The Lovesac pany(LOVE) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements, including Balance Sheets, Statements of Operations, Changes in Stockholders' Equity, and Cash Flows, for the period ended April 30, 2023 Condensed Balance Sheets | Metric | April 30, 2023 (in thousands) | January 29, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $45,125 | $43,533 | | Total Current Assets | $187,697 | $194,041 | | Total Assets | $428,036 | $418,054 | | Total Current Liabilities | $96,922 | $88,839 | | Total Liabilities | $238,790 | $224,794 | | Total Stockholders' Equity | $189,246 | $193,260 | Condensed Statements of Operations | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net sales | $141,193 | $129,380 | | Cost of merchandise sold | $70,489 | $63,272 | | Gross profit | $70,704 | $66,108 | | Total operating expenses | $76,573 | $63,463 | | Operating (loss) income | $(5,869) | $2,645 | | Net (loss) income | $(4,230) | $1,895 | | Basic Net (loss) income per common share | $(0.28) | $0.13 | | Diluted Net (loss) income per common share | $(0.28) | $0.12 | Condensed Statements of Changes in Stockholders' Equity | Metric | January 29, 2023 (in thousands) | April 30, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Balance - January 29, 2023 | $193,260 | - | | Net loss | - | $(4,230) | | Equity based compensation | - | $686 | | Taxes paid for net share settlement of equity awards | - | $(470) | | Balance - April 30, 2023 | - | $189,246 | Condensed Statements of Cash Flows | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net Cash Provided by (Used in) Operating Activities | $6,291 | $(21,786) | | Net Cash Used in Investing Activities | $(4,177) | $(6,018) | | Net Cash Used in Financing Activities | $(522) | $(208) | | Net Change in Cash and Cash Equivalents | $1,592 | $(28,012) | | Cash and Cash Equivalents - Ending | $45,125 | $64,380 | Notes to Financial Statements Note 1. Basis of Presentation and Summary of Significant Accounting Policies This note outlines the basis of presentation for interim unaudited financial statements, highlighting the seasonal business nature and the Company's 'Designed for Life' furniture approach - The Company's business is seasonal, with the majority of activity occurring in the fourth fiscal quarter, meaning interim results are not necessarily indicative of full-year results[26] - The Lovesac Company designs, manufactures, and sells high-quality furniture using a 'Designed for Life' approach, marketing products through showrooms (211 locations as of April 30, 2023) and its e-commerce website[27] Note 2. Revenue Recognition This note details revenue recognition policies, including product net sales, shipping, returns, customer deposits, and disaggregation of net sales by channel - Revenue is recognized when control of products transfers to the customer, typically upon delivery to a third-party carrier[32] Shipping and Handling Costs and Customer Deposits | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Shipping and handling costs | $37,800 | $34,900 | | Customer deposit liabilities (period end) | $15,400 | $6,800 | | Customer deposits recognized as revenue | $6,800 | $13,300 | Sales Channel Disaggregation | Sales Channel | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Showrooms | $83,574 | $81,254 | | Internet | $40,225 | $31,255 | | Other | $17,394 | $16,871 | | Total Net Sales | $141,193 | $129,380 | - The Company engages in barter arrangements, repurposing returned inventory for media credits to support advertising, with barter sales recognized at $4.1 million for the thirteen weeks ended April 30, 2023, up from $2.6 million in the prior year[38][39] Note 3. Income Taxes This note details income tax benefit/expense, effective tax rates, influencing factors, and addresses unrecognized tax benefits and penalties Income Tax Benefit (Expense) and Effective Tax Rate | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Income tax (benefit) expense | $1,298 (benefit) | $(715) (expense) | | Effective tax rate | 23.5% | 27.4% | - The effective tax rate for the thirteen weeks ended April 30, 2023, was 23.5%, compared to 27.4% for the prior year, primarily due to state taxes varying from the 21% federal statutory rate[41] Note 4. Basic and Diluted Net (Loss) Income Per Common Share This note explains basic and diluted net (loss) income per common share calculation, detailing the exclusion of antidilutive securities during net loss periods - For the thirteen weeks ended April 30, 2023, 1,283,449 restricted stock units, 495,366 stock options, and 281,750 warrants were excluded from diluted EPS calculation as their inclusion would be antidilutive due to the net loss[44] Note 5. Leases This note details lease expenses, weighted average lease terms, discount rates for operating leases, and future minimum lease payments Lease Expenses | Lease Expense Type | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Operating lease expense | $7,004 | $5,334 | | Variable lease expense | $2,041 | $2,197 | | Short term lease expense | $240 | $179 | | Total lease expense | $9,285 | $7,710 | Weighted Average Lease Terms and Discount Rates | Metric | April 30, 2023 | May 1, 2022 | | :-------------------------------- | :------------- | :---------- | | Weighted average remaining lease term (years) | 7.5 | 7.2 | | Weighted average discount rate | 4.42% | 3.97% | Future Minimum Lease Payments | Future Minimum Lease Payments (as of April 30, 2023, in thousands) | Amount | | :------------------------------------------------ | :----- | | Total undiscounted future minimum lease payments | $195,486 | | Total present value of lease obligations | $164,028 | | Operating lease liability - long term | $141,868 | Note 6. Commitments and Contingencies This note addresses legal proceedings, with management believing their resolution will not materially adversely affect the Company's financial position or cash flows - Management believes that the ultimate resolution of current legal proceedings will not materially adversely affect the Company's financial position, results of operations, or cash flows[50] Note 7. Financing Arrangements This note details the Company's revolving line of credit with Wells Fargo, including its extended maturity to September 2024 and borrowing availability - The Company's line of credit with Wells Fargo was amended on March 24, 2023, extending its maturity date to September 2024[52] - As of April 30, 2023, the Company had $36.0 million in borrowing availability under the line of credit, with no outstanding borrowings[52] Note 8. Stockholders' Equity This note provides information on common stock warrants, equity incentive plan, stock options, and restricted stock units, including compensation expense - As of April 30, 2023, 281,750 common stock warrants remain outstanding with an average exercise price of $19.20 and a weighted average remaining contractual life of 0.16 years[53] - The 2017 Equity Incentive Plan was amended in fiscal 2024, increasing authorized shares for issuance by 225,000 to a total of 2,879,889 shares[54] - 495,366 non-statutory stock options granted in June 2019 vested on June 5, 2022, after meeting employment and market conditions (average closing price of $75 for 40 consecutive trading days)[55] Restricted Stock Units | Restricted Stock Units | April 30, 2023 | May 1, 2022 | | :-------------------------------- | :------------- | :---------- | | Unvested at period end | 1,283,449 | 767,023 | | Weighted average grant date fair value | $30.07 | $34.31 | | Equity based compensation expense (in thousands) | $686 | $1,163 | - Total unrecognized equity-based compensation cost related to unvested awards was approximately $7.0 million as of April 30, 2023, to be recognized over a weighted average period of 2.4 years[58] - In March 2023, the CEO received a one-time grant of 235,000 Restricted Stock Units, vesting on the fifth or seventh anniversary of the grant date, contingent on continuous service and achievement of specified share price and net sales performance levels[59] Note 9. Segment Information This note clarifies the Company operates as a single reportable segment, with sales disaggregated by Sactionals, Sacs, and Other product categories - The Company's operating segments are aggregated into one reportable segment, as the chief operating decision makers review results for sales channels that share similar economic and qualitative characteristics[60] Net Sales by Product Category | Product Category | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Sactionals | $127,903 | $115,002 | | Sacs | $10,737 | $11,927 | | Other | $2,553 | $2,451 | | Total Net Sales | $141,193 | $129,380 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Company's financial condition and results of operations for the thirteen weeks ended April 30, 2023, covering key performance indicators, macro-economic factors, product offerings, sales channels, and liquidity Overview This section provides an overview of The Lovesac Company's business model, product offerings, omni-channel platform, and the impact of macro-economic factors on its operations - The Lovesac Company is a technology-driven furniture company known for its modular Sactionals and premium foam Sacs, designed for life-long adaptability and protected by utility patents[64] - The Company operates an omni-channel platform, combining direct-to-consumer showrooms (including mobile concierge and kiosks) with a strong e-commerce presence[64] - Macro-economic factors such as increased inflation, rising interest rates, and housing market conditions have contributed to a slowdown in demand, which may continue to impact the business[65] Product Overview This section details the Company's core product lines, Sactionals and Sacs, highlighting their features, market positioning, and contribution to net sales - Sactionals, comprising modular couches with patented features, represented 90.6% of net sales for the thirteen weeks ended April 30, 2023 (up from 88.9% in prior year), emphasizing adaptability and durability[67] - The Sactionals StealthTech Sound + Charge product line, introduced in October 2021, integrates immersive surround sound by Harman Kardon and wireless charging into the modular platform[67] - Sacs, oversized beanbag chairs filled with Durafoam, accounted for 7.6% of net sales for the thirteen weeks ended April 30, 2023 (down from 9.2% in prior year)[68] - The 'Other' product line includes accessories like drink holders, Footsac blankets, and the Sactionals Power Hub, complementing core products and enhancing customization[68] Sales Channels This section describes the Company's omni-channel sales strategy, including showrooms, e-commerce, and other touchpoints, and their respective contributions to net sales - Showrooms, totaling 211 locations as of April 30, 2023, accounted for 59.2% of total net sales for the thirteen weeks ended April 30, 2023 (down from 62.8% in prior year), with the Company updating showrooms to a new concept emphasizing technology for experiential engagement[68] - E-commerce sales increased to 28.5% of total net sales for the thirteen weeks ended April 30, 2023 (up from 24.2% in prior year), driven by strong promotional campaigns and leveraging robust technological capabilities[73] - Other touchpoints, including online pop-up-shops (e.g., Costco.com) and shop-in-shops (e.g., Best Buy), contributed 12.3% of total net sales (down from 13.0% in prior year), also including barter inventory transactions as part of ESG initiatives[73] SELECTED CONDENSED FINANCIAL INFORMATION This section presents selected condensed financial information, including statements of operations, balance sheet data, cash flow data, and a reconciliation of non-GAAP measures like EBITDA and Adjusted EBITDA Condensed Statements of Operations Data | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Total net sales | $141,193 | $129,380 | | Gross profit | $70,704 | $66,108 | | Operating (loss) income | $(5,869) | $2,645 | | Net (loss) income | $(4,230) | $1,895 | | Basic EPS | $(0.28) | $0.13 | | Diluted EPS | $(0.28) | $0.12 | | EBITDA | $(3,047) | $5,306 | | Adjusted EBITDA | $(2,356) | $6,373 | Condensed Balance Sheet Data | Metric | April 30, 2023 (in thousands) | January 29, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $45,125 | $43,533 | | Working capital | $90,775 | $105,202 | | Total assets | $428,036 | $418,054 | | Total liabilities | $238,790 | $224,794 | | Total stockholders' equity | $189,246 | $193,260 | Condensed Cash Flow Data | Cash Flow Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net Cash Provided by (Used in) Operating Activities | $6,291 | $(21,786) | | Net Cash Used in Investing Activities | $(4,177) | $(6,018) | | Net Cash Used in Financing Activities | $(522) | $(208) | | Net change in cash and cash equivalents | $1,592 | $(28,012) | | Cash and cash equivalents at period end | $45,125 | $64,380 | - EBITDA and Adjusted EBITDA are non-GAAP measures used to evaluate operating performance by excluding non-cash and certain other items not reflective of underlying business performance[75][77] Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA | Reconciliation Item | Thirteen Weeks Ended April 30, 2023 (in thousands) | Thirteen Weeks Ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net (loss) income | $(4,230) | $1,895 | | Interest (income) expense, net | $(341) | $35 | | Income tax (benefit) expense | $(1,298) | $715 | | Depreciation and amortization | $2,822 | $2,661 | | EBITDA | $(3,047) | $5,306 | | Equity-based compensation | $744 | $1,172 | | Other non-recurring expenses | $(53) | $(105) | | Adjusted EBITDA | $(2,356) | $6,373 | How We Assess the Performance of Our Business This section outlines the key financial metrics and operational indicators used by management to evaluate the Company's business performance Net Sales Net sales comprise merchandise sales, shipping, and handling revenue, less returns and discounts, recognized upon shipment from various channels - Net sales are recognized when title transfers upon shipment of goods from Company-operated showrooms, shop-in-shops, pop-up-shops, and web channels[80] Gross Profit Gross profit is net sales less cost of merchandise sold, with gross margin representing this profit as a percentage of net sales - Gross profit is defined as net sales less cost of merchandise sold, with gross margin being the percentage of gross profit to net sales[81] Selling, General and Administrative Expenses SG&A expenses include payroll, showroom occupancy, headquarters costs, equity-based compensation, and credit card fees, expected to increase with growth but leverage as a percentage of net sales - SG&A expenses include payroll, showroom occupancy, headquarters costs, equity-based compensation, public company expenses, and credit card fees[82] - SG&A as a percentage of net sales is typically higher in lower volume quarters and lower in higher volume quarters due to a significant portion of fixed costs[82] - The Company expects SG&A expenses to increase with business growth, particularly payroll and rent, but aims to leverage these as a percentage of net sales through continued growth and investments in R&D and technology[83] Advertising and Marketing Expense Advertising and marketing expenses cover digital, social, and traditional initiatives, expected to increase as a percentage of net sales to support growth - Advertising and marketing expenses include digital, social, and traditional initiatives across all business channels and are expected to increase as a percentage of net sales to support growth[84] Depreciation and Amortization Depreciation and amortization expenses are recognized for property, equipment, and intangible assets Basis of Presentation and Results of Operations This section provides the basis of financial presentation and analyzes the Company's results of operations for the reported periods Statement of Operations Data (% of Net Sales) | Statement of Operations Data (% of Net Sales) | Thirteen weeks ended April 30, 2023 | Thirteen weeks ended May 1, 2022 | | :-------------------------------------------- | :---------------------------------- | :------------------------------- | | Net sales | 100 % | 100 % | | Cost of merchandise sold | 50 % | 49 % | | Gross profit | 50 % | 51 % | | Selling, general and administrative expenses | 40 % | 35 % | | Advertising and marketing | 12 % | 12 % | | Depreciation and amortization | 2 % | 2 % | | Operating (loss) income | -4 % | 2 % | | Interest expense, net | 0 % | 0 % | | Net (loss) income before taxes | -4 % | 2 % | | Benefit from (provision for) income taxes | 1 % | -1 % | | Net (loss) income | -3 % | 1 % | Thirteen weeks ended April 30, 2023 Compared to the thirteen weeks ended May 1, 2022 This section compares financial performance for the thirteen weeks ended April 30, 2023, against the prior year, detailing changes in net sales, gross profit, operating expenses, and net income/loss Net sales This section analyzes the changes in net sales across various channels for the thirteen weeks ended April 30, 2023, compared to the prior year - Net sales increased by $11.8 million, or 9.1%, to $141.2 million, driven by growth across all channels and a 19.7% increase in new customers[87] - Showroom net sales increased by 2.9% to $83.6 million, primarily due to comparable sales growth of 8.4% and the addition of 50 new showrooms, despite a 15.8% decrease in total units sold[87] - Internet net sales surged by 28.7% to $40.2 million, attributed to strong promotional campaigns[87] - Other net sales grew by 3.1% to $17.4 million, mainly due to inventory barter transactions and 95 Costco in-store pop-up-shops, partially offset by lower productivity from online pop-up-shops[87] Gross profit This section analyzes the changes in gross profit and gross margin for the thirteen weeks ended April 30, 2023, compared to the prior year - Gross profit increased by $4.6 million, or 7.0%, to $70.7 million, but gross margin decreased by 100 basis points to 50.1% of net sales[88] - The gross margin decrease was primarily due to a 120 basis point drop in product margin from higher promotional discounting, partially offset by a 20 basis point decrease in total distribution and related tariff expenses[88] Selling, general and administrative expenses This section analyzes the changes in selling, general, and administrative expenses for the thirteen weeks ended April 30, 2023, compared to the prior year - SG&A expenses increased by $11.9 million, or 26.6%, to $56.8 million, driven by higher employment costs ($5.9 million), overhead expenses ($2.9 million), and rent ($1.4 million) from new showrooms[89] - As a percentage of net sales, SG&A increased by 560 basis points to 40.3%, mainly due to deleverage in employment costs, continuous growth investments, and increased selling-related expenses[90] Advertising and Marketing This section analyzes the changes in advertising and marketing expenses for the thirteen weeks ended April 30, 2023, compared to the prior year - Advertising and marketing expenses increased by $1.0 million, or 6.4%, to $16.9 million, reflecting ongoing investments to support net sales growth[91] - As a percentage of net sales, advertising and marketing expenses slightly decreased to 12.0% from 12.3% in the prior year[91] Depreciation and amortization expenses This section analyzes the changes in depreciation and amortization expenses for the thirteen weeks ended April 30, 2023, compared to the prior year - Depreciation and amortization expenses increased by $0.1 million, or 6.1%, to $2.8 million, primarily due to capital investments in new and remodeled showrooms[92] Interest income (expense), net This section analyzes the changes in net interest income (expense) for the thirteen weeks ended April 30, 2023, compared to the prior year - The Company reported interest income of $0.3 million, a favorable change from an interest expense of less than $0.1 million in the prior year, driven by higher interest rates on cash balances[93] Benefit (provision) for income taxes This section analyzes the changes in income tax benefit (provision) for the thirteen weeks ended April 30, 2023, compared to the prior year - The Company recorded an income tax benefit of $1.3 million, a shift from an income tax expense of $0.7 million in the prior year, primarily due to a net loss before taxes of $5.5 million[94] Liquidity and Capital Resources This section discusses the Company's liquidity sources, capital needs, and management's assessment of its ability to meet future financial obligations General The Company's liquidity sources include cash flows from operations, a revolving line of credit, and securities issuances, supporting key needs like marketing, inventory, and capital expenditures - Primary liquidity sources are cash flows from operations, a revolving line of credit, and securities issuances[95] - Key cash needs include marketing, inventory, payroll, showroom rent, capital expenditures for new/updated showrooms, and IT investments[95] - The Company believes existing cash, operational cash flow, and credit line availability are sufficient for working capital and capital expenditures for at least the next 12 months[95] Cash Flow Analysis This section analyzes the Company's cash flows from operating, investing, and financing activities, detailing drivers of changes in cash and cash equivalents Cash Flow Summary | Cash Flow Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net Cash Provided by (Used in) Operating Activities | $6,291 | $(21,786) | | Net Cash Used in Investing Activities | $(4,177) | $(6,018) | | Net Cash Used in Financing Activities | $(522) | $(208) | | Net change in cash and cash equivalents | $1,592 | $(28,012) | | Cash and cash equivalents at period end | $45,125 | $64,380 | Net Cash Provided by (Used in) Operating Activities This section analyzes the net cash provided by or used in operating activities, detailing the primary factors influencing these changes - Net cash provided by operating activities was $6.3 million for the thirteen weeks ended April 30, 2023, a significant improvement from $21.8 million used in the prior year[99][100] - The positive operating cash flow in 2023 was driven by decreases in merchandise inventories ($13.1 million) and prepaid expenses ($6.0 million), and increases in customer deposits ($8.6 million)[99] Net Cash Used in Investing Activities This section analyzes the net cash used in investing activities, primarily focusing on capital expenditures for showrooms and intangible assets - Net cash used in investing activities decreased to $4.2 million for the thirteen weeks ended April 30, 2023, from $6.0 million in the prior year, primarily due to lower capital expenditures for new/remodeled showrooms and intangible assets[101][102] Net Cash Used in Financing Activities This section analyzes the net cash used in financing activities, primarily due to taxes paid for net share settlement of equity awards - Net cash used in financing activities increased to $0.5 million for the thirteen weeks ended April 30, 2023, mainly due to taxes paid for net share settlement of equity awards[103] Revolving Line of Credit The Company's revolving credit facility with Wells Fargo was extended to September 2024, with $36.0 million borrowing availability and no outstanding borrowings - The revolving credit facility with Wells Fargo was extended to mature on September 30, 2024, with a maximum commitment of $40.0 million[105][106] - As of April 30, 2023, the Company had $36.0 million in borrowing availability and no outstanding borrowings on the line of credit[105] Off Balance Sheet Arrangements As of April 30, 2023, the Company has no material off-balance sheet arrangements, other than ordinary course employment agreements - The Company has no material off-balance sheet arrangements as of April 30, 2023, other than ordinary course employment agreements[107] Critical Accounting Policies and Estimates This section refers to the Annual Report on Form 10-K for accounting policies, noting no material changes during the thirteen weeks ended April 30, 2023 - No material changes to significant accounting policies occurred during the thirteen weeks ended April 30, 2023[108] Recent Accounting Pronouncements Recent accounting pronouncements are not expected to have a material impact on the Company's financial statements - Recent accounting pronouncements are not expected to have a material impact on the Company's financial statements[29][109] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the Company's exposure to market risks, including interest rate, inflation, and liquidity, and the strategies employed for their management Interest Rate Risk This section discusses the Company's exposure to interest rate fluctuations on cash and investments, and the expected impact on operations - The Company's cash, cash equivalents, and short-term investments are subject to interest rate fluctuations, but changes in prevailing interest rates are not expected to materially impact results of operations[111][112] Inflation This section discusses the Company's experience with inflationary pressures and its strategies to mitigate their impact on costs and supply chain - The Company experienced inflationary pressures in fiscal year 2023 across wholesale costs and supply chain, and monitors these impacts to minimize effects through pricing strategies, productivity improvements, and cost reductions[113] Liquidity Risk This section discusses the Company's approach to managing liquidity risk, including partnerships with strong banking institutions and access to credit markets - In response to 2023 global bank failures, the Company reinforced its commitment to a strong balance sheet and minimizing liquidity risk by partnering with strong banking institutions and ensuring access to credit markets[114] Item 4. Controls and Procedures This section details management's evaluation of disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section presents management's conclusion on the effectiveness of the Company's disclosure controls and procedures as of April 30, 2023 - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of April 30, 2023, concluding they provide reasonable assurance of achieving their objectives[115] Changes in Internal Control Over Financial Reporting This section reports on any material changes in internal control over financial reporting during the thirteen weeks ended April 30, 2023 - There were no material changes in internal control over financial reporting during the thirteen weeks ended April 30, 2023[116] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 6 for information on legal proceedings, which management believes will not materially adversely affect the Company - Information on legal proceedings is incorporated by reference from Note 6, Commitments and Contingencies, in Part I, Item 1 of this report[119] Item 1A. Risk Factors This section states no material changes to risk factors previously disclosed in the Company's Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2023[120] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period Item 3. Defaults Upon Senior Securities This item is not applicable for the reporting period Item 4. Mine Safety Disclosures This item is not applicable for the reporting period Item 5. Other Information This item is not applicable for the reporting period Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including equity incentive plan amendments, employment agreements, and certifications - Exhibits include Amendment No. 1 to The Lovesac Company Second Amended and Restated 2017 Equity Incentive Plan, employment agreements for Keith Siegner, and certifications by the CEO and CFO[126]