Annual report pursuant to Section 13 and 15(d)

Quarterly Financial Data (Unaudited)

v3.23.3
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.