash outflows to course material vendors and cash inflows from collections from schools. Our quarterly cash flows also may fluctuate depending on the timing of the start of the various schools’ semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods.

Cash Flow from Operating Activities

Cash flows used in operating activities during the 39 weeks ended January 31, 2026 were $(30.8) million compared to $(138.0) million during the 39 weeks ended January 25, 2025. The decrease in cash flows used in operating activities of $107.3 million was primarily driven by favorable working capital changes, including the timing of payments to vendors reflected in higher accounts payable balances. This improvement was partially offset by increased receivables associated with the continued growth of the Company’s BNC First Day® affordable access course material programs, as well as increased inventory levels during the period.

Cash Flow from Investing Activities

Cash flows used in investing activities during the 39 weeks ended January 31, 2026 were $(11.8) million compared to $(9.0) million during the 39 weeks ended January 25, 2025. The increase in cash used in investing activities is primarily due to higher capital expenditures, which totaled $11.8 million compared to $9.8 million in the prior year period, primarily related to investments in store construction, internal systems and website enhancements.

Cash Flow from Financing Activities

Cash flows provided by financing activities during the 39 weeks ended January 31, 2026 were $32.2 million compared to $135.2 million during the 39 weeks ended January 25, 2025. The net change of $103.0 million was primarily driven by equity financing transactions completed in the prior year period, including $50.0 million from a new equity investment led by Immersion Corporation, $45.0 million from a fully backstopped Rights Offering, and $78.5 million of proceeds from the sale of Common Stock under the Company's ATM facility. These prior year inflows were partially offset by higher net borrowings during the 39 weeks ended January 31, 2026 compared to the prior year period.

Capital Resources

Financing Arrangements

On June 10, 2024, the Company completed a series of financing and recapitalization Transactions that significantly deleveraged its Consolidated Balance Sheet and enhanced liquidity. The Transactions included equity issuances, the conversion of the Company’s term loan indebtedness into equity, and the refinancing of the Company’s asset-based revolving credit facility.

As of January 31, 2026, the Company had the full $325 million borrowing capacity available under its revolving credit facility with no borrowing base or collateral limitations, subject to compliance with applicable covenants with $138.4 million outstanding.

In connection with the Transactions, the Company raised $95.0 million of gross equity proceeds through a private investment and a fully backstopped rights offering, resulting in net cash proceeds of approximately $85.5 million after transaction costs. Upon closing, Immersion Corporation obtained a controlling interest in the Company.

Also on the Closing Date, the Company’s existing term loan indebtedness was converted into shares of the Company’s Common Stock and extinguished. The Company refinanced its asset-based revolving credit facility, which provides aggregate revolving commitments of up to $325.0 million and matures in 2028. Refer to Note 6. Equity and Note 10. Debt for additional information.

Subsequent to the Closing Date, the Company entered into at-the-market equity sales agreements pursuant to which it sold an aggregate of $80.0 million of Common Stock. The Company maintains an effective shelf registration statement for potential future issuances, however, the shelf registration statement will be available for use again after the date of this filing. It is not considered a source of liquidity as of the date of this filing.

Share Repurchases

During the 39 weeks ended January 31, 2026, we did not repurchase any of our Common Stock under the stock repurchase program. As of January 31, 2026, approximately $26.7 million remains available under the stock repurchase program.

Critical Accounting Estimates

Our policies regarding the use of estimates and other critical accounting policies are consistent with the disclosures in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimatesin our Annual Report on Form 10-K for the fiscal year ended May 3, 2025.