Quarterly Financial Data (Unaudited)

12 Months Ended

Jan. 29, 2023

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

The following tables present net impact of the restatement described in Note 2. Restatement and Other Corrections of Previously Issued Financial Statements on our previously reported unaudited condensed financial statements for each interim period ended October 30, 2022, July 31, 2022 and May 1, 2022, respectively.

The restated periods presented below will be effective with the filing of our future 2024 unaudited interim condensed financial statement filings in Quarterly Reports on Form 10-Q. The previously reported amounts presented in the tables below have been derived from our Quarterly Reports on Form 10-Q filed on December 8, 2022, September 9, 2022 and June, 8, 2022 respectively. See Note 2. Restatement and Other Corrections of Previously Issued Financial Statements for a description of the misstatements in each category of restatements referenced by (a) through (h).

The net impact of the restatement on our quarterly financial data for 2023 is summarized as follows:

	For the Thirteen Weeks Ended
	January 29, 2023				October 30, 2022				July 31, 2022				May 1, 2022
(in thousands)	As Previously Reported		As Restated		As Previously Reported		As Restated		As Previously Reported		As Restated		As Previously Reported		As Restated
Net sales	$	238,847	$	238,481	$	134,784	$	134,784	$	148,534	$	148,534	$	129,380	$	129,380
Gross profit	135,220		133,674		63,572		64,904		80,926		79,099		66,108		65,974
Operating income (loss)	38,071		36,477		(11,595)		(10,125)		9,896		8,120		2,645		2,494
Net income (loss)	27,644		26,215		(8,419)		(7,362)		7,122		5,849		1,895		1,786

	As of
	January 29, 2023				October 30, 2022				July 31, 2022				May 1, 2022
(in thousands)	As Previously Reported		As Restated		As Previously Reported		As Restated		As Previously Reported		As Restated		As Previously Reported		As Restated
Total current assets	$	194,041	$	187,715	$	215,537	$	209,264	$	209,259	$	203,491	$	210,185	$	206,214
Total non-current assets	224,013		220,911		191,859		191,787		164,655		165,422		156,391		157,381
Total assets	418,054		408,626		407,396		401,051		373,914		368,913		366,576		363,595
Total current liabilities	88,839		82,041		118,997		111,389		98,059		92,852		103,859		99,399
Total non-current liabilities	135,955		133,491		130,229		130,229		109,864		109,864		103,480		103,480
Total liabilities	224,794		215,532		249,226		241,618		207,923		202,716		207,339		202,879
Total equity	193,260		193,094		158,170		159,433		165,991		166,197		159,237		160,716

The net impact of the restatement on our quarterly and year-to-date unaudited condensed financial statements as of and for the thirteen weeks and thirty-nine weeks ended October 30, 2022, as of and for the thirteen and twenty-six weeks ended July 31, 2023 and as of and for the thirteen weeks ended May 1, 2022 is summarized as follows:

THE LOVESAC COMPANY

CONDENSED BALANCE SHEET

(unaudited)

	October 30, 2022
(amounts in thousands, except share and per share amounts)	As Previously Reported		Corrections		Reference	As Restated
Assets
Current Assets
Cash and cash equivalents	$	3,832	$	—		$	3,832
Trade accounts receivable	15,357		—			15,357
Merchandise inventories, net	154,481		—			154,481
Prepaid expenses and other current assets	41,867		(6,273)		(a)(b)(e)(f)	35,594
Total Current Assets	215,537		(6,273)			209,264
Property and equipment, net	47,477		—			47,477
Operating lease right-of-use assets	133,075		(1,100)		(b)	131,975
Other Assets
Goodwill	144		—			144
Intangible assets, net	1,395		—			1,395
Deferred financing costs, net	73		—			73
Deferred tax asset	9,695		(12)		(f)	9,683
Other assets	—		1,040		(e)	1,040
Total Other Assets	11,307		1,028			12,335
Total Assets	$	407,396	$	(6,345)		$	401,051
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	47,267	$	—		$	47,267
Accrued expenses	33,126		1,533		(a)(f)	34,659
Payroll payable	7,199		—			7,199
Customer deposits	5,861		—			5,861
Current operating lease liabilities	20,774		(9,141)		(b)(e)	11,633
Sales taxes payable	4,770		—			4,770
Total Current Liabilities	118,997		(7,608)			111,389
Operating Lease Liability, long-term	130,229		—			130,229
Line of Credit	—		—			—
Total Liabilities	249,226		(7,608)			241,618
Stockholders’ Equity
Preferred Stock $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of October 30, 2022	—		—			—
Common Stock $0.00001 par value, 40,000,000 shares authorized, 15,192,134 shares issued and outstanding as of October 30, 2022	—		—			—
Additional paid-in capital	175,108		—			175,108
Accumulated (deficit) earnings	(16,938)		1,263		(a)(b)(f)	(15,675)
Stockholders' Equity	158,170		1,263			159,433
Total Liabilities and Stockholders' Equity	$	407,396	$	(6,345)		$	401,051

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.7 million, an increase to accrued expenses of $1.1 million, and an increase to accumulated deficit of $0.4 million at October 30, 2022.

(b) Leases - The correction of these misstatements resulted in an decease to prepaid expenses and other current assets of less than $0.1 million, a decrease to operating lease right-of-use assets of $1.1 million, a decrease to current operating lease liabilities of $3.3 million, and a decrease to accumulated deficit of $2.2 million at October 30, 2022.

(e) Balance Sheet Reclassifications - The correction of these misstatements resulted in a decrease to prepaid expenses and other current assets of $6.9 million, a decrease to current operating lease liabilities of $5.9 million and an increase to other assets of $1.0 million at October 30, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in an increase to prepaid expenses and other current assets of less than $0.1 million, a decrease to deferred tax asset of less than $0.1 million, an increase to accrued expenses of $0.4 million, and an increase to accumulated deficit of $0.4 million at October 30, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF OPERATIONS

(unaudited)

	For the Thirteen Weeks Ended October 30, 2022
(amounts in thousands, except per share data and share amounts)	As Previously Reported		Corrections		Reference	As Restated
Net sales	$	134,784	$	—		$	134,784
Cost of merchandise sold	71,212		(1,332)		(a)(d)	69,880
Gross profit	63,572		1,332			64,904
Operating expenses
Selling, general and administration expenses	53,658		(138)		(b)	53,520
Advertising and marketing	19,050		—			19,050
Depreciation and amortization	2,459		—			2,459
Total operating expenses	75,167		(138)			75,029
Operating (loss) income	(11,595)		1,470			(10,125)
Interest expense, net	(69)		—			(69)
Net (loss) income before taxes	(11,664)		1,470			(10,194)
Benefit from (provision for) income taxes	3,245		(413)		(f)	2,832
Net (loss) income	$	(8,419)	$	1,057		$	(7,362)
Net (loss) income per common share:
Basic	$	(0.55)	$	0.07		$	(0.48)
Diluted	$	(0.55)	$	0.07		$	(0.48)
Weighted average number of common shares outstanding:
Basic	15,220,593		—			15,220,593
Diluted	15,220,593		—			15,220,593

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in a decrease to cost of merchandise sold of $0.4 million for the thirteen weeks ended October 30, 2022.

(b) Leases - The correction of these misstatements resulted in a decrease to selling, general and administrative expenses of $0.1 million for the thirteen weeks ended October 30, 2022.

(d) Supplier Rebates - The correction of these misstatements resulted in a decrease to cost of merchandise sold of $0.9 million for the thirteen weeks ended October 30, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to benefit from income taxes of $0.4 million for the thirteen weeks ended October 30, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF OPERATIONS

(unaudited)

	For the Thirty-Nine Weeks Ended October 30, 2022
(amounts in thousands, except per share data and share amounts)	As Previously Reported		Corrections		Reference	As Restated
Net sales	$	412,698	$	—		$	412,698
Cost of merchandise sold	202,092		629		(a)	202,721
Gross profit	210,606		(629)			209,977
Operating expenses
Selling, general and administration expenses	147,425		(172)		(b)	147,253
Advertising and marketing	54,039		—			54,039
Depreciation and amortization	8,196		—			8,196
Total operating expenses	209,660		(172)			209,488
Operating income (loss)	946		(457)			489
Interest expense, net	(101)		—			(101)
Net income (loss) before taxes	845		(457)			388
(Provision for) benefit from income taxes	(247)		132		(f)	(115)
Net income (loss)	$	598	$	(325)		$	273
Net income (loss) per common share:
Basic	$	0.04	$	(0.02)		$	0.02
Diluted	$	0.04	$	(0.02)		$	0.02
Weighted average number of common shares outstanding:
Basic	15,190,079		—			15,190,079
Diluted	16,067,066		—			16,067,066

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to cost of merchandise sold of $0.6 million for the thirty-nine weeks ended October 30, 2022.

(b) Leases - The correction of these misstatements resulted in a decrease to selling, general and administrative expenses of $0.2 million for the thirty-nine weeks ended October 30, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to provision for income taxes of $0.1 million for the thirty-nine weeks ended October 30, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THIRTEEN AND THIRTY-NINE WEEKS ENDED OCTOBER 30, 2022

(unaudited)

		Common
(amounts in thousands, except share amounts)	Restatement Reference	Shares	Amount		Additional paid-in capital		Accumulated (deficit) earnings		Total Shareholders' Equity
As Previously Reported
Balance - January 30, 2022		15,123,338	$	—	$	173,762	$	(17,536)	$	156,226
Net income		—	—		—		1,895		1,895
Equity-based compensation		—	—		1,163		—		1,163
Issuance of common stock for restricted stock		1,704	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(47)		—		(47)
Balance - May 1, 2022		15,125,042	$	—	$	174,878	$	(15,641)	$	159,237
Net income		—	—		—		7,122		7,122
Equity-based compensation		—	—		1,034		—		1,034
Issuance of common stock for restricted stock		58,235	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(1,402)		—		(1,402)
Balance - July 31, 2022		15,183,277	$	—	$	174,510	$	(8,519)	$	165,991
Net loss		—	—		—		(8,419)		(8,419)
Equity-based compensation		—	—		732		—		732
Issuance of common stock for restricted stock		8,857	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(134)		—		(134)
Balance - October 30, 2022		15,192,134	$	—	$	175,108	$	(16,938)	$	158,170
Restatement Impacts
Balance - January 30, 2022	(a)(b)(f)	—	$	—	$	—	$	1,588	$	1,588
Net loss	(a)(b)(f)	—	—		—		(109)		(109)
Equity-based compensation		—	—		—		—		—
Issuance of common stock for restricted stock		—	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		—		—		—
Balance - May 1, 2022		—	$	—	$	—	$	1,479	$	1,479
Net loss	(a)(b)(d)(f)	—	—		—		(1,273)		(1,273)
Equity-based compensation		—	—		—		—		—
Issuance of common stock for restricted stock		—	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		—		—		—
Balance - July 31, 2022		—	$	—	$	—	$	206	$	206
Net income	(a)(b)(d)(f)	—	—		—		1,057		1,057
Equity-based compensation		—	—		—		—		—
Issuance of common stock for restricted stock		—	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		—		—		—
Balance - October 30, 2022		—	$	—	$	—	$	1,263	$	1,263
As Restated
Balance - January 30, 2022		15,123,338	$	—	$	173,762	$	(15,948)	$	157,814
Net income		—	—		—		1,786		1,786
Equity-based compensation		—	—		1,163		—		1,163
Issuance of common stock for restricted stock		1,704	—		—		—
Taxes paid for net share settlement of equity awards		—	—		(47)		—		(47)
Balance - May 1, 2022		15,125,042	$	—	$	174,878	$	(14,162)	$	160,716
Net income		—	—		—		5,849		5,849
Equity-based compensation		—	—		1,034		—		1,034
Issuance of common stock for restricted stock		58,235	—		—		—
Taxes paid for net share settlement of equity awards		—	—		(1,402)		—		(1,402)
Balance - July 31, 2022		15,183,277	$	—	$	174,510	$	(8,313)	$	166,197
Net loss		—	—		—		(7,362)		(7,362)
Equity-based compensation		—	—		732		—		732
Issuance of common stock for restricted stock		8,857	—		—		—
Taxes paid for net share settlement of equity awards		—	—		(134)		—		(134)
Balance - October 30, 2022		15,192,134	$	—	$	175,108	$	(15,675)	$	159,433

See descriptions of the net income (loss) impacts in the statements of operations for the thirteen and thirty-nine weeks ended October 30, 2022 sections above.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF CASH FLOWS

(unaudited)

	For the Thirty-Nine Weeks Ended October 30, 2022
	As Previously Reported		Corrections		Reference	As Restated
Cash Flows from Operating Activities
Net income (loss)	$	598	$	(325)	(a)(b)(f)	$	273
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of property and equipment	7,911		—			7,911
Amortization of other intangible assets	285		—			285
Amortization of deferred financing fees	117		—			117
Net loss on disposal of property and equipment	41		—			41
Equity based compensation	2,929		—			2,929
Non-cash operating lease cost	13,582		—			13,582
Deferred income taxes	141		(103)		(f)	38
Change in operating assets and liabilities:
Trade accounts receivable	(6,810)		—			(6,810)
Merchandise inventories	(45,988)		—			(45,988)
Prepaid expenses and other current assets	(20,547)		2,846		(a)(b)(e)(f)	(17,701)
Other assets	—		7		(e)	7
Accounts payable and accrued expenses	3,281		(2,073)		(a)(f)(h)	1,208
Operating lease liabilities	(13,227)		(3,596)		(b)(e)	(16,823)
Customer deposits	(7,455)		—			(7,455)
Net cash used in operating activities	(65,142)		(3,244)			(68,386)
Cash Flows from Investing Activities
Purchase of property and equipment	(21,292)		3,177		(h)	(18,115)
Payments for patents and trademarks	(267)		67		(h)	(200)
Net cash (used in) provided by investing activities	(21,559)		3,244			(18,315)
Cash Flows from Financing Activities
Taxes paid for net share settlement of equity awards	(1,583)		—			(1,583)
Payment of deferred financing costs	(276)		—			(276)
Net cash used in financing activities	(1,859)		—			(1,859)
Net change in cash and cash equivalents	(88,560)		—			(88,560)
Cash and cash equivalents - Beginning	92,392		—			92,392
Cash and cash equivalents - Ending	$	3,832	$	—		$	3,832
Supplemental Cash Flow Data:
Cash paid for taxes	$	9,811	$	—		$	9,811
Cash paid for interest	$	65	$	—		$	65
Non-cash investing activities:
Asset acquisitions not yet paid for at period end	$	—	$	3,244	(h)	$	3,244

See descriptions of the net income (loss) impacts in the statement of operations for the thirty-nine weeks ended October 30, 2022 section above.

The cash flow classification, as described in item (h) in the description of misstatement adjustments section above, resulted in a decrease of $3.2 million in net cash provided by operating activities and an increase of $3.2 million in net cash provided by investing activities for the thirty-nine weeks ended October 30, 2022.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the thirty-nine weeks ended October 30, 2022.

THE LOVESAC COMPANY

CONDENSED BALANCE SHEET

(unaudited)

	July 31, 2022
(amounts in thousands, except share and per share amounts)	As Previously Reported		Corrections		Reference	As Restated
Assets
Current Assets
Cash and cash equivalents	$	17,652	$	—		$	17,652
Trade accounts receivable	8,970		—			8,970
Merchandise inventories, net	146,626		(934)		(d)	145,692
Prepaid expenses and other current assets	36,011		(4,834)		(a)(b)(e)(f)	31,177
Total Current Assets	209,259		(5,768)			203,491
Property and equipment, net	42,049		—			42,049
Operating lease right-of-use assets	113,823		(600)		(b)	113,223
Other Assets
Goodwill	144		—			144
Intangible assets, net	1,425		—			1,425
Deferred financing costs, net	116		—			116
Deferred tax asset	7,098		310		(f)	7,408
Other assets	—		1,057		(e)	1,057
Total Other Assets	8,783		1,367			10,150
Total Assets	$	373,914	$	(5,001)		$	368,913
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	34,238	$	—		$	34,238
Accrued expenses	29,372		1,401		(a)(f)	30,773
Payroll payable	5,056		—			5,056
Customer deposits	6,488		—			6,488
Current operating lease liabilities	18,514		(6,608)		(b)(e)	11,906
Sales taxes payable	4,391		—			4,391
Total Current Liabilities	98,059		(5,207)			92,852
Operating Lease Liability, long-term	109,864		—			109,864
Line of Credit	—		—			—
Total Liabilities	207,923		(5,207)			202,716
Stockholders’ Equity
Preferred Stock $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of July 31, 2022	—		—			—
Common Stock $0.00001 par value, 40,000,000 shares authorized, 15,183,277 shares issued and outstanding as of July 31, 2022	—		—			—
Additional paid-in capital	174,510		—			174,510
Accumulated (deficit) earnings	(8,519)		206		(a)(b)(d)(f)	(8,313)
Stockholders' Equity	165,991		206			166,197
Total Liabilities and Stockholders' Equity	$	373,914	$	(5,001)		$	368,913

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.2 million, an increase to accrued expenses of $1.0 million, and an increase to accumulated deficit of $0.8 million at July 31, 2022.

(b) Leases - The correction of these misstatements resulted in an decease to prepaid expenses and other current assets of less than $0.1 million, a decrease to operating lease right-of-use assets of $0.6 million, a decrease to current operating lease liabilities of $2.6 million, and a decrease to accumulated deficit of $2.0 million at July 31, 2022.

(d) Supplier Rebates - The correction of these misstatements resulted in a decrease to merchandise inventories, net of $0.9 million and an increase to accumulated deficit of $0.9 million at July 31, 2022.

(e) Balance Sheet Reclassifications - The correction of these misstatements resulted in a decrease to prepaid expenses and other current assets of $5.1 million, a decrease to current operating lease liabilities of $4.0 million and an increase to other assets of $1.1 million at July 31, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in an increase to prepaid expenses and other current assets of less than $0.1 million, an increase to deferred tax asset of $0.3 million, an increase to accrued expenses of $0.3 million, and an increase to accumulated deficit of less than $0.1 million at July 31, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF OPERATIONS

(unaudited)

	For the Thirteen Weeks Ended July 31, 2022
(amounts in thousands, except per share data and share amounts)	As Previously Reported		Corrections		Reference	As Restated
Net sales	$	148,534	$	—		$	148,534
Cost of merchandise sold	67,608		1,827		(a)(d)	69,435
Gross profit	80,926		(1,827)			79,099
Operating expenses
Selling, general and administration expenses	48,866		(51)		(b)	48,815
Advertising and marketing	19,088		—			19,088
Depreciation and amortization	3,076		—			3,076
Total operating expenses	71,030		(51)			70,979
Operating income (loss)	9,896		(1,776)			8,120
Interest income, net	3		—			3
Net income (loss) before taxes	9,899		(1,776)			8,123
(Provision for) benefit from income taxes	(2,777)		503		(f)	(2,274)
Net income (loss)	$	7,122	$	(1,273)		$	5,849
Net income (loss) per common share:
Basic	$	0.47	$	(0.09)		$	0.38
Diluted	$	0.45	$	(0.08)		$	0.37
Weighted average number of common shares outstanding:
Basic	15,195,116		—			15,195,116
Diluted	16,004,061		—			16,004,061

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to cost of merchandise sold of $0.9 million for the thirteen weeks ended July 31, 2022.

(b) Leases - The correction of these misstatements resulted in a decrease to selling, general and administrative expenses of less than $0.1 million for the thirteen weeks ended July 31, 2022.

(d) Supplier Rebates - The correction of these misstatements resulted in an increase to cost of merchandise sold of $0.9 million for the thirteen weeks ended July 31, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to provision for income taxes of $0.5 million for the thirteen weeks ended July 31, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF OPERATIONS

(unaudited)

	For the Twenty-Six Weeks Ended July 31, 2022
(amounts in thousands, except per share data and share amounts)	As Previously Reported		Corrections		Reference	As Restated
Net sales	$	277,914	$	—		$	277,914
Cost of merchandise sold	130,880		1,961		(a)(d)	132,841
Gross profit	147,034		(1,961)			145,073
Operating expenses
Selling, general and administration expenses	93,767		(34)		(b)	93,733
Advertising and marketing	34,989		—			34,989
Depreciation and amortization	5,737		—			5,737
Total operating expenses	134,493		(34)			134,459
Operating income (loss)	12,541		(1,927)			10,614
Interest expense, net	(32)		—			(32)
Net income (loss) before taxes	12,509		(1,927)			10,582
(Provision for) benefit from income taxes	(3,492)		545		(f)	(2,947)
Net income (loss)	$	9,017	$	(1,382)		$	7,635
Net income (loss) per common share:
Basic	$	0.59	$	(0.09)		$	0.50
Diluted	$	0.56	$	(0.08)		$	0.48
Weighted average number of common shares outstanding:
Basic	15,175,247		—			15,175,247
Diluted	16,032,731		—			16,032,731

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to cost of merchandise sold of $1.0 million for the twenty-six weeks ended July 31, 2022.

(b) Leases - The correction of these misstatements resulted in a decrease to selling, general and administrative expenses of less than $0.1 million for the twenty-six weeks ended July 31, 2022.

(d) Supplier Rebates - The correction of these misstatements resulted in an increase to cost of merchandise sold of $0.9 million for the twenty-six weeks ended July 31, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to provision for income taxes of $0.5 million for the twenty-six weeks ended July 31, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2022

(unaudited)

		Common
(amounts in thousands, except share amounts)	Restatement Reference	Shares	Amount		Additional paid-in capital		Accumulated (deficit) earnings		Total Shareholders' Equity
As Previously Reported
Balance - January 30, 2022		15,123,338	$	—	$	173,762	$	(17,536)	$	156,226
Net income		—	—		—		1,895		1,895
Equity-based compensation		—	—		1,163		—		1,163
Issuance of common stock for restricted stock		1,704	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(47)		—		(47)
Balance - May 1, 2022		15,125,042	$	—	$	174,878	$	(15,641)	$	159,237
Net income		—	—		—		7,122		7,122
Equity-based compensation		—	—		1,034		—		1,034
Issuance of common stock for restricted stock		58,235	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(1,402)		—		(1,402)
Balance - July 31, 2022		15,183,277	$	—	$	174,510	$	(8,519)	$	165,991
Restatement Impacts
Balance - January 30, 2022	(a)(b)(f)	—	$	—	$	—	$	1,588	$	1,588
Net loss	(a)(b)(f)	—	—		—		(109)		(109)
Equity-based compensation		—	—		—		—		—
Issuance of common stock for restricted stock		—	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		—		—		—
Balance - May 1, 2022		—	$	—	$	—	$	1,479	$	1,479
Net loss	(a)(b)(d)(f)	—	—		—		(1,273)		(1,273)
Equity-based compensation		—	—		—		—		—
Issuance of common stock for restricted stock		—	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		—		—		—
Balance - July 31, 2022		—	$	—	$	—	$	206	$	206
As Restated
Balance - January 30, 2022		15,123,338	$	—	$	173,762	$	(15,948)	$	157,814
Net income		—	—		—		1,786		1,786
Equity-based compensation		—	—		1,163		—		1,163
Issuance of common stock for restricted stock		1,704	—		—		—
Taxes paid for net share settlement of equity awards		—	—		(47)		—		(47)
Balance - May 1, 2022		15,125,042	$	—	$	174,878	$	(14,162)	$	160,716
Net income		—	—		—		5,849		5,849
Equity-based compensation		—	—		1,034		—		1,034
Issuance of common stock for restricted stock		58,235	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(1,402)		—		(1,402)
Balance - July 31, 2022		15,183,277	$	—	$	174,510	$	(8,313)	$	166,197

See descriptions of the net income (loss) impacts in the statements of operations for the thirteen and twenty-six weeks ended July 31, 2022 sections above.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF CASH FLOWS

(unaudited)

	For the Twenty-Six Weeks Ended July 31, 2022
	As Previously Reported		Corrections		Reference	As Restated
Cash Flows from Operating Activities
Net income (loss)	$	9,017	$	(1,382)	(a)(b)(d)(f)	$	7,635
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of property and equipment	5,549		—			5,549
Amortization of other intangible assets	188		—			188
Amortization of deferred financing fees	71		—			71
Equity based compensation	2,197		—			2,197
Non-cash operating lease cost	8,711		—			8,711
Deferred income taxes	2,738		(425)		(f)	2,313
Change in operating assets and liabilities:
Trade accounts receivable	(423)		—			(423)
Merchandise inventories	(38,133)		934		(d)	(37,199)
Prepaid expenses and other current assets	(17,916)		1,406		(a)(b)(e)(f)	(16,510)
Other assets	—		(10)		(e)	(10)
Accounts payable and accrued expenses	(16,024)		(2,496)		(a)(f)(h)	(18,520)
Operating lease liabilities	(8,501)		(1,563)		(b)(e)	(10,064)
Customer deposits	(6,828)		—			(6,828)
Net cash used in operating activities	(59,354)		(3,536)			(62,890)
Cash Flows from Investing Activities
Purchase of property and equipment	(13,461)		3,496		(h)	(9,965)
Payments for patents and trademarks	(200)		40		(h)	(160)
Net cash (used in) provided by investing activities	(13,661)		3,536			(10,125)
Cash Flows from Financing Activities
Taxes paid for net share settlement of equity awards	(1,449)		—			(1,449)
Payment of deferred financing costs	(276)		—			(276)
Net cash used in financing activities	(1,725)		—			(1,725)
Net change in cash and cash equivalents	(74,740)		—			(74,740)
Cash and cash equivalents - Beginning	92,392		—			92,392
Cash and cash equivalents - Ending	$	17,652	$	—		$	17,652
Supplemental Cash Flow Data:
Cash paid for taxes	$	9,393	$	—		$	9,393
Cash paid for interest	$	34	$	—		$	34
Non-cash investing activities:
Asset acquisitions not yet paid for at period end	$	—	$	3,536	(h)	$	3,536

See descriptions of the net income (loss) impacts in the statement of operations for the twenty-six weeks ended July 31, 2022 section above.

The cash flow classification, as described in item (h) in the description of misstatement adjustments section above, resulted in a decrease of $3.5 million in net cash provided by operating activities and an increase of $3.5 million in net cash provided by investing activities for the twenty-six weeks ended July 31, 2022.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the twenty-six weeks ended July 31, 2022.

THE LOVESAC COMPANY

CONDENSED BALANCE SHEET

(unaudited)

	May 1, 2022
(amounts in thousands, except share and per share amounts)	As Previously Reported		Corrections		Reference	As Restated
Assets
Current Assets
Cash and cash equivalents	$	64,380	$	—		$	64,380
Trade accounts receivable	6,413		—			6,413
Merchandise inventories, net	123,008		—			123,008
Prepaid expenses and other current assets	16,384		(3,971)		(a)(b)(e)(f)	12,413
Total Current Assets	210,185		(3,971)			206,214
Property and equipment, net	37,455		—			37,455
Operating lease right-of-use assets	107,930		—			107,930
Other Assets
Goodwill	144		—			144
Intangible assets, net	1,452		—			1,452
Deferred financing costs, net	97		—			97
Deferred tax asset	9,313		(84)		(f)	9,229
Other assets	—		1,074		(e)	1,074
Total Other Assets	11,006		990			11,996
Total Assets	$	366,576	$	(2,981)		$	363,595
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	29,764	$	—		$	29,764
Accrued expenses	39,431		494		(a)(f)	39,925
Payroll payable	5,188		—			5,188
Customer deposits	7,607		—			7,607
Current operating lease liabilities	17,530		(4,954)		(b)(e)	12,576
Sales taxes payable	4,339		—			4,339
Total Current Liabilities	103,859		(4,460)			99,399
Operating Lease Liability, long-term	103,480		—			103,480
Line of Credit	—		—			—
Total Liabilities	207,339		(4,460)			202,879
Stockholders’ Equity
Preferred Stock $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of May 1, 2022	—		—			—
Common Stock $0.00001 par value, 40,000,000 shares authorized, 15,125,042 shares issued and outstanding as of May 1, 2022	—		—			—
Additional paid-in capital	174,878		—			174,878
Accumulated (deficit) earnings	(15,641)		1,479		(a)(b)(f)	(14,162)
Stockholders' Equity	159,237		1,479			160,716
Total Liabilities and Stockholders' Equity	$	366,576	$	(2,981)		$	363,595

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.1 million, an increase to accrued expenses of less than $0.1 million, and a decrease to accumulated deficit of less than $0.1 million at May 1, 2022.

(b) Leases - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.3 million, a decrease to current operating lease liabilities of $1.7 million, and a decrease to accumulated deficit of $2.0 million at May 1, 2022.

(e) Balance Sheet Reclassifications - The correction of these misstatements resulted in a decrease to prepaid expenses and other current assets of $4.4 million, a decrease to current operating lease liabilities of $3.3 million and an increase to other assets of $1.1 million at May 1, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in an increase to prepaid expenses and other current assets of less than $0.1 million, a decrease to deferred tax asset of $0.1 million, an increase to accrued expenses of $0.4 million, and an increase to accumulated deficit of $0.5 million at May 1, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF OPERATIONS

(unaudited)

	For the Thirteen Weeks Ended May 1, 2022
(amounts in thousands, except per share data and share amounts)	As Previously Reported		Corrections		Reference	As Restated
Net sales	$	129,380	$	—		$	129,380
Cost of merchandise sold	63,272		134		(a)	63,406
Gross profit	66,108		(134)			65,974
Operating expenses
Selling, general and administration expenses	44,901		17		(b)	44,918
Advertising and marketing	15,901		—			15,901
Depreciation and amortization	2,661		—			2,661
Total operating expenses	63,463		17			63,480
Operating income (loss)	2,645		(151)			2,494
Interest expense, net	(35)		—			(35)
Net income (loss) before taxes	2,610		(151)			2,459
(Provision for) benefit from income taxes	(715)		42		(f)	(673)
Net income (loss)	$	1,895	$	(109)		$	1,786
Net income (loss) per common share:
Basic	$	0.13	$	(0.01)		$	0.12
Diluted	$	0.12	$	(0.01)		$	0.11
Weighted average number of common shares outstanding:
Basic	15,155,378		—			15,155,378
Diluted	16,173,339		—			16,173,339

The description of each error is described in Note 2. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to cost of merchandise sold of $0.1 million for the thirteen weeks ended May 1, 2022.

(b) Leases - The correction of these misstatements resulted in an increase to selling, general and administrative expenses of less than $0.1 million for the thirteen weeks ended May 1, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to provision for income taxes of less than $0.1 million for the thirteen weeks ended May 1, 2022.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THIRTEEN WEEKS ENDED MAY 1, 2022

(unaudited)

		Common
(amounts in thousands, except share amounts)	Restatement Reference	Shares	Amount		Additional paid-in capital		Accumulated (deficit) earnings		Total Shareholders' Equity
As Previously Reported
Balance - January 30, 2022		15,123,338	$	—	$	173,762	$	(17,536)	$	156,226
Net income		—	—		—		1,895		1,895
Equity-based compensation		—	—		1,163		—		1,163
Issuance of common stock for restricted stock		1,704	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(47)		—		(47)
Balance - May 1, 2022		15,125,042	$	—	$	174,878	$	(15,641)	$	159,237
Restatement Impacts
Balance - January 30, 2022	(a)(b)(f)	—	$	—	$	—	$	1,588	$	1,588
Net loss	(a)(b)(f)	—	—		—		(109)		(109)
Equity-based compensation		—	—		—		—		—
Issuance of common stock for restricted stock		—	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		—		—		—
Balance - May 1, 2022		—	$	—	$	—	$	1,479	$	1,479
As Restated
Balance - January 30, 2022		15,123,338	$	—	$	173,762	$	(15,948)	$	157,814
Net income		—	—		—		1,786		1,786
Equity-based compensation		—	—		1,163		—		1,163
Issuance of common stock for restricted stock		1,704	—		—		—		—
Taxes paid for net share settlement of equity awards		—	—		(47)		—		(47)
Balance - May 1, 2022		15,125,042	$	—	$	174,878	$	(14,162)	$	160,716

See descriptions of the net income (loss) impacts in the statement of operations for the thirteen weeks ended May 1, 2022 section above.

THE LOVESAC COMPANY

CONDENSED STATEMENT OF CASH FLOWS

(unaudited)

	For the Thirteen Weeks Ended May 1, 2022
	As Previously Reported		Corrections		Reference	As Restated
Cash Flows from Operating Activities
Net income (loss)	$	1,895	$	(109)	(a)(b)(f)	$	1,786
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of property and equipment	2,575		—			2,575
Amortization of other intangible assets	86		—			86
Amortization of deferred financing fees	29		—			29
Equity based compensation	1,163		—			1,163
Non-cash operating lease cost	4,184		—			4,184
Deferred income taxes	523		(31)		(f)	492
Change in operating assets and liabilities:
Trade accounts receivable	2,134		—			2,134
Merchandise inventories	(14,515)		—			(14,515)
Prepaid expenses and other current assets	270		543		(a)(b)(e)(f)	813
Other assets	—		(26)		(e)	(26)
Accounts payable and accrued expenses	(10,359)		(1,409)		(a)(f)(h)	(11,768)
Operating lease liabilities	(4,062)		(509)		(b)(e)	(4,571)
Customer deposits	(5,709)		—			(5,709)
Net cash used in operating activities	(21,786)		(1,541)			(23,327)
Cash Flows from Investing Activities
Purchase of property and equipment	(5,893)		1,443		(h)	(4,450)
Payments for patents and trademarks	(125)		98		(h)	(27)
Net cash (used in) provided by investing activities	(6,018)		1,541			(4,477)
Cash Flows from Financing Activities
Taxes paid for net share settlement of equity awards	(47)		—			(47)
Payment of deferred financing costs	(161)		—			(161)
Net cash used in financing activities	(208)		—			(208)
Net change in cash and cash equivalents	(28,012)		—			(28,012)
Cash and cash equivalents - Beginning	92,392		—			92,392
Cash and cash equivalents - Ending	$	64,380	$	—		$	64,380
Supplemental Cash Flow Data:
Cash paid for taxes	$	905	$	—		$	905
Cash paid for interest	$	33	$	—		$	33
Non-cash investing activities:
Asset acquisitions not yet paid for at period end	$	—	$	1,541	(h)	$	1,541

See descriptions of the net income (loss) impacts in the statement of operations for the thirteen weeks ended May 1, 2022 section above.

The cash flow classification, as described in item (h) in the description of misstatement adjustments section above, resulted in a decrease of $1.5 million in net cash provided by operating activities and an increase of $1.5 million in net cash provided by investing activities for the thirteen weeks ended May 1, 2022.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the thirteen weeks ended May 1, 2022.