0001213900-21-047197.txt : 20210909 0001213900-21-047197.hdr.sgml : 20210909 20210909160133 ACCESSION NUMBER: 0001213900-21-047197 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 61 CONFORMED PERIOD OF REPORT: 20210801 FILED AS OF DATE: 20210909 DATE AS OF CHANGE: 20210909 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Lovesac Co CENTRAL INDEX KEY: 0001701758 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FURNITURE STORES [5712] IRS NUMBER: 320514958 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38555 FILM NUMBER: 211244413 BUSINESS ADDRESS: STREET 1: TWO LANDMARK SQUARE, SUITE 300 CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-817-2279 MAIL ADDRESS: STREET 1: TWO LANDMARK SQUARE, SUITE 300 CITY: STAMFORD STATE: CT ZIP: 06901 10-Q 1 f10q0821_thelovesacco.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended August 1, 2021

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                to         

 

Commission File Number: 001-38555
 
THE LOVESAC COMPANY
(Exact name of registrant as specified in its charter)

 

Delaware   32-0514958
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

Two Landmark Square, Suite 300    
Stamford, Connecticut   06901
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (888) 636-1223

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.00001 par value per share     LOVE     The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) ☒ Yes ☐ No

 

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

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

 

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of September 7, 2021, there were 15,118,514 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 

 

 

THE LOVESAC COMPANY

 

FORM 10-Q

INDEX TO QUARTERLY REPORT ON FORM 10-Q

AUGUST 1, 2021

 

    Page
PART I. FINANCIAL INFORMATION 1
     
Item 1. Financial Statements 1
     
  Condensed Consolidated Balance Sheets as of August 1, 2021 (unaudited) and January 31, 2021 1
     
  Condensed Consolidated Statements of Operations for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020 (unaudited) 2
     
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020 (unaudited) 3
     
  Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended August 1, 2021 and August 2, 2020 (unaudited) 4
     
  Notes to Condensed Consolidated Financial Statements (unaudited) 5
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 29
     
Item 4. Controls and Procedures 29
     
Part II. OTHER INFORMATION 30
     
Item 1. Legal Proceedings 30
     
Item 1A. Risk Factors 30
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
     
Item 3. Defaults Upon Senior Securities 30
     
Item 4. Mine Safety Disclosures 30
     
Item 5. Other Information 30
     
Item 6. Exhibits 31

 

i

 

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other legal authority, which statements may involve substantial risk and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.

 

You should not place undue reliance on forward looking statements. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur at all or on a specified timeframe. The cautionary statements set forth in this Quarterly Report on Form 10-Q, including in Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

  our ability to sustain recent growth rates;

 

  our ability to sustain the recent increase in our Internet sales;

 

  our ability to manage the growth of our operations over time;

 

  our ability to maintain, grow and enforce our brand and trademark rights;

 

  our ability to improve our products and develop new products;

 

  our ability to obtain, grow and enforce intellectual property related to our business and avoid infringement or other violation of the intellectual property rights of others;

 

  our ability to successfully open and operate new showrooms;

 

  the impact of any systems interruptions that impair customer access to our sites or other performance failures in our technology infrastructure;

 

  any decline in consumer spending including due to negative impact from economic conditions;

 

  our ability to compete and succeed in a highly competitive and evolving industry; and

 

  the effect and consequences of the novel coronavirus (“COVID-19”) public health crisis on our business operations and continuity.

 

We caution you that the foregoing list may not contain all the forward-looking statements made in this Quarterly Report on Form 10-Q.

 

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the sections entitled “Risk Factors” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur at all or on a specified timeline, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

 

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

 

ii

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

THE LOVESAC COMPANY

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   August 1,
2021
   January 31,
2021
 
   (unaudited)     
Assets        
Current Assets        
Cash and cash equivalents  $68,487,569   $78,341,101 
Trade accounts receivable   7,363,359    4,513,460 
Merchandise inventories   74,991,843    50,416,712 
Prepaid expenses and other current assets   10,602,702    10,128,353 
           
Total Current Assets   161,445,473    143,399,626 
           
Property and equipment, net   29,530,483    25,867,980 
           
Operating lease right-of-use assets   88,900,462    
-
 
           
Other Assets          
Goodwill   143,562    143,562 
Intangible assets, net   1,189,013    1,517,032 
Deferred financing costs, net   45,335    90,671 
           
Total Other Assets   1,377,910    1,751,265 
           
Total Assets  $281,254,328   $171,018,871 
           
Liabilities and Stockholders’ Equity          
Current Liabilities          
Accounts payable  $25,888,209   $24,310,972 
Accrued expenses   19,867,021    17,187,694 
Payroll payable   4,821,714    6,361,677 
Customer deposits   13,365,940    5,992,633 
Current operating lease liabilities   14,536,004    - 
Sales taxes payable   2,139,824    2,470,593 
           
Total Current Liabilities   80,618,712    56,323,569 
           
Deferred Rent   -    6,748,747 
           
Operating Lease Liability, long-term   83,707,124    - 
           
Line of Credit   115    
-
 
           
Total Liabilities   164,325,951    63,072,316 
           
Stockholders’ Equity          
Preferred Stock $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of August 1, 2021 and January 31, 2021.   
-
    
-
 
Common Stock $.00001 par value, 40,000,000 shares authorized, 15,105,826 shares issued and outstanding as of August 1, 2021 and 15,011,556 shares issued and outstanding as of January 31, 2021.   151    150 
Additional paid-in capital   169,855,660    171,382,086 
Accumulated deficit   (52,927,434)   (63,435,681)
           
Stockholders’ Equity   116,928,377    107,946,555 
           
Total Liabilities and Stockholders’ Equity  $281,254,328   $171,018,871 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1

 

 

THE LOVESAC COMPANY

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
Net sales  $102,447,339   $61,945,410   $185,362,758   $116,317,817 
Cost of merchandise sold   43,415,701    30,889,870    80,255,012    57,978,708 
Gross profit   59,031,638    31,055,540    105,107,746    58,339,109 
Operating expenses                    
Selling, general and administration expenses   35,385,196    23,383,525    66,103,378    49,214,927 
Advertising and marketing   13,035,551    7,166,537    23,715,916    15,362,122 
Depreciation and amortization   1,602,543    1,543,902    4,022,247    3,179,562 
Total operating expenses   50,023,290    32,093,964    93,841,541    67,756,611 
                     
Operating income (loss)   9,008,348    (1,038,424)   11,266,205    (9,417,502)
Interest (expense) income, net   (45,426)   (34,729)   (89,564)   21,627 
Net income (loss) before taxes   8,962,922    (1,073,153)   11,176,641    (9,395,875)
Provision for income taxes   (515,208)   (33,771)   (668,394)   (58,800)
Net income (loss)  $8,447,714   $(1,106,924)  $10,508,247   $(9,454,675)
                     
Net income (loss) per common share:                    
Basic  $0.56   $(0.08)  $0.70   $(0.65)
Diluted  $0.52   $(0.08)  $0.66   $(0.65)
                     
Weighted average number of common shares outstanding:                    
Basic   15,096,528    14,518,929    15,034,954    14,499,505 
Diluted   16,100,927    14,518,929    16,039,352    14,499,505 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2

 

 

THE LOVESAC COMPANY

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY 

FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2021 AND AUGUST 2, 2020

(unaudited)

 

   Common   Additional Paid-in   Accumulated     
   Shares   Amount   Capital   Deficit   Total 
Balance - February 2, 2020   14,472,611   $145   $168,317,210   $(78,162,828)  $90,154,527 
Net loss   -    
-
    
-
    (8,347,751)   (8,347,751)
Equity based compensation   -    
-
    898,077    
-
    898,077 
Vested restricted stock units   35,776    
-
    
-
    
-
    
-
 
Taxes paid for net share settlement of equity awards   -    
-
    (149,512)   
-
    (149,512)
Balance - May 3, 2020   14,508,387    145    169,065,775    (86,510,579)   82,555,341 
                          
Net loss   -    
-
    
-
    (1,106,924)   (1,106,924)
Equity based compensation   -    
-
    677,106    
-
    677,106 
Vested restricted stock units   19,192    
-
    
-
    
-
    
-
 
Taxes paid for net share settlement of equity awards   -    
-
    (305,908)   
-
    (305,908)
Balance - August 2, 2020   14,527,579   $145   $169,436,973   $(87,617,503)  $81,819,615 
                          
Balance - January 31, 2021   15,011,556   $150   $171,382,086   $(63,435,681)  $107,946,555 
Net income   -    
-
    
-
    2,060,533    2,060,533 
Equity based compensation   -    
-
    654,472    
-
    654,472 
Vested restricted stock units   4,868    
-
    
-
    
-
    
-
 
Exercise of Warrants   2,106    
-
    20,000    
-
    20,000 
Balance - May 2, 2021   15,018,530   $150   $172,056,558   $(61,375,148)  $110,681,560 
                          
Net income   -    
-
    
-
    8,447,714    8,447,714 
Equity based compensation   -    
-
    1,084,716    
-
    1,084,716 
Vested restricted stock units   78,446    1    (1)   
-
    
-
 
Exercise of Warrants   8,850    
-
    84,000    
-
    84,000 
Taxes paid for net share settlement of equity awards   -    
-
    (3,369,613)   
-
    (3,369,613)
Balance - August 1, 2021   15,105,826   $151   $169,855,660   $(52,927,434)  $116,928,377 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

THE LOVESAC COMPANY

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

 

   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
 
Cash Flows from Operating Activities        
Net income (loss)  $10,508,247   $(9,454,675)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation and amortization of property and equipment   3,479,175    3,015,012 
Amortization of other intangible assets   543,072    164,550 
Amortization of deferred financing fees   45,336    42,394 
Net loss on disposal of property and equipment   
-
    5,487 
Equity based compensation   1,739,188    1,575,183 
Deferred rent   
-
    2,360,113 
Non-cash operating lease cost   9,012,071    
-
 
Impairment of right of use lease asset   553,990    
-
 
Changes in operating assets and liabilities:          
Trade accounts receivable   (2,849,899)   961,404 
Merchandise inventories   (24,575,131)   (4,614,759)
Prepaid expenses and other current assets   460,419    2,375,123 
Accounts payable and accrued expenses   2,830,247    8,201,988 
Operating lease liabilities   (8,351,325)   
-
 
Customer deposits   7,373,307    7,441,436 
Net Cash Provided by Operating Activities   768,697    12,073,256 
Cash Flows from Investing Activities          
Purchase of property and equipment   (7,141,678)   (4,917,262)
Payments for patents and trademarks   (215,053)   (354,143)
Net Cash Used in Investing Activities   (7,356,731)   (5,271,405)
Cash Flows from Financing Activities          
Taxes paid for net share settlement of equity awards   (3,369,613)   (455,420)
Proceeds from the exercise of warrants   104,000    
-
 
Proceeds from the line of credit   115    
-
 
Payment of deferred financing costs   
-
    (50,000)
Net Cash Used in Financing Activities   (3,265,498)   (505,420)
Net Change in Cash and Cash Equivalents   (9,853,532)   6,296,431 
Cash and Cash Equivalents - Beginning   78,341,101    48,538,827 
Cash and Cash Equivalents - Ending  $68,487,569   $54,835,258 
Supplemental Cash Flow Disclosures          
Cash paid for taxes  $669,899   $58,800 
Cash paid for interest  $31,504   $37,557 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

THE LOVESAC COMPANY

 

CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

 

FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2021 AND AUGUST 2, 2020

 

NOTE 1 - BASIS OF PRESENTATION, OPERATIONS AND LIQUIDITY

 

The condensed consolidated balance sheet of The Lovesac Company (the “Company”, “we”, “us” or “our”) as of January 31, 2021, which has been derived from our audited financial statements as of and for the 52-week year ended January 31, 2021, and the accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. Certain information and note disclosures normally included in annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to those rules and regulations. The financial information presented herein, which is not necessarily indicative of results to be expected for the full current fiscal year, reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the interim unaudited condensed consolidated financial statements. Such adjustments are of a normal, recurring nature. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements filed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2021.

 

Due to the seasonality of the Company’s business, with the majority of our activity occurring in the fourth quarter of each fiscal year, the results of operations for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020 are not necessarily indicative of results to be expected for the full fiscal year.

 

Nature of Operations

 

The Company is a technology driven company that designs, manufactures and sells unique, high quality furniture derived through its proprietary “Designed for Life” approach which results in products that are built to last a lifetime and designed to evolve as our customers’ lives do. The Company markets and sells its products through modern and efficient showrooms and, increasingly, through online sales directly at www.lovesac.com, supported by direct-to-consumer touch-feel points in the form of our own showrooms as well as through shop-in-shops and online pop-up-shops with third party retailers. The Company was formed as a Delaware corporation on January 3, 2017, in connection with a corporate reorganization with SAC Acquisition LLC, a Delaware limited liability company (“SAC LLC”), the predecessor entity to the Company.

 

COVID-19

 

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic and, in the following weeks, the U.S. federal, state and local governments issued lockdown orders and related safety measures impacting the operations of our showrooms and consumer demand. Although there has been a general improvement in conditions, there continues to be significant uncertainties around the scope and severity of the pandemic, its impact on the global economy, including supply chains, and other business disruptions that may impact our operating results and financial condition. We continue to follow the guidance issued by federal, state and local governments and health organizations and have taken measures to protect the safety of our associates and customers.

 

Operations and Liquidity 

 

The Company had incurred significant operating losses and used cash in its operating activities since inception through fiscal 2020. Operating losses resulted from inadequate sales levels for the cost structure and expenses as a result of impact of tariffs on inventory, expanding into new markets, opening new showrooms, and investments into advertising, marketing and infrastructure to support increases in revenues. The Company plans to continue to open new retail showrooms in larger markets and increase its shop-in-shop relationships to increase sales levels invest in advertising and marketing initiatives to increase brand awareness and invest in infrastructure to support growth of the Company. There can be no assurance that anticipated sales levels will be achieved. The Company believes that based on its current sales and expense levels, projections for the next twelve months, current cash on hand and the credit facility with Wells Fargo Bank, National Association, see Note 7, the Company will have sufficient working capital to cover operating cash needs through the twelve-month period from the financial statement issuance date.

 

5

 

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

 

Except as described below, the Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. The Company, as an emerging growth company, has elected to use the extended transition period for complying with new or revised financial accounting standards.   

 

The following new accounting pronouncements were adopted in fiscal 2022:

 

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) amending lease guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2020-05 extended the effective date to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted the guidance in fiscal 2022 and there was not a material effect on the Company’s consolidated results of operations.

 

Adoption of this standard resulted in the recognition of operating lease right-to-use (“ROU”) assets and corresponding lease liabilities of approximately $90 million and $97 million, respectively, and reclassification of deferred rent of $6.7 million as a reduction of the right-of-use assets on the consolidated balance sheet as of February 1, 2021. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all of our leases.

 

NOTE 3 – INTANGIBLE ASSETS, NET

 

A summary of intangible assets follows:

 

      August 1, 2021 
   Estimated Life  Gross Carrying Amount   Accumulated Amortization   Net carrying amount 
Patents  10 Years   $2,559,400   $(1,532,308)  $1,027,092 
Trademarks  3 Years    1,282,315    (1,120,394)   161,921 
Other intangibles  5 Years    839,737    (839,737)   
-
 
Total     $4,681,452   $(3,492,439)  $1,189,013 

 

      January 31, 2021 
   Estimated Life  Gross Carrying Amount   Accumulated Amortization   Net carrying amount 
Patents  10 Years  $2,387,328   $(1,128,997)  $1,258,331 
Trademarks  3 Years   1,239,334    (980,633)   258,701 
Other intangibles  5 Years   839,737    (839,737)   
-
 
Total     $4,466,399   $(2,949,367)  $1,517,032 

 

Amortization expense associated with intangible assets subject to amortization is included in depreciation and amortization expense on the accompanying condensed consolidated statements of operations. Amortization expense on other intangible assets was $79,751 and $86,179 and $543,072 and $164,550 for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively.

 

As of August 1, 2021, estimated future amortization expense associated with intangible assets subject to amortization is as follows:

 

Remainder of Fiscal 2022  $136,604 
2023   175,868 
2024   158,462 
2025   129,307 
2026   125,848 
2027   124,195 
Thereafter   338,729 
   $1,189,013 

 

6

 

NOTE 4 – INCOME TAXES

 

The Company continues to provide a full valuation allowance against its net deferred tax assets due to the uncertainty as to when business conditions will improve sufficiently to enable it to utilize its deferred tax assets. As a result, the Company did not record a federal or state tax benefit on its operating losses for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020.

 

The Company does not anticipate any material adjustments relating to unrecognized tax benefits within the next twelve months; however, the ultimate outcome of tax matters is uncertain and unforeseen results can occur. We had no material interest or penalties during the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively, and we do not anticipate any such items during the next twelve months. Our policy is to record interest and penalties directly related to uncertain tax positions as income tax expense in the condensed consolidated statements of operations.

 

NOTE 5 – BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding and common stock equivalents outstanding during the period. Diluted net income (loss) per common share includes, in periods in which they are dilutive, the effect of those potentially dilutive securities where the average market price of the common stock exceeds the exercise prices for the respective periods.

 

For the thirteen and twenty-six weeks ended August 1, 2021, the effects of 558,021 shares of common stock related to restricted stock units, 495,366 shares of common stock underlying stock options and warrants to purchase 281,750 shares of common stock were included in the diluted share calculation.

 

As of August 2, 2020, there were 2,241,802 potentially dilutive shares which may be issued in the future, including 707,316 shares of common stock related to restricted stock units, 495,366 shares of common stock underlying stock options and warrants to purchase 1,039,120 shares of common stock. These were excluded from the diluted loss per share calculation in the thirteen and twenty-six weeks ended August 2, 2020, because the effect of including these potentially dilutive shares was antidilutive.

 

NOTE 6 – COMMITMENTS, CONTINGENCY AND RELATED PARTIES

 

Leases

 

The Company leases its office, warehouse facilities and retail showrooms under operating lease agreements which expire at various dates through June 2031. The Company determines if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Certain operating leases have renewal options and rent escalation clauses. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement.

 

Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components for our showroom real estate leases in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, where applicable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

 

7

 

Lease expense for operating leases consists of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. In addition, certain of our equipment lease agreements include variable lease payments, which are based on the usage of the underlying asset. The variable portion of payments are not included in the initial measurement of the asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.

 

ASC 842 requires companies to use the rate implicit in the lease whenever that rate is readily determinable and if the interest rate is not readily determinable, then a lessee may use its incremental borrowing rate. Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determined our incremental borrowing rate by computing the rate of interest that we would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) at an amount equal to the total lease payments and (iv) in a similar economic environment. We used the incremental borrowing rates we determined as of February 1, 2021 for operating leases that commenced prior to that date. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. The lease term for all of our lease arrangements include the noncancelable period of the lease plus, if applicable, any additional periods covered by an option to extend the lease that is reasonably certain to be exercised by the Company. Our leases generally do not include termination options for either party to the lease or restrictive financial or other covenants. Some of our leases contain variable lease payments based on a Consumer Price Index or percentage of sales, which are excluded from the measurement of the lease liability.

 

The Company’s lease terms and rates are as follows:

 

   August 1,
2021
 
Weighted average remaining lease term (in years)    
Operating Leases   7.0 
      
Weighted average discount rate     
Operating Leases   3.76%

 

During the thirteen and twenty-six weeks ended August 1, 2021, we recognized operating lease expense of $4.6 million and $9.1 million, respectively. In addition, during the thirteen and twenty-six weeks ended August 1, 2021, we recognized $3.0 million and $4.3 million, respectively, for index-based changes in rent, maintenance, real estate taxes, insurance and other charges included in the lease as well as rental expenses related to short term leases.

 

During the thirteen and twenty-six weeks ended August 1, 2021, we recognized impairment charges totaling $0.6 million associated with showroom-level ROU assets that are included as part of selling, general and administrative expenses. We did not recognize any impairment charges associated with showroom-level ROU assets during fiscal year 2021 as we did not adopt the guidance in ASU No. 2016-02, Leases (Topic 842) until fiscal 2022.

 

The following table discloses the location and amount of our operating lease costs within our condensed consolidated balance sheets:

 

   Balance sheet location  August 1,
2021
 
Assets       
Operating leases  Operating lease right-of-use assets (non-current)  $88,900,462 
         
Liabilities        
Current:        
Operating leases  Current operating lease liabilities   14,536,004 
         
Noncurrent:        
Operating leases  Operating lease liability, long term   83,707,124 
         
Total lease liabilities     $98,243,128 

 

8

 

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable leases with terms of more than one year to the total lease liabilities recognized on the condensed consolidated balance sheet as of August 1, 2021:

 

Remainder 2022  $7,512,755 
2023   17,725,139 
2024   17,140,692 
2025   15,967,063 
2026   14,291,166 
Thereafter   40,311,548 
Total undiscounted future minimum lease payments   112,948,363 
Less:inputed interest   (14,705,235)
Total present value of lease obligations   98,243,128 
Less: current operating lease liability   (14,536,004)
Operating lease liability- long term  $83,707,124 

 

Supplemental Cash Flow information and non-cash activity related to our operating leases is as follows (in thousands):

 

   For the
twenty-six
weeks ended
August 1,
2021
 
Operating cash flow information:    
Amounts paid on operating lease liabilities  $8,351 
Non-cash activities     
Right-of-use assets obtained in exchange for lease obligations  $96,560 

  

Severance Contingency

 

The Company has various employment agreements with its senior level executives. A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $4.7 million at August 1, 2021 if all executives with employment agreements were terminated without cause and the full amount of severance was payable.

 

Legal Contingency

 

The Company is involved in various legal proceedings in the ordinary course of business. Management cannot presently predict the outcome of these matters, although management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a materially adverse effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

 

Related Parties

 

Our equity sponsor Mistral Capital Management, LLC (“Mistral”) performed management services for the Company under a contractual agreement that ended on January 31, 2021. Certain of our directors are members and principals of Mistral. Management fees totaled approximately $100,000 and $200,000 for the thirteen and twenty-six weeks ended August 2, 2020, respectively, and are included in selling, general and administrative expenses. There were no amounts payable to Mistral as of August 1, 2021. Amounts payable to Mistral as of January 31, 2021 were $15,213 related to reimbursable fees and were included in accrued liabilities in the accompanying condensed consolidated balance sheets.

 

Our equity sponsor Satori Capital, LLC (“Satori”) performed management services for the Company under a contractual agreement that ended on January 31, 2021. One of our directors is a partner at Satori. Management fees totaled approximately $25,000 and $50,000 for the thirteen and twenty-six weeks ended August 2, 2020, respectively, and are included in selling, general and administrative expenses. There were no amounts payable to Satori as of August 2, 2021. Amounts payable to Satori as of January 31, 2021 were $8,333 consisting of management fees which were included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. In addition, the Company reimbursed Satori for expenses incurred in the amount of $0 and $36,401 for out-of-pocket expenses for the twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively. There were no such reimbursements during the thirteen weeks ended August 1, 2021 and August 2, 2020, respectively.

 

The Company engaged Blueport Commerce (“Blueport”), a company owned in part by investment vehicles affiliated with Mistral, as an ecommerce platform in February 2018. One of our directors was also a director of Blueport. The Company terminated the Blueport contract in fiscal 2021 in order to launch a new enhanced ecommerce platform. There were $1,218,278 and $1,701,126 of fees incurred with Blueport sales transacted through the Blueport platform during the thirteen and twenty-six weeks ended August 2, 2020, respectively. There were no amounts payable to Blueport as of August 1, 2021 and January 31, 2021, respectively.  

  

9

 

NOTE 7 – FINANCING ARRANGEMENTS

 

The Company has a line of credit with Wells Fargo Bank, National Association (“Wells”). The line of credit with Wells allows the Company to borrow up to $25.0 million and will mature in February 2023. Borrowings are limited to 90% of eligible credit card receivables plus 85% of eligible wholesale receivables plus 85% of the net recovery percentage for the eligible inventory multiplied by the value of such eligible inventory of the Company for the period from December 16 of each year until October 14 of the immediately following year, with a seasonal increase to 90% of the net recovery percentage for the period from October 15 of each year until December 15 of such year, seasonal advance rate, minus applicable reserves established by Wells. As of August 1, 2021 and January 31, 2021, the Company’s borrowing availability under the line of credit with Wells was $22.5 million and $15.9 million, respectively. As of August 1 2021, we had borrowings of $115 relating to fees associated with the line of credit. As of January 31, 2021, there were no borrowings outstanding on this line of credit.

 

Under the line of credit with Wells, the Company may elect that revolving loans bear interest at a rate per annum equal to the base rate plus the applicable margin or the LIBOR rate plus the applicable margin. The applicable margin is based on tier’s relating to the quarterly average excess availability. The tiers range from 2.00% to 2.25%. The loan agreement calls for certain covenants including a timing of the financial statement’s threshold and a minimum excess availability threshold.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Common Stock Warrants

 

The following represents warrant activity during the twenty-six weeks ended August 1, 2021 and August 2, 2020:

 

   Average  exercise price   Number of warrants   Weighted  average  remaining contractual life (in years) 
Warrants Outstanding at February 2, 2020  $16.83    1,039,120    1.93 
Warrants issued   
-
    
-
    
-
 
Expired and canceled   
-
    
-
    
-
 
Exercised   
-
    
-
    
-
 
Outstanding at August 2, 2020  $16.83    1,039,120    1.43 
                
Warrants Outstanding at January 31, 2021  $19.07    293,973    2.57 
Warrants issued   
-
    
-
    
-
 
Expired and canceled   9.83    (98)   
-
 
Exercised   16.00    (12,125)   (0.09)
Outstanding at August 1, 2021  $19.20    281,750    1.91 

 

In the twenty-six weeks ended August 1, 2021, a total of 5,625 warrants were exercised on a cashless basis, whereby the holders received fewer shares of common stock in lieu of a cash payment to the Company. Warrants exercised in the twenty-six weeks ended August 1, 2021 resulted in the issuance of 10,956 common shares. There were 98 warrants that expired in the twenty-six weeks ended August 1, 2021.

 

Equity Incentive Plan

 

The Company adopted the 2017 Equity Incentive Plan (the “2017 Equity Plan”) which provides for awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units, cash-based awards and other stock-based Awards. All awards shall be granted within 10 years from the effective date of the 2017 Equity Plan. The number of shares of common stock reserved for issuance under the 2017 Equity Plan was 2,104,889 at August 1, 2021.

 

10

 

Stock Options

 

In June 2019, the Company granted 495,366 non-statutory stock options to certain officers of the Company with an option price of $38.10 per share. 100% of the stock options are subject to vesting on the third anniversary of the date of grant if the officers is still employed by the Company and the average closing price of the Company’s common stock for the prior 40 consecutive trading days has been at least $75 by the third anniversary of the grant. Both the employment and the market condition must be satisfied no later than June 5, 2024 or the options will terminate. These options were valued using a Monte Carlo simulation model to account for the path dependent market conditions that stipulate when and whether or not the options shall vest. The 495,366 stock options were modified in fiscal 2021 to extend the term of the options through June 5, 2024. This resulted in additional compensation of approximately $874,000, of which, $315,000 was recorded upon modification and the remaining expense to be recognized over the remaining expected term. The market condition was met on June 5, 2021, which was the date on which the average closing price of the Company’s common stock had been at least $75 for 40 consecutive trading days. The options will vest and become exercisable on June 5, 2022 as long as the officers are still employed on that date. As a result of the market condition being met, the Company accelerated the amortization and recognized additional stock-based compensation expense during the thirteen weeks ended August 1, 2021 of approximately $0.2 million.

 

A summary of the status of our stock options as of August 1, 2021 and August 2, 2020, and the changes during the twenty-six weeks ended August 1, 2021 and August 2, 2020 is presented below:

 

   Number of options   Weighted average exercise price   Weighted  average  remaining contractual life (in years)   Average intrinsic value 
Outstanding at February 2, 2020   495,366   $38.10    2.34    
              -
 
Exercised   
-
                
Expired and canceled   
-
                
Outstanding at August 2, 2020   495,366   $38.10    3.84    
-
 
Exercisable at the end of the period   
-
    
-
    
-
    
-
 
                     
   Number of options   Weighted average exercise price   Weighted  average  remaining contractual life (in years)   Average intrinsic value 
Outstanding at January 31, 2021   495,366   $38.10    3.35    
-
 
Granted   
-
    
-
           
Canceled and forfeited   
-
    
-
           
Outstanding at August 1, 2021   495,366   $38.10    2.85   $35.32 
Exercisable at the end of the period   
-
    
-
    
-
    
-
 

 

11

 

Restricted Stock Units

 

A summary of the status of our unvested restricted stock units as of August 1, 2021 and August 2, 2020, and changes during the twenty-six weeks then ended, is presented below:

 

   Number of shares   Weighted average grant date fair value 
Unvested at February 2, 2020   183,053   $21.34 
Granted   607,656    17.67 
Forfeited   (782)   13.49 
Vested   (82,611)   14.83 
Unvested at August 2, 2020   707,316   $19.07 

 

   Number of shares   Weighted average grant date fair value 
Unvested at January 31, 2021   655,558   $18.86 
Granted   63,456    80.40 
Forfeited   (7,904)   19.27 
Vested   (153,089)   20.20 
Unvested at August 1, 2021   558,021   $25.52 

  

Equity based compensation expense was approximately $1.1 million and $1.8 million for the thirteen and twenty-six weeks ended August 1, 2021 and $0.7 million and $1.6 million and for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

The total unrecognized equity-based compensation cost related to unvested restricted stock awards was approximately $6.1 million as of August 1, 2021 and will be recognized in operations over a weighted average period of 1.89 years.

 

NOTE 9 – EMPLOYEE BENEFIT PLAN

 

In February 2017, the Company established the TLC 401(k) Plan (the “401(k) Plan”) with Elective Deferrals beginning May 1, 2017. The 401(k) Plan calls for Elective Deferral Contributions, Safe Harbor Matching Contributions and Profit-Sharing Contributions. All associates of the Company will be eligible to participate in the 401(k) Plan as of the day of the month which is coincident with or next follows the date on which they attain age 21 and complete one month of service. Participants will be able to contribute up to 100% of their eligible compensation to the 401(k) Plan subject to limitations with the IRS. The employer contributions to the 401(k) Plan were $242,801 and $398,483 for the thirteen weeks and the twenty-six weeks ended August 1, 2021 and $117,190 and $234,470 for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

NOTE 10 – SEGMENT INFORMATION

 

The Company has determined that the Company operates within a single reporting segment. The chief operating decision makers of the Company are the Chief Executive Officer and President. The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of net sales. 

 

   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
                 
Sactionals  $89,173,770   $53,544,454   $163,184,299   $97,352,021 
Sacs   11,716,347    7,868,761    18,857,220    17,525,833 
Other   1,557,222    532,195    3,321,239    1,439,963 
   $102,447,339   $61,945,410   $185,362,758   $116,317,817 

 

12

 

NOTE 11 – BARTER ARRANGEMENTS

 

The Company has a bartering arrangement with Icon International, Inc. (“Icon”), a vendor, whereby the Company will provide inventory in exchange for media credits. During fiscal 2021, the Company exchanged $3,169,825 of inventory plus the cost of freight for certain media credits. To account for the exchange, the Company recorded the transfer of the inventory asset as a reduction of inventory and an increase to a prepaid media asset account of $2,937,035 which is included in “Prepaid and other current assets” on the accompanying condensed consolidated balance sheet. During the first half of fiscal 2022, the Company used $1,084,292 in media credits. There were no additional barter arrangements entered into during the thirteen weeks and twenty-six weeks ended August 1, 2021. The Company had $1,436,979 and $2,521,271 of unused media credits remaining as of August 1, 2021 and January 31, 2021, respectively.

 

The Company accounts for barter transactions under ASC Topic No. 845 “Nonmonetary Transactions.” Barter transactions with commercial substance are recorded at the estimated fair value of the products exchanged, unless the products received have a more readily determinable estimated fair value. Revenue associated with barter transactions is recorded at the time of the exchange of the related assets.

 

NOTE 12 – REVENUE RECOGNITION 

 

The Company’s revenue consists substantially of product sales. The Company reports product sales net of discounts and recognizes them at the point in time when control transfers to the customer, which occurs when shipment is confirmed.

 

Estimated refunds for returns and allowances are recorded using our historical return patterns, adjusting for any changes in returns policies. The Company records estimated refunds for net sales returns on a monthly basis as a reduction of net sales and cost of sales on the condensed consolidated statement of operations and an increase in inventory and customers returns liability on the condensed consolidated balance sheet. As of August 1, 2021 and January 31, 2021, there was a returns allowance recorded on the condensed consolidated balance sheet in the amount of $1,534,078 and $2,226,723, respectively, which was included in accrued expenses and $319,361 and $334,896, respectively, associated with sales returns included in merchandise inventories.

 

In some cases, deposits are received before the Company transfers control, resulting in contract liabilities. These contract liabilities are reported as deposits on the Company’s condensed consolidated balance sheet. As of August 1, 2021 and January 31, 2021, the Company recorded under customer deposit liabilities the amount of $13,365,940 and $5,992,633, respectively. During the twenty-six weeks ended August 1, 2021 and August 2, 2020, the Company recognized approximately $5,992,633 and $1,653,597, respectively, related to our customer deposits.

 

Upon adoption of ASC 606, we have elected the following accounting policies and practical expedients:

 

The Company recognizes shipping and handling expense as fulfilment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, we record the expenses for shipping and handling activities at the same time we recognize revenue.

 

The Company excludes from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes).

 

13

 

The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods.

 

The Company offers its products through an inventory lean omni-channel platform that provides a seamless and meaningful experience to its customers in showrooms and through the internet. The Other channel predominantly represents sales through the use of online pop-up-shops and shop-in-shops that are staffed with associates trained to demonstrate and sell our product. The following represents sales disaggregated by channel:

 

   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
Showrooms  $62,594,191   $12,850,565   $111,580,066   $30,968,706 
Internet   29,480,191    46,074,015    54,655,220    76,138,052 
Other   10,372,957    3,020,830    19,127,472    9,211,059 
   $102,447,339   $61,945,410   $185,362,758   $116,317,817 

 

The Company has no foreign operations and its sales to foreign countries was less than .01% of total net sales in both fiscal 2022 and 2021.

 

The Company had no customers in fiscal 2022 or 2021 that comprise more than 10% of total net sales.

 

See Note 10 for sales disaggregated by product.

 

14

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended January 31, 2021. As discussed in the section titled “Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified in the Forward-Looking Statements section herein and set forth below and those discussed in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent report on Form 10-K filed with the Securities and Exchange Commission.

 

We operate on a 52- or 53-week fiscal year that ends on the Sunday closest to February 1. Each fiscal year generally is comprised of four 13-week fiscal quarters, although in the years with 53 weeks, the fourth quarter represents a 14-week period.

 

Overview

 

We are a technology driven company that designs, manufactures and sells unique, high quality furniture derived through our proprietary “Designed for Life” approach which results in products that are built to last a lifetime and designed to evolve as our customers’ lives do. Our current product offering is comprised of modular couches called Sactionals, premium foam beanbag chairs called Sacs, and their associated home decor accessories. Innovation is at the center of our design philosophy with all of our core products protected by a robust portfolio of utility patents. We market and sell our products primarily online directly at www.lovesac.com, supported by direct-to-consumer touch-feel points in the form of our own showrooms as well as through shop-in-shops and online pop-up-shops with third party retailers. We believe that our ecommerce centric approach, coupled with our ability to deliver our large, upholstered products through express couriers, is unique to the furniture industry.

 

Impact of COVID-19

 

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic and, in the following weeks, the U.S. federal, state and local governments issued lockdown orders and related safety measures impacting the operations of our showrooms and consumer demand. Although there has been a general improvement in conditions, there continues to be significant uncertainties around the scope and severity of the pandemic, its impact on the global economy, including supply chains, and other business disruptions that may impact our operating results and financial condition. We continue to follow the guidance issued by federal, state and local governments and health organizations and have taken measures to protect the safety of our associates and customers.

 

While the COVID-19 pandemic led to shifts in the way in which we operated in fiscal 2021, we continued to serve our customers through our online channels as our products can be easily configured, shopped online and delivered quickly in a touchless way, coupled with consumers’ demand for home related products and solutions. In fiscal 2022, our showroom sales have increased, including sales from shop-in-shop and pop-up-shops, and our internet sales have decreased demonstrating a customer shift back to in-store purchases. As our showrooms are now fully reopened, we continue to experience growth as our net sales increased $69.0 million, or 59.4%, to $185.4 million for the twenty-six weeks ended August 1, 2021, compared to $116.3 million for the twenty-six weeks ended August 2, 2020. Retail sales drove an increase of $80.6 million, or 260.3%, to $111.6 million for the twenty-six weeks ended August 1, 2021 compared to $31.0 million for the twenty-six weeks ended August 2, 2020. The increase in retail sales over the prior year period was mainly due to the limited showroom operations related to COVID-19 in the prior year period, which more than offset the decrease in our internet sales (sales made directly to customers through our ecommerce channel) of $21.5 million, or 28.2% in the twenty-six weeks ended August 1, 2021. New customers increased by 9.6% for the twenty-six weeks ended August 1, 2021 as compared to 52.5% for the twenty-six weeks ended August 2, 2020 due to large number of new internet customers acquired related to the Heroes campaign and the temporary closures of some showroom locations.

 

15

 

Product Overview

 

Our products serve as a set of building blocks that can be rearranged, restyled and re-upholstered with any new setting, mitigating constant changes in fashion and style. They are built to last and evolve throughout a customer’s life.

 

  Sactionals. Our Sactional product line currently represents a majority of our net sales. We believe our Sactionals platform is unlike competing products in its adaptability yet is comparable aesthetically to similarly priced premium couches and sectionals. Our Sactional products include a number of patented features relating to their geometry and modularity, coupling mechanisms and other features. Utilizing only two, standardized pieces, “seats” and “sides,” and approximately 200 high quality, tight-fitting covers that are removable, washable, and changeable, customers can create numerous permutations of a sectional couch with minimal effort. Customization is further enhanced with our specialty-shaped modular offerings, such as our wedge seat and roll arm side. Our custom features and accessories can be added easily and quickly to a Sactional to meet endless design, style, storage and utility preferences, reflecting our Designed for Life philosophy. Sactionals are built to meet the highest durability and structural standards applicable to fixed couches. Sactionals are comprised of standardized units and we guarantee their compatibility over time, which we believe is a major pillar of their value proposition to the consumer. Our Sactionals represented 87.0% and 88.0% of our sales for the thirteen and twenty-six weeks ended August 1, 2021 as compared to 86.4% and 83.7% of our sales for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

  Sacs. We believe that our Sacs product line is a category leader in oversized beanbags. The Sac product line offers 6 different sizes ranging from 22 pounds to 95 pounds with capacity to seat 3+ people on the larger model Sacs. Filled with Durafoam, a blend of shredded foam, Sacs provide serene comfort and guaranteed durability. Their removable covers are machine washable and may be easily replaced with a wide selection of cover offerings.

 

  Accessories. Our accessories complement our Sacs and Sactionals by increasing their adaptability to meet evolving consumer demands and preferences. Our current product line offers Sactional-specific drink holders, Footsac blankets, decorative pillows, fitted seat tables and ottomans in varying styles and finishes and our unique Sactionals Power Hub, providing our customers with the flexibility to customize their furnishings with decorative and practical add-ons to meet evolving style preferences.

 

16

 

Sales Channels

 

We offer our products through an omni-channel platform that provides a seamless and meaningful experience to our customers online and in-store. Our distribution strategy allows us to reach customers through four distinct, brand-enhancing channels.

 

  Ecommerce. Through our ecommerce channel, we believe we are able to significantly enhance the consumer shopping experience for home furnishings, driving deeper brand engagement and loyalty, while also realizing more favorable margins than our showroom locations. We believe our robust technological capabilities position us well to benefit from the growing consumer preference to transact at home and via mobile devices. With furniture especially suited to ecommerce applications, our net sales completed through this channel accounted for 29% and 30% of total net sales for the thirteen and twenty-six weeks ended August 1, 2021, respectively, down from 74% and 66% of total net sales for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

  Showrooms. We market and sell our products through 123 showrooms at top tier malls, lifestyle centers and street locations in 38 states in the U.S. We carefully select the best small-footprint retail locations in high-end malls and lifestyle centers for our showrooms. Compared to traditional retailers, our showrooms require significantly less square footage because of our need to have only a few in-store sample configurations for display and our ability to stack our inventory for immediate sale. The architecture and layout of these showrooms is designed to communicate our brand personality and key product features. Our goal is to educate first-time customers, creating an environment where people can touch, feel, read, and understand the technology behind our products. We are updating and remodeling many of our showrooms to reflect our new showroom concept, which emphasizes our unique product platform, and will be the standard for future showrooms. Our new showroom concept utilizes technology in more experiential ways to increase traffic and sales. Net sales completed through this channel accounted for 61% and 60% of total net sales for the thirteen and twenty-six weeks ended August 1, 2021, respectively, up from 21% and 27% of total net sales for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

 

Other touchpoints. We augment our showrooms with other touchpoint strategies including online pop-up-shops and shop-in-shops. We utilize in store pop-up-shops to increase the number of locations where customers can experience and purchase our products, a low-cost alternative to drive brand awareness, in store sales, and ecommerce sales. These in-store pop-up-shops are staffed similarly to our showrooms with associates trained to demonstrate and sell our products and promote our brand. Unlike the in-store pop-up-shops which are typically 10-day shows, and pop-up locations, shop-in-shops are designed to be in permanent locations carrying the same digital technology of our showrooms and are also staffed with associates trained to demonstrate and sell our products. Shop-in-shops require less capital expenditure to open a productive space to drive brand awareness and touchpoint opportunities for demonstrating and selling our products. We did not host any in-store pop-up-shops in the thirteen and twenty-six weeks ended August 1, 2021. We hosted 19 and 154 in store pop-up-shops at Costco for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

We operated 2 and 4 temporary online pop-up-shops on Costco.com for the thirteen and twenty-six weeks ended August 1, 2021, respectively, up from 1 and 2 for the thirteen and twenty-six weeks ended August 2, 2020, respectively. We expect to continue hosting temporary online pop-ups on Costco.com and do not currently expect any further contribution from Costco for in-store pop-up-shops. We operated 4 Best Buy shop-in-shops for the thirteen and twenty-six weeks ended August 1, 2021, respectively, up from 3 for the thirteen and twenty-six weeks ended August 2, 2020, respectively. Other sales which includes pop-up-shop sales and shop-in-shop sales accounted for 10.1% and 10.3% of our total sales for the thirteen and twenty-six weeks ended August 1, 2021, respectively, up from 4.9% and 7.9% of our total sales for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

17

 

SELECTED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

The following tables present our summary condensed consolidated financial and other data as of and for the periods indicated. The condensed consolidated statement of operations data and the condensed consolidated statement of cash flow data for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020 and the summary condensed consolidated balance sheet data as of August 1, 2021, are derived from our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report filed on Form 10-Q and have been prepared on the same basis as the audited condensed consolidated financial statements.

 

The summarized financial information presented below is derived from and should be read in conjunction with our audited condensed consolidated financial statements including the notes to those financial statements and our unaudited condensed consolidated financial statements including the notes to those financial statements both of which are included elsewhere in this Quarterly Report filed on Form 10-Q along with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical results are not necessarily indicative of our future results.

 

   Thirteen weeks ended   Twenty-six weeks ended 
(dollars in thousands, except per share data)  August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
Condensed Consolidated Statement of Operations Data:                
Net sales                
Showrooms  $62,594   $12,850   $111,580   $30,969 
Internet   29,480    46,074    54,655    76,138 
Other   10,373    3,021    19,127    9,211 
Total net sales   102,447    61,945    185,362    116,318 
                     
Cost of merchandise sold   43,416    30,890    80,255    57,979 
                     
Gross profit   59,031    31,055    105,107    58,339 
Operating expenses                    
Selling, general and administrative expenses   35,385    23,383    66,103    49,215 
Advertising and marketing   13,036    7,166    23,716    15,362 
Depreciation and amortization   1,603    1,544    4,022    3,180 
                     
Total operating expenses   50,024    32,093    93,841    67,757 
                     
Operating income (loss)   9,007    (1,038)   11,266    (9,418)
                     
Interest (expense) income, net   (45)   (35)   (90)   22 
                     
Net income (loss) before taxes   8,962    (1,073)   11,176    (9,396)
                     
Provision for income taxes   (515)   (34)   (668)   (59)
                     
Net income (loss)  $8,447   $(1,107)  $10,508   $(9,455)
Net Income (Loss) Attributable to Common Stockholders  $8,447   $(1,107)  $10,508   $(9,455)
                     
Net income (loss) per common share:                    
Basic (1)  $0.56   $(0.08)  $0.70   $(0.65)
Diluted (1)  $0.52   $(0.08)  $0.66   $(0.65)
                     
Weighted average number of common shares outstanding:                    
Basic   15,096,528    14,518,929    15,034,954    14,499,505 
Diluted   16,100,927    14,518,929    16,039,352    14,499,505 

 

18

 

   Thirteen weeks ended   Twenty-six weeks ended 
(dollars in thousands)  August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
                 
EBITDA (2)(3)  $10,610   $506   $15,288   $(6,238)
Adjusted EBITDA (2)(3)  $12,403   $2,185   $17,735   $(3,516)

 

   As of 
(dollars in thousands)  August 1,
2021
   August 2,
2020
 
         
Balance Sheet Data:        
Cash and cash equivalents  $68,488   $54,835 
Working capital   80,827    59,726 
Total assets   281,254    135,332 
Total liabilities   164,326    53,513 
Total stockholders’ equity   116,928    81,819 

 

   Twenty-six weeks ended 
(dollars in thousands)  August 1,
2021
   August 2,
2020
 
         
Condensed Consolidated Statement of Cash flow Data:        
Net Cash Provided by Operating Activities  $769   $12,073 
Net Cash Used in Investing Activities   (7,357)   (5,271)
Net Cash Used in Financing Activities   (3,265)   (505)
Net change in cash and cash equivalents   (9,853)   6,297 
Cash and cash equivalents at the end of the period   68,488    54,835 

 

(1)For the calculation of basic and diluted net income (loss) per share, see Note 5 and Note 8 to our condensed consolidated financial statements.

 

(2)EBITDA and Adjusted EBITDA are “Non-GAAP Measures” that are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe that EBITDA and Adjusted EBITDA are useful measures of operating performance, as they eliminate expenses that are not reflective of the underlying business performance, facilitate a comparison of our operating performance on a consistent basis from period-to-period and provide for a more complete understanding of factors and trends affecting our business. Additionally, EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use EBITDA and Adjusted EBITDA, alongside GAAP measures such as gross profit, operating income (loss) and net income (loss), to measure and evaluate our operating performance and we believe these measures are useful to investors in evaluating our operating performance.

 

These Non-GAAP Measures should not be considered as alternatives to net income (loss) or net income (loss) per share as a measure of financial performance, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. They should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, our Non-GAAP Measures are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as tax payments and debt service requirements and certain other cash costs that recur in the future. Our Non-GAAP Measures contain certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In addition, our Non-GAAP Measures exclude certain non-recurring and other charges.

 

In the future, we may incur expenses that are the same as or similar to some of the adjustments in our Non-GAAP Measures. Our presentation of our Non-GAAP Measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying primarily on our GAAP results and by using our Non-GAAP Measures as supplemental information. Our Non-GAAP Measures are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

 

19

 

  (3) We define “EBITDA” as earnings before interest, taxes, depreciation and amortization. We define “Adjusted EBITDA” as EBITDA adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include management fees, equity-based compensation expense, write-offs of property and equipment, deferred rent, financing expenses and certain other charges and gains that we do not believe reflect our underlying business performance.

 

Reconciliation of Non-GAAP Financial Measures

 

The following provides a reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA for the periods presented:

 

   Thirteen weeks
ended
   Thirteen weeks
ended
   Twenty-six weeks
ended
   Twenty-six weeks
ended
 
(dollars in thousands)  August 1,
2021
   August 2,
2020
  

August 1,
2021

   August 2,
2020
 
Net income (loss)  $8,447   $(1,107)  $10,508   $(9,455)
Interest expense (income), net   45    35    90    (22)
Taxes   515    34    668    59 
Depreciation and amortization   1,603    1,544    4,022    3,180 
EBITDA   10,610    506    15,288    (6,238)
Management fees (a)   -    125    -    250 
Deferred rent (b)   -    872    -    856 
Equity-based compensation (c)   1,239    677    1,893    1,575 
Loss on disposal of property and equipment (d)   -    5    -    5 
Impairment of right of use lease asset (e)   554    -    554    - 
Other non-recurring expenses (f)(g)   -    -    -    36 
Adjusted EBITDA  $12,403   $2,185   $17,735   $(3,516)

 

(a) Represents management fees and expenses charged by our equity sponsors.
   
(b) Represents the difference between rent expense recorded and the amount paid by the Company. In accordance with generally accepted accounting principles, the Company records monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease terms.  The Company adopted ASC 842 at the beginning of fiscal 2022 therefore we no longer recognize deferred rent.
   
(c) Represents expenses, such as compensation expense and employer taxes related to RSU equity vesting and exercises associated with stock options and restricted stock units granted to our associates and board of directors.  
   
(d)   Represents the loss on disposal of fixed assets related to showroom remodels.
   
(e) Represents the impairment of the right of use lease asset for one showroom for which the fixed assets had been impaired in the prior fiscal quarter.
   
(f) There were no other non-recurring expenses in the thirteen weeks ended August 1, 2021 and August 2, 2020, respectively.
   
(g) There were no other non-recurring expenses in the twenty-six weeks ended August 1, 2021. Other non-recurring expenses in the twenty-six weeks ended August 2, 2020 are related to $36 in professional and legal fees related to financing initiatives.

 

20

 

How We Assess the Performance of Our Business

 

We consider a variety of financial and operating measures, including the following, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

 

Net Sales

 

Net sales reflect our sale of merchandise plus shipping and handling revenue less returns and discounts. Sales made at Company operated showrooms, including shop-in-shops and pop-up shops, and via the web are recognized in accordance with the guidance set forth in ASC 606, which is typically at the point of transference of title when the goods are shipped.

 

Gross Profit

 

Gross profit is equal to our net sales less cost of merchandise sold. Gross profit as a percentage of our net sales is referred to as gross margin. In September 2018, the Office of the U.S. Trade Representative began imposing a 10 percent ad valorem duty on a subset of products imported from China, inclusive of various furniture product categories. In September 2019, the Office of U.S. Trade Representative imposed an additional 15 percent ad valorem duty on products imported from China.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses include all operating costs, other than advertising and marketing expense, not included in cost of merchandise sold. These expenses include all payroll and payroll-related expenses; showroom expenses, including occupancy costs related to showroom operations, such as rent and common area maintenance; occupancy and expenses related to many of our operations at our headquarters, including utilities, equity-based compensation, financing related expense and public company expenses. Selling, general and administrative expenses as a percentage of net sales is usually higher in lower volume quarters and lower in higher volume quarters because a significant portion of the costs are relatively fixed.

 

Our recent revenue growth has been accompanied by increased selling, general and administrative expenses. The most significant components of these increases are payroll and rent costs. We expect these expenses, as well as rent expense associated with the opening of new showrooms, to increase as we grow our business. We expect to leverage total selling, general and administrative expenses as a percentage of sales as sales volumes continue to grow. We expect to continue to invest in infrastructure to support the Company’s growth. These investments will lessen the impact of expense leveraging during the period of investment with the greater impact of expense leveraging happening after the period of investment. However, total selling, general and administrative expenses generally will leverage during the periods of investments with the most deleverage occurring in the first three quarters of the fiscal year, and the greatest leverage occurring in the fourth quarter.

 

Advertising and Marketing Expense

 

Advertising and marketing expense include digital, social, and traditional advertising and marketing initiatives that cover all of our business channels. Advertising and marketing expense is expected to continue to increase as a percentage to sales as we continue to invest in advertising and marketing which has accelerated sales growth.

 

21

 

Basis of Presentation and Results of Operations

 

The following table sets forth, for the periods presented, our condensed consolidated statement of operations data as a percentage of total revenues:

 

   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
Statement of Operations Data:                
Net sales   100%   100%   100%   100%
Cost of merchandise sold   42%   50%   43%   50%
Gross profit   58%   50%   57%   50%
Selling, general and administrative expenses   35%   38%   36%   42%
Advertising and marketing   13%   12%   13%   13%
Depreciation and amortization   2%   2%   2%   3%
Operating income (loss)   9%   -2%   6%   -8%
Interest (expense) income, net   0%   0%   0%   0%
Net income (loss) before taxes   9%   -2%   6%   -8%
Provision for income taxes   -1%   0%   0%   0%
Net income (loss)   8%   -2%   6%   -8%

 

Thirteen weeks ended August 1, 2021 Compared to the Thirteen weeks ended August 2, 2020

 

Net sales

 

Net sales increased $40.5 million, or 65.4%, to $102.4 million in the thirteen weeks ended August 1, 2021 as compared to $61.9 million in the thirteen weeks ended August 2, 2020. The increase in overall net sales was driven by our Showroom and Other channel sales, partially offset by the decrease in Internet sales. New customers increased by 16.5% in the thirteen weeks ended August 1, 2021 as compared to 47.8% in the thirteen weeks ended August 2, 2020 driven by the successful Heroes’ campaign. We had 123 and 97 showrooms as of August 1, 2021 and August 2, 2020, respectively. We opened 7 additional showrooms, and we did not close or remodel any showrooms in the thirteen weeks ended August 1, 2021, as compared to opening 8 additional showrooms, closing 2 showrooms and remodeling 1 showroom in the thirteen weeks ended August 2, 2020. Showroom sales increased $49.7 million, or 387.1%, to $62.6 million in the thirteen weeks ended August 1, 2021 as compared to $12.9 million in the thirteen weeks ended August 2, 2020. This increase was due in large part to comparable sales increase of $40.3 million, or 290.9%, to $54.1 million in the thirteen weeks ended August 1, 2021, compared to $13.8 million in the thirteen weeks ended August 2, 2020, related to higher point of sales transactions with lower promotional discounting. Point of sales transactions represent orders placed through our showrooms which does not always reflect the point at which control transfers to the customer, which occurs upon shipment being confirmed. See Note 12 to the condensed consolidated financial statements. We believe point of sales transactions is a more accurate way to measure showroom performance and how our showroom associates are incentivized. Retail sales per selling square foot increased $418, or 215.6%, to $611 in the thirteen weeks ended August 1, 2021 as compared to $194 in the thirteen weeks ended August 2, 2020. Total number of units sold at point of transaction increased by approximately 222.6% driven by higher comparable sales. The increase in comparable sales, retail sales per selling square foot and total number of units sold over prior years is the result of limited showroom operations due to COVID-19 in the prior year period. Internet sales (sales made directly to customers through our ecommerce channel) decreased $16.6 million, or 36.0%, to $29.5 million in the thirteen weeks ended August 1, 2021 as compared to $46.1 million in the thirteen weeks ended August 2, 2020. The decrease in Internet sales was due primarily to the shift of sales into the internet channel in prior year as a result of the limited showroom operations due to COVID-19. Other sales, which include pop-up-shop sales and shop-in-shop sales increased $7.4 million, or 243.4%, to $10.4 million in the thirteen weeks ended August 1, 2021 as compared to $3.0 million in the thirteen weeks ended August 2, 2020. This increase was due to hosting 1 additional temporary online pop-up-shop on Costco.com compared to the prior year period and sales increase from shop-in-shop locations that were closed in the prior year period due to COVID-19.

 

Gross profit

 

Gross profit increased $28.0 million, or 90.1%, to $59.0 million in the thirteen weeks ended August 1, 2021 from $31.1 million in the thirteen weeks ended August 2, 2020. Gross margin increased to 57.6% of net sales in the thirteen weeks ended August 1, 2021 from 50.1% of net sales in the thirteen weeks ended August 2, 2020. The increase in gross margin percentage of 749 basis points was primarily driven by an increase of approximately 506 basis points due to lower promotional discounting, continuing vendor negotiations to assist with the mitigation of tariffs and continued shift of products from China to Vietnam, Malaysia, and Indonesia. Distribution expenses improved by 243 basis points over the prior year due to higher leverage of 793 basis points in warehousing and distribution costs, partially offset by the increase in inbound freight of 550 basis points due to escalating inbound container costs as well as some shift of inventory purchases back to China, which are impacted by the 25% tariff rate to help alleviate container congestion coming from our other overseas vendors.

 

22

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased $12.0 million, or 51.3%, to $35.4 million in the thirteen weeks ended August 1, 2021 as compared to $23.4 million in the prior year period. The increase in selling, general and administrative expenses was primarily related to an increase in employment costs, overhead expenses, rent, and selling related expenses. Employment costs increased by $6.9 million driven by an increase in new hires and variable compensation. Rent increased by $2.4 million related to our net addition of 26 showrooms. Selling related expenses increased $1.7 million due to an increase of $1.9 million in credit card fees related to the increase in sales, partially offset by a decrease of $0.2 million due to a lower fee structure relating to online pop-up shops at Costco.com. Overhead expenses increased $1.0 million consisting of an increase of $0.6 million in equity-based compensation related to an option trigger event that caused an acceleration of the recognition of stock option equity compensation expense, an increase of $0.4 million in infrastructure investments, and an increase of $0.1 million in travel expenses, partially offset by a decrease of $0.1 million in insurance expenses.

 

Selling, general and administrative expenses were 34.5% of net sales in the thirteen weeks ended August 1, 2021 as compared to 37.7% of net sales in the thirteen weeks ended August 2, 2020. The decrease in selling, general and administrative expenses of 3.2% of net sales was primarily due to higher leverage within infrastructure investments, rent, insurance and selling related expenses, partially offset by deleverage in employment costs, equity-based compensation, and travel. The deleverage in certain expenses relate to the investments we are making into the business that were put on hold in the prior year relating to COVID-19 financial resilience measures and the acceleration of stock compensation expense related to stock options vesting as a required market condition was achieved in the thirteen weeks ended August 1, 2021.

 

Advertising and Marketing

 

Advertising and marketing expenses increased $5.9 million, or 81.9%, to $13.0 million for the thirteen weeks ended August 1, 2021 as compared to $7.2 million in the thirteen weeks ended August 2, 2020. The majority of the increase in advertising and marketing dollars relates to the reinstatement of marketing spends as showroom locations are fully open in the current period versus the limited showroom operations due to COVID-19 in the prior year period. The investment by quarter may vary greatly. Advertising and marketing expenses were 12.7% of net sales in the thirteen weeks ended August 1, 2021 as compared to 11.6% of net sales in the thirteen weeks ended August 2, 2020. The majority of the increase in advertising and marketing as a percent of net sales is related to increased media activities and higher media costs compared to the COVID-19 related marketing environment in the prior year period.

 

Depreciation and amortization expenses

 

Depreciation and amortization expenses increased $0.1 million, or 3.8%, to $1.6 million in the thirteen weeks ended August 1, 2021 as compared to $1.5 million in the thirteen weeks ended August 2, 2020. The increase in depreciation and amortization expense principally relates to capital investments for new and remodeled showrooms.

 

Interest (expense) income, net

 

 Interest expense, net which is less than $0.1 million principally relates to the interest expense related to unused line fees and amortization of deferred financing fees on the asset-based loan with a slight offset of interest earned on the Company’s cash and cash equivalents balances for the thirteen weeks ended August 1, 2021. The increase in net interest expense from prior year was the result of a decrease in interest rates being earned on the Company’s cash and cash equivalents during the thirteen weeks ended August 1, 2021 as compared to the same period in the prior year.

 

Provision for income taxes

 

Income tax provision was less than 0.60% and 0.06% of sales for the thirteen weeks ended August 1, 2021 and August 2, 2020, respectively.

 

23

 

Twenty-six weeks ended August 1, 2021 Compared to the Twenty-six weeks ended August 2, 2020

 

Net sales

 

Net sales increased $69.0 million, or 59.4%, to $185.4 million in the twenty-six weeks ended August 1, 2021 as compared to $116.3 million in the twenty-six weeks ended August 2, 2020. The increase in overall net sales was driven by our Showroom sales, Other sales and partially offset by a decrease in our Internet Sales. New customers increased by 9.6% in the twenty-six weeks ended August 1, 2021 as compared to 52.5% in the twenty-six weeks ended August 2, 2020 driven by the successful Heroes’ campaign in the second quarter. We had 123 and 97 showrooms as of August 1, 2021 and August 2, 2020, respectively. We opened 15 additional showrooms and did not permanently close or remodel any showrooms in the twenty-six weeks ended August 1, 2021. Showroom sales increased $80.6 million, or 260.3%, to $111.6 million in the twenty-six weeks ended August 1, 2021 as compared to $31.0 million in the twenty-six weeks ended August 2, 2020, related to higher point of sales transactions with lower promotional discounting. This increase was due in large part to our comparable showroom point of sales transaction increase of $67.0 million, or 235.3%, to $95.4 million in the twenty-six weeks ended August 1, 2021 as compared to $28.5 million in the twenty-six weeks ended August 2, 2020. Point of sales transactions represent orders placed through our showrooms which does not always reflect the point at which control transfers to the customer, which occurs upon shipment being confirmed. See Note 12 to the condensed consolidated financial statements. We believe point of sales transactions is a more accurate way to measure showroom performance and how our showroom associates are incentivized. Retail sales per selling square foot increased $768, or 178.5%, to $1,198 in the twenty-six weeks ended August 1, 2021 as compared to $430 in the twenty-six weeks ended August 2, 2020. Total number of units sold at point of transaction increased by approximately 179.5%. The increase in comparable point of sales transactions, retail sales per selling square foot and number of units sold for the twenty-six week ended was principally driven by the limited showroom operations due to COVID-19 in the prior year period. Internet sales (sales made directly to customers through our ecommerce channel) decreased $21.5 million, or 28.2%, to $54.7 million in the twenty-six weeks ended August 1, 2021 as compared to $76.1 million in the twenty-six weeks ended August 2, 2020. The decrease in Internet sales was due primarily to the shift of sales into the internet channel in prior year as a result of the limited showroom operations due to COVID-19. Other sales, which include pop-up-shop sales and shop-in-shop sales, increased $9.9 million, or 107.7%, to $19.1 million in the twenty-six weeks ended August 1, 2021 as compared to $9.2 million in the twenty-six weeks ended August 2, 2020. This increase was due to hosting 2 additional temporary online pop-up-shops on Costco.com compared to the prior year period and sales increase from shop-in-shop locations that were closed in the prior year period due to COVID-19.

 

Gross profit

 

Gross profit increased $46.8 million, or 80.2%, to $105.1 million in the twenty-six weeks ended August 1, 2021 from $58.3 million in the twenty-six weeks ended August 2, 2020. Gross margin increased to 56.7% of net sales in the twenty-six weeks ended August 1, 2021 from 50.2% of net sales in the twenty-six weeks ended August 2, 2020. The increase in gross margin percentage of 655 basis points was primarily driven by an increase of approximately 457 basis points due to lower promotional discount, continuing vendor negotiations to assist with the mitigation of tariffs and continued shift of products from China to Vietnam, Malaysia, and Indonesia. Distribution expenses improved by 198 basis points over the prior year due to higher leverage of 945 basis points in warehousing and distribution costs, partially offset by the increase in inbound freight of 747 basis points due to escalating inbound container costs as well as some shift of inventory purchases back to China, which are impacted by the 25% tariff rate to help alleviate container congestion coming from our other overseas vendors. 

 

24

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased $16.9 million, or 34.3%, to $66.1 million in the twenty-six weeks ended August 1, 2021 as compared to $49.2 million in twenty-six weeks ended August 2, 2020. The increase in selling, general and administrative expenses was primarily related to an increase in employment costs, rent, overhead expenses, and selling related expenses. Employment costs increased by $9.9 million driven by an increase in new hires and variable compensation. Rent increased by $3.9 million related to our net addition of 26 showrooms. Overhead expenses increased $1.7 million consisting of an increase of $1.4 million in infrastructure investments and an increase of $0.3 million in equity-based compensation. Selling related expenses increased $1.4 million due to an increase of $2.8 million in credit card fees, partially offset by a decrease of $1.4 million in due to a lower fee structure in for online pop-up-shop sales at Costco.com.

 

Selling, general and administrative expenses were 35.7% of net sales in the twenty-six weeks ended August 1, 2021 as compared to 42.3% of net sales in the twenty-six weeks ended August 2, 2020. The decrease in selling, general and administrative expenses of 6.6% of net sales was primarily due to higher leverage within infrastructure investments, selling related expenses, rent, insurance, equity-based compensation and travel.

 

Advertising and Marketing

 

Advertising and marketing expenses increased $8.4 million, or 54.4%, to $23.7 million in the twenty-six weeks ended August 1, 2021 as compared to $15.4 million in the twenty-six weeks ended August 2, 2020. The majority of the increase in advertising and marketing dollars relates to the reinstatement of marketing spends as showroom locations are fully open in the current period versus the limited showroom operations due to COVID-19 in the prior year period. The investment by quarter may vary greatly. Advertising and marketing expenses were 12.8% of net sales in the twenty-six weeks ended August 1, 2021 as compared to 13.2% of net sales in the twenty-six weeks ended August 2, 2020. The majority of the decrease in advertising and marketing as a percent of net sales is primarily due to improved performance in our media activities which has driven an increase in net sales, higher Sactional sales mix and higher average selling price.

 

Depreciation and amortization expenses

 

Depreciation and amortization expenses increased $0.8 million, or 26.5%, to $4 million in the twenty-six weeks ended August 1, 2021 as compared to $3.2 million in the twenty-six weeks ended August 2, 2020. The increase in depreciation and amortization expense principally relates to capital investments for new and remodeled showrooms.

 

Interest income (expense), net

 

Interest expense, net which is less than $0.1 million principally relates to the interest expense related to unused line fees and amortization of deferred financing fees on the asset-based loan with a slight offset of interest earned on the Company’s cash and cash equivalents balances for the twenty-six weeks ended August 1, 2021. The increase in net interest expense from prior year was the result of a decrease in interest rates being earned on the Company’s cash and cash equivalents during the twenty-six weeks ended August 1, 2021 as compared to the same period in the prior year.

 

Provision for income taxes

 

Income tax provision was less than 0.40% and 0.06% of sales for the twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively.

 

25

 

Liquidity and Capital Resources

 

General

 

Our business relies on cash flows from operations, our revolving line of credit (see “Revolving Line of Credit” below) and securities issuances as our primary sources of liquidity. Our primary cash needs are for advertising and marketing, inventory, payroll, showroom rent, capital expenditures associated with opening new showrooms and updating existing showrooms, as well as infrastructure and information technology. The most significant components of our working capital are cash and cash equivalents, inventory, accounts receivable, accounts payable and other current liabilities and customer deposits. Borrowings generally increase in our third fiscal quarter as we prepare for the holiday selling season, which is in our fourth fiscal quarter. We believe that cash expected to be generated from operations, the availability under our revolving line of credit and our existing cash balances are sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months.

 

Cash Flow Analysis

 

A summary of operating, investing, and financing activities during the periods indicated are shown in the following table:

 

   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
 
         
Condensed Consolidated Statement of Cash flow Data:        
Net Cash Provided by Operating Activities  $769   $12,073 
Net Cash Used in Investing Activities   (7,357)   (5,271)
Net Cash Used in Financing Activities   (3,265)   (505)
Net change in cash and cash equivalents   (9,853)   6,297 
Cash and cash equivalents at the end of the period   68,488    54,835 

 

Net Cash Provided By Operating Activities

 

Cash from operating activities consists primarily of net income(loss) adjusted for certain non-cash items, including depreciation and amortization, loss on disposal of property and equipment, equity-based compensation, deferred rent, and non-cash interest expense and the effect of changes in working capital and other activities.

 

In the twenty-six weeks ended August 1, 2021, net cash provided by operating activities was $0.8 million and consisted of changes in operating assets and liabilities of ($25.1) million, net income of $10.5 million, and adjustments to reconcile net income to cash provided by operating activities of $15.4 million. Working capital and other activities consisted primarily of increases in inventory of $24.6 million, trade accounts receivable of $2.9 million, and customer deposits of $7.4 million, and accounts payable and accrued expenses of $2.8 million, partially offset by decreases in prepaid expenses and other current assets of $0.5 million and operating lease liabilities of $8.4 million.

 

In the twenty-six weeks ended August 2, 2020, net cash provided by operating activities was $12.1 million and consisted of changes in operating assets and liabilities of $14.4 million, a net loss of $9.5 million, and adjustments to reconcile net loss to cash used in operating activities of $7.2 million. Working capital and other activities consisted primarily of decreases in prepaid expenses of $2.4 million and accounts receivable of $1.0 million and increases in accounts payable and accrued expenses of $8.2 million and customer deposits of $7.4 million, partially offset by an increase in inventory of $4.6 million.

 

26

 

Net Cash Used In Investing Activities

 

Investing activities consist primarily of investment in supply chain and systems infrastructure and capital expenditures related to new showroom openings and the remodeling of existing showrooms.

 

For the twenty-six weeks ended August 1, 2021, capital expenditures were $7.4 million as a result of investments in new and remodeled showrooms and intangibles such as patents and trademarks.

 

For the twenty-six weeks ended August 2, 2020, capital expenditures were $5.3 million as a result of investments in new and remodeled showrooms and intangibles such as patents and trademarks offset by proceeds from disposal of property and equipment.

 

Net Cash Used In Financing Activities

 

Financing activities consist primarily of the proceeds from stock offerings and taxes paid for the net settlement of equity awards.

 

For the twenty-six weeks ended August 1, 2021, net cash used in financing activities was $3.3 million, due mostly to taxes paid for net share settlement of $3.4 million offset by proceeds from the exercise of warrants of $0.1 million. For the twenty-six weeks ended August 2, 2020, net cash used in financing activities was $0.5 million, due mostly to taxes paid for net share settlement of $0.5 million.

 

 

Revolving Line of Credit

 

On February 6, 2018, we entered into a five-year, secured revolving credit facility with Wells Fargo Bank, National Association (“Wells”). The credit facility permits borrowings of up to $25.0 million, subject to borrowing base and availability restrictions. For additional information regarding our line of credit with Wells, see Note 7 to our condensed consolidated financial statements. As of August 1, 2021, the Company’s borrowing availability under the line of credit with Wells was $22.5 million. As of August 1, 2021, there were $115 borrowings outstanding on this line of credit related to line of credit fees.

 

Severance Contingency

 

The Company has various employment agreements with its senior level executives. A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those associates are terminated without cause. The total amount of exposure to the Company under these agreements was $4.7 million at August 1, 2021 if all executives with employment agreements were terminated without cause and the full amount of severance was payable.

 

27

 

Off Balance Sheet Arrangements

 

We have no material off balance sheet arrangements as of August 1, 2021, except for employment agreements entered in the ordinary course of business.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in conformity with GAAP. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Please see Note 1 to our consolidated financial statements included in the Annual Report on Form 10-K filed on April 14, 2021 for a complete description of our significant accounting policies. There have been no material changes to the significant accounting policies during the twenty-six weeks ended August 1, 2021.

 

Recent Accounting Pronouncements

 

Refer to Note 2, Recent Accounting Pronouncements, contained in the Condensed Consolidated Notes to Financial Statements in Item 1 of Part 1 of this Quarterly Report on Form 10-Q for a full description of the recent accounting pronouncements and our expectation of their impact, if any, on our results of operations and financial condition.

 

28

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

In the normal course of business, we are exposed to a variety of risks, including fluctuations in interest rates that could affect our financial position and results of operations.

 

Interest Rate Risk

 

Debt

 

Interest rate risk exists primarily through our borrowing activities. We use U.S. dollar denominated borrowings to fund our working capital and investment needs. It is anticipated that the fair market value of any future debt under the line of credit will continue to be immaterially affected by fluctuations in interest rates and we do not believe that the value of such debt would be significantly impacted by current market events. Under the line of credit, the Company may elect that revolving loans bear interest at a rate per annum equal to the base rate plus the applicable margin or the LIBOR rate plus the applicable margin. The applicable margin is based on tier’s relating to the quarterly average excess availability. The tiers range from 2.00% to 2.25%. We currently do not engage in any interest rate hedging activity and we have no intention of doing so in the foreseeable future. A hypothetical 100 basis point change (up or down) in the one-month LIBOR rate would not have a material effect on our condensed consolidated results of operations.

 

LIBOR Transition

 

Borrowings under our revolving line of credit have an interest rate tied to LIBOR, which is the subject of recent national, international, and other regulatory guidance and proposals for reform. These reforms and other pressure may cause LIBOR to disappear entirely or to perform differently than in the past. It is expected that certain banks will stop reporting information used to set LIBOR at the end of 2021 when their reporting obligations cease. This will effectively end the usefulness of LIBOR and end its publication. If LIBOR is no longer available, or otherwise at our option, we will pursue alternative interest rate calculations in our Credit Agreement, including the use of the Secured Overnight Financing Rate (SOFR). A number of other alternatives to LIBOR have been proposed or are being developed, but it is not clear which, if any, will be adopted. Any of these alternative methods may result in interest payments that are higher than expected or that do not otherwise correlate over time with the payments that would have been made on such indebtedness for the interest periods if the applicable LIBOR rate was available in its current form.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting during the thirteen weeks ended August 1, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

29

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

 

Item 1A. Risk Factors

 

Other than as set forth below, there have been 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 31, 2021.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

In the thirteen weeks ended August 1, 2021, 4,500 warrants with an exercise price of $16 per share were exercised on a cashless basis, resulting in the issuance of 3,600 common shares, and 5,250 warrants with an exercise price of $16 per share were exercised upon cash payment of the exercise price to the Company. We received no proceeds from the cashless exercise of the warrants. In issuing these shares, we relied on an exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

 

Item 3. Defaults upon Senior Securities.

 

Not applicable.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

30

 

Item 6. Exhibits

 

Exhibit
Number
  Description of Exhibit   Filed / Incorporated
by Reference
from Form **
  Incorporated by
Reference from
Exhibit Number
  Dated Filed
31.1   Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended   Filed herewith.        
31.2   Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended   Filed herewith.        
32.1*   Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended   Filed herewith.        
32.2*   Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended   Filed herewith.        
101.INS   XBRL Instance Document            
101.SCH   Inline XBRL Taxonomy Extension Schema Document            
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document            
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document            
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document            
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document            
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)          

 

* This certification is deemed not filed for purposes of section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.

 

31

 

SIGNATURES

 

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

  

  The Lovesac Company
   
  By: /s/ Shawn Nelson
    Shawn Nelson
Date: September 9, 2021   Chief Executive Officer
    (Principal Executive Officer)
     
  By: /s/ Donna Dellomo
    Donna Dellomo
Date: September 9, 2021   Executive Vice President and
Chief Financial Officer
    (Principal Financial Officer and
Principal Accounting Officer)

 

 

32

 

 

 

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EX-31.1 2 f10q0821ex31-1_thelovesacco.htm CERTIFICATION

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Shawn Nelson, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of The Lovesac Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: September 9, 2021 Signed:  /s/ Shawn Nelson
  Name: Shawn Nelson
  Title:

Chief Executive Officer
(Principal Executive Officer)

 

EX-31.2 3 f10q0821ex31-2_thelovesacco.htm CERTIFICATION

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Donna Dellomo, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of The Lovesac Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: September 9, 2021 Signed:  /s/ Donna Dellomo
  Name: Donna Dellomo
  Title:

Executive Vice President and
Chief Financial Officer

(Principal Financial Officer)

 

EX-32.1 4 f10q0821ex32-1_thelovesacco.htm CERTIFICATION

Exhibit 32.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Shawn Nelson, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of The Lovesac Company for the thirteen weeks ended August 1, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of The Lovesac Company.

 

Date: September 9, 2021 Signed:  /s/ Shawn Nelson
  Name: Shawn Nelson
  Title:

Chief Executive Officer
(Principal Executive Officer)

 

EX-32.2 5 f10q0821ex32-2_thelovesacco.htm CERTIFICATION

Exhibit 32.2

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Donna Dellomo, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of The Lovesac Company for the thirteen weeks ended August 1, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of The Lovesac Company.

 

Date: September 9, 2021 Signed:  /s/ Donna Dellomo
  Name: Donna Dellomo
  Title:

Executive Vice President and
Chief Financial Officer

(Principal Financial Officer)

 

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financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. Certain information and note disclosures normally included in annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to those rules and regulations. The financial information presented herein, which is not necessarily indicative of results to be expected for the full current fiscal year, reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the interim unaudited condensed consolidated financial statements. Such adjustments are of a normal, recurring nature. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements filed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2021.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due to the seasonality of the Company’s business, with the majority of our activity occurring in the fourth quarter of each fiscal year, the results of operations for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020 are not necessarily indicative of results to be expected for the full fiscal year.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b> </b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Nature of Operations</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company is a technology driven company that designs, manufactures and sells unique, high quality furniture derived through its proprietary “Designed for Life” approach which results in products that are built to last a lifetime and designed to evolve as our customers’ lives do. The Company markets and sells its products through modern and efficient showrooms and, increasingly, through online sales directly at www.lovesac.com, supported by direct-to-consumer touch-feel points in the form of our own showrooms as well as through shop-in-shops and online pop-up-shops with third party retailers. The Company was formed as a Delaware corporation on January 3, 2017, in connection with a corporate reorganization with SAC Acquisition LLC, a Delaware limited liability company (“SAC LLC”), the predecessor entity to the Company.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b> </b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>COVID-19</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic and, in the following weeks, the U.S. federal, state and local governments issued lockdown orders and related safety measures impacting the operations of our showrooms and consumer demand. Although there has been a general improvement in conditions, there continues to be significant uncertainties around the scope and severity of the pandemic, its impact on the global economy, including supply chains, and other business disruptions that may impact our operating results and financial condition. We continue to follow the guidance issued by federal, state and local governments and health organizations and have taken measures to protect the safety of our associates and customers.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b> </b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operations and Liquidity </b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company had incurred significant operating losses and used cash in its operating activities since inception through fiscal 2020. Operating losses resulted from inadequate sales levels for the cost structure and expenses as a result of impact of tariffs on inventory, expanding into new markets, opening new showrooms, and investments into advertising, marketing and infrastructure to support increases in revenues. The Company plans to continue to open new retail showrooms in larger markets and increase its shop-in-shop relationships to increase sales levels invest in advertising and marketing initiatives to increase brand awareness and invest in infrastructure to support growth of the Company. There can be no assurance that anticipated sales levels will be achieved. The Company believes that based on its current sales and expense levels, projections for the next twelve months, current cash on hand and the credit facility with Wells Fargo Bank, National Association, see Note 7, the Company will have sufficient working capital to cover operating cash needs through the twelve-month period from the financial statement issuance date.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except as described below, the Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. The Company, as an emerging growth company, has elected to use the extended transition period for complying with new or revised financial accounting standards.   </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The following new accounting pronouncements were adopted in fiscal 2022:</i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) amending lease guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2020-05 extended the effective date to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted the guidance in fiscal 2022 and there was not a material effect on the Company’s consolidated results of operations.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Adoption of this standard resulted in the recognition of operating lease right-to-use (“ROU”) assets and corresponding lease liabilities of approximately $90 million and $97 million, respectively, and reclassification of deferred rent of $6.7 million as a reduction of the right-of-use assets on the consolidated balance sheet as of February 1, 2021. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all of our leases.</span></p> 90000000 97000000 6700000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 3 – INTANGIBLE ASSETS, NET</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A summary of intangible assets follows:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="padding-bottom: 1.5pt"> </td> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Estimated Life</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross Carrying Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Accumulated Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Net carrying amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Patents</td><td style="width: 1%"> </td> <td style="width: 11%; text-align: center">10 Years </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,559,400</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,532,308</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,027,092</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Trademarks</td><td> </td> <td style="text-align: center">3 Years </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,282,315</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(1,120,394</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">161,921</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Other intangibles</td><td style="padding-bottom: 1.5pt"> </td> <td style="text-align: center; padding-bottom: 1.5pt">5 Years </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">839,737</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(839,737</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-57">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,681,452</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(3,492,439</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,189,013</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="margin: 0"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="padding-bottom: 1.5pt"> </td> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">January 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Estimated Life</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross Carrying Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Accumulated Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Net carrying amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Patents</td><td style="width: 1%"> </td> <td style="width: 11%; text-align: center">10 Years</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,387,328</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,128,997</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,258,331</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Trademarks</td><td> </td> <td style="text-align: center">3 Years</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,239,334</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(980,633</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">258,701</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Other intangibles</td><td style="padding-bottom: 1.5pt"> </td> <td style="text-align: center; padding-bottom: 1.5pt">5 Years</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">839,737</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(839,737</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-58">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,466,399</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(2,949,367</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,517,032</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amortization expense associated with intangible assets subject to amortization is included in depreciation and amortization expense on the accompanying condensed consolidated statements of operations. Amortization expense on other intangible assets was $79,751 and $86,179 and $543,072 and $164,550 for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As of August 1, 2021, estimated future amortization expense associated with intangible assets subject to amortization is as follows:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; width: 88%">Remainder of Fiscal 2022</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">136,604</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2023</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">175,868</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2024</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">158,462</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2025</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">129,307</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2026</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">125,848</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2027</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">124,195</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">338,729</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,189,013</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="padding-bottom: 1.5pt"> </td> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Estimated Life</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross Carrying Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Accumulated Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Net carrying amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Patents</td><td style="width: 1%"> </td> <td style="width: 11%; text-align: center">10 Years </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,559,400</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,532,308</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,027,092</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Trademarks</td><td> </td> <td style="text-align: center">3 Years </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,282,315</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(1,120,394</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">161,921</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Other intangibles</td><td style="padding-bottom: 1.5pt"> </td> <td style="text-align: center; padding-bottom: 1.5pt">5 Years </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">839,737</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(839,737</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-57">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,681,452</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(3,492,439</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,189,013</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="margin: 0"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="padding-bottom: 1.5pt"> </td> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">January 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Estimated Life</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Gross Carrying Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Accumulated Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Net carrying amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Patents</td><td style="width: 1%"> </td> <td style="width: 11%; text-align: center">10 Years</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,387,328</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,128,997</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,258,331</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Trademarks</td><td> </td> <td style="text-align: center">3 Years</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,239,334</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(980,633</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">258,701</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Other intangibles</td><td style="padding-bottom: 1.5pt"> </td> <td style="text-align: center; padding-bottom: 1.5pt">5 Years</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">839,737</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(839,737</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-58">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,466,399</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(2,949,367</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,517,032</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> P10Y 2559400 -1532308 1027092 P3Y 1282315 -1120394 161921 P5Y 839737 -839737 4681452 -3492439 1189013 P10Y 2387328 -1128997 1258331 P3Y 1239334 -980633 258701 P5Y 839737 -839737 4466399 -2949367 1517032 79751 86179 543072 164550 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; width: 88%">Remainder of Fiscal 2022</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">136,604</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2023</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">175,868</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2024</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">158,462</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2025</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">129,307</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2026</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">125,848</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2027</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">124,195</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">338,729</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,189,013</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table> 136604 175868 158462 129307 125848 124195 338729 1189013 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 4 – INCOME TAXES</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company continues to provide a full valuation allowance against its net deferred tax assets due to the uncertainty as to when business conditions will improve sufficiently to enable it to utilize its deferred tax assets. As a result, the Company did not record a federal or state tax benefit on its operating losses for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company does not anticipate any material adjustments relating to unrecognized tax benefits within the next twelve months; however, the ultimate outcome of tax matters is uncertain and unforeseen results can occur. We had no material interest or penalties during the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively, and we do not anticipate any such items during the next twelve months. Our policy is to record interest and penalties directly related to uncertain tax positions as income tax expense in the condensed consolidated statements of operations.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 5 – BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding and common stock equivalents outstanding during the period. Diluted net income (loss) per common share includes, in periods in which they are dilutive, the effect of those potentially dilutive securities where the average market price of the common stock exceeds the exercise prices for the respective periods.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For the thirteen and twenty-six weeks ended August 1, 2021, the effects of 558,021 shares of common stock related to restricted stock units, 495,366 shares of common stock underlying stock options and warrants to purchase 281,750 shares of common stock were included in the diluted share calculation.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As of August 2, 2020, there were 2,241,802 potentially dilutive shares which may be issued in the future, including 707,316 shares of common stock related to restricted stock units, 495,366 shares of common stock underlying stock options and warrants to purchase 1,039,120 shares of common stock. These were excluded from the diluted loss per share calculation in the thirteen and twenty-six weeks ended August 2, 2020, because the effect of including these potentially dilutive shares was antidilutive.</span></p> 558021 558021 495366 495366 281750 281750 2241802 707316 495366 1039120 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 6 – COMMITMENTS, CONTINGENCY AND RELATED PARTIES</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Leases </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company leases its office, warehouse facilities and retail showrooms under operating lease agreements which expire at various dates through June 2031. The Company determines if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Certain operating leases have renewal options and rent escalation clauses. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components for our showroom real estate leases in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, where applicable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease expense for operating leases consists of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. In addition, certain of our equipment lease agreements include variable lease payments, which are based on the usage of the underlying asset. The variable portion of payments are not included in the initial measurement of the asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASC 842 requires companies to use the rate implicit in the lease whenever that rate is readily determinable and if the interest rate is not readily determinable, then a lessee may use its incremental borrowing rate. Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determined our incremental borrowing rate by computing the rate of interest that we would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) at an amount equal to the total lease payments and (iv) in a similar economic environment. We used the incremental borrowing rates we determined as of February 1, 2021 for operating leases that commenced prior to that date. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. The lease term for all of our lease arrangements include the noncancelable period of the lease plus, if applicable, any additional periods covered by an option to extend the lease that is reasonably certain to be exercised by the Company. Our leases generally do not include termination options for either party to the lease or restrictive financial or other covenants. Some of our leases contain variable lease payments based on a Consumer Price Index or percentage of sales, which are excluded from the measurement of the lease liability.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company’s lease terms and rates are as follows:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold">Weighted average remaining lease term (in years)</td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left; text-indent: 10pt">Operating Leases</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">7.0</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold">Weighted average discount rate</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; text-indent: 10pt">Operating Leases</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">3.76</td><td style="text-align: left">%</td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During the thirteen and twenty-six weeks ended August 1, 2021, we recognized operating lease expense of $4.6 million and $9.1 million, respectively. In addition, during the thirteen and twenty-six weeks ended August 1, 2021, we recognized $3.0 million and $4.3 million, respectively, for index-based changes in rent, maintenance, real estate taxes, insurance and other charges included in the lease as well as rental expenses related to short term leases.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the thirteen and twenty-six weeks ended August 1, 2021, we recognized impairment charges totaling $0.6 million associated with showroom-level ROU assets that are included as part of selling, general and administrative expenses. We did not recognize any impairment charges associated with showroom-level ROU assets during fiscal year 2021 as we did not adopt the guidance in ASU No. 2016-02, Leases (Topic 842) until fiscal 2022.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The following table discloses the location and amount of our operating lease costs within our condensed consolidated balance sheets:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td style="border-bottom: Black 1.5pt solid; text-align: center"><b>Balance sheet location</b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><b>August 1,<br/> 2021</b></td><td style="padding-bottom: 1.5pt"><b> </b></td></tr> <tr style="vertical-align: bottom"> <td><span style="text-decoration:underline">Assets</span></td><td> </td> <td> </td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 30%; text-align: left">Operating leases</td><td style="width: 2%"> </td> <td style="width: 56%; text-align: left">Operating lease right-of-use assets (non-current)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">88,900,462</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-decoration: underline">Liabilities</td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Current:</td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Operating leases</td><td> </td> <td style="text-align: left">Current operating lease liabilities</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">14,536,004</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Noncurrent:</td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Operating leases</td><td> </td> <td style="text-align: left">Operating lease liability, long term</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">83,707,124</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total lease liabilities</td><td style="padding-bottom: 4pt"> </td> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">98,243,128</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable leases with terms of more than one year to the total lease liabilities recognized on the condensed consolidated balance sheet as of August 1, 2021:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; width: 88%">Remainder 2022</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,512,755</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2023</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17,725,139</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2024</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17,140,692</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2025</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">15,967,063</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2026</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">14,291,166</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">40,311,548</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; text-indent: 10pt">Total undiscounted future minimum lease payments</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">112,948,363</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Less:inputed interest</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(14,705,235</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; text-indent: 10pt">Total present value of lease obligations</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">98,243,128</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Less: current operating lease liability</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(14,536,004</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Operating lease liability- long term</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">83,707,124</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Supplemental Cash Flow information and non-cash activity related to our operating leases is as follows (in thousands):</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the<br/> twenty-six<br/> weeks ended<br/> August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold">Operating cash flow information:</td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Amounts paid on operating lease liabilities</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,351</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="font-weight: bold; text-align: left">Non-cash activities</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Right-of-use assets obtained in exchange for lease obligations</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">96,560</td><td style="text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i> </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Severance Contingency</span></i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company has various employment agreements with its senior level executives. A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $4.7 million at August 1, 2021 if all executives with employment agreements were terminated without cause and the full amount of severance was payable.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i> </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Legal Contingency</span></i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company is involved in various legal proceedings in the ordinary course of business. Management cannot presently predict the outcome of these matters, although management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a materially adverse effect on the Company’s condensed consolidated financial position, results of operations or cash flows.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Related Parties</span></i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our equity sponsor Mistral Capital Management, LLC (“Mistral”) performed management services for the Company under a contractual agreement that ended on January 31, 2021. Certain of our directors are members and principals of Mistral. Management fees totaled approximately $100,000 and $200,000 for the thirteen and twenty-six weeks ended August 2, 2020, respectively, and are included in selling, general and administrative expenses. There were no amounts payable to Mistral as of August 1, 2021. Amounts payable to Mistral as of January 31, 2021 were $15,213 related to reimbursable fees and were included in accrued liabilities in the accompanying condensed consolidated balance sheets.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our equity sponsor Satori Capital, LLC (“Satori”) performed management services for the Company under a contractual agreement that ended on January 31, 2021. One of our directors is a partner at Satori. Management fees totaled approximately $25,000 and $50,000 for the thirteen and twenty-six weeks ended August 2, 2020, respectively, and are included in selling, general and administrative expenses. There were no amounts payable to Satori as of August 2, 2021. Amounts payable to Satori as of January 31, 2021 were $8,333 consisting of management fees which were included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. In addition, the Company reimbursed Satori for expenses incurred in the amount of $0 and $36,401 for out-of-pocket expenses for the twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively. There were no such reimbursements during the thirteen weeks ended August 1, 2021 and August 2, 2020, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company engaged Blueport Commerce (“Blueport”), a company owned in part by investment vehicles affiliated with Mistral, as an ecommerce platform in February 2018. One of our directors was also a director of Blueport. The Company terminated the Blueport contract in fiscal 2021 in order to launch a new enhanced ecommerce platform. There were $1,218,278 and $1,701,126 of fees incurred with Blueport sales transacted through the Blueport platform during the thirteen and twenty-six weeks ended August 2, 2020, respectively. There were no amounts payable to Blueport as of August 1, 2021 and January 31, 2021, respectively.  </span></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold">Weighted average remaining lease term (in years)</td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left; text-indent: 10pt">Operating Leases</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">7.0</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold">Weighted average discount rate</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; text-indent: 10pt">Operating Leases</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">3.76</td><td style="text-align: left">%</td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> P7Y 0.0376 4600000 9100000 3000000.0 4300000 600000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td style="border-bottom: Black 1.5pt solid; text-align: center"><b>Balance sheet location</b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><b>August 1,<br/> 2021</b></td><td style="padding-bottom: 1.5pt"><b> </b></td></tr> <tr style="vertical-align: bottom"> <td><span style="text-decoration:underline">Assets</span></td><td> </td> <td> </td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 30%; text-align: left">Operating leases</td><td style="width: 2%"> </td> <td style="width: 56%; text-align: left">Operating lease right-of-use assets (non-current)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">88,900,462</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-decoration: underline">Liabilities</td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Current:</td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Operating leases</td><td> </td> <td style="text-align: left">Current operating lease liabilities</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">14,536,004</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Noncurrent:</td><td> </td> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Operating leases</td><td> </td> <td style="text-align: left">Operating lease liability, long term</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">83,707,124</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total lease liabilities</td><td style="padding-bottom: 4pt"> </td> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">98,243,128</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> 88900462 14536004 83707124 98243128 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; width: 88%">Remainder 2022</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,512,755</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2023</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17,725,139</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2024</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17,140,692</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2025</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">15,967,063</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2026</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">14,291,166</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">40,311,548</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; text-indent: 10pt">Total undiscounted future minimum lease payments</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">112,948,363</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Less:inputed interest</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(14,705,235</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; text-indent: 10pt">Total present value of lease obligations</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">98,243,128</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Less: current operating lease liability</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(14,536,004</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Operating lease liability- long term</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">83,707,124</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> 7512755 17725139 17140692 15967063 14291166 40311548 112948363 14705235 98243128 14536004 83707124 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the<br/> twenty-six<br/> weeks ended<br/> August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold">Operating cash flow information:</td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Amounts paid on operating lease liabilities</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,351</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="font-weight: bold; text-align: left">Non-cash activities</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Right-of-use assets obtained in exchange for lease obligations</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">96,560</td><td style="text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i> </i></span></p> 8351 96560 A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $4.7 million at August 1, 2021 if all executives with employment agreements were terminated without cause and the full amount of severance was payable. 100000 200000 15213 25000 50000 8333 0 36401 1218278 1701126 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 7 – FINANCING ARRANGEMENTS</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">The Company has a line of credit with Wells Fargo Bank, National Association (“Wells”). The line of credit with Wells allows the Company to borrow up to $25.0 million and will mature in February 2023. Borrowings are limited to 90% of eligible credit card receivables plus 85% of eligible wholesale receivables plus 85% of the net recovery percentage for the eligible inventory multiplied by the value of such eligible inventory of the Company for the period from December 16 of each year until October 14 of the immediately following year, with a seasonal increase to 90% of the net recovery percentage for the period from October 15 of each year until December 15 of such year, seasonal advance rate, minus applicable reserves established by Wells. As of August 1, 2021 and January 31, 2021, the Company’s borrowing availability under the line of credit with Wells was $22.5 million and $15.9 million, respectively. As of August 1 2021, we had borrowings of $115 relating to fees associated with the line of credit. As of January 31, 2021, there were no borrowings outstanding on this line of credit.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif">Under the line of credit with Wells, the Company may elect that revolving loans bear interest at a rate per annum equal to the base rate plus the applicable margin or the LIBOR rate plus the applicable margin. The applicable margin is based on tier’s relating to the quarterly average excess availability. The tiers range from 2.00% to 2.25%. The loan agreement calls for certain covenants including a timing of the financial statement’s threshold and a minimum excess availability threshold.</span></p> 25000000.0 2023-02 0.90 0.85 0.85 0.90 22500000 15900000 115 0.0200 0.0225 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 8 – STOCKHOLDERS’ EQUITY</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif"><i> </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif"><i><span style="text-decoration:underline">Common Stock Warrants</span></i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The following represents warrant activity during the twenty-six weeks ended August 1, 2021 and August 2, 2020:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average  exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of warrants</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted  average  remaining contractual life (in years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%">Warrants Outstanding at February 2, 2020</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">16.83</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,039,120</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1.93</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Warrants issued</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-59">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-60">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-61">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Expired and canceled</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-62">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-63">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-64">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Exercised</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-65">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-66">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-67">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at August 2, 2020</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16.83</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,039,120</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1.43</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Warrants Outstanding at January 31, 2021</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">19.07</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">293,973</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2.57</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Warrants issued</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-68">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-69">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-70">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Expired and canceled</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">9.83</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(98</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-71">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Exercised</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">16.00</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(12,125</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0.09</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at August 1, 2021</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">19.20</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">281,750</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1.91</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In the twenty-six weeks ended August 1, 2021, a total of 5,625 warrants were exercised on a cashless basis, whereby the holders received fewer shares of common stock in lieu of a cash payment to the Company. Warrants exercised in the twenty-six weeks ended August 1, 2021 resulted in the issuance of 10,956 common shares. There were 98 warrants that expired in the twenty-six weeks ended August 1, 2021.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Equity Incentive Plan</span></i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company adopted the 2017 Equity Incentive Plan (the “2017 Equity Plan”) which provides for awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units, cash-based awards and other stock-based Awards. All awards shall be granted within 10 years from the effective date of the 2017 Equity Plan. The number of shares of common stock reserved for issuance under the 2017 Equity Plan was 2,104,889 at August 1, 2021.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Stock Options</span></i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In June 2019, the Company granted 495,366 non-statutory stock options to certain officers of the Company with an option price of $38.10 per share. 100% of the stock options are subject to vesting on the third anniversary of the date of grant if the officers is still employed by the Company and the average closing price of the Company’s common stock for the prior 40 consecutive trading days has been at least $75 by the third anniversary of the grant. Both the employment and the market condition must be satisfied no later than June 5, 2024 or the options will terminate. These options were valued using a Monte Carlo simulation model to account for the path dependent market conditions that stipulate when and whether or not the options shall vest. The 495,366 stock options were modified in fiscal 2021 to extend the term of the options through June 5, 2024. This resulted in additional compensation of approximately $874,000, of which, $315,000 was recorded upon modification and the remaining expense to be recognized over the remaining expected term. The market condition was met on June 5, 2021, which was the date on which the average closing price of the Company’s common stock had been at least $75 for 40 consecutive trading days. The options will vest and become exercisable on June 5, 2022 as long as the officers are still employed on that date. As a result of the market condition being met, the Company accelerated the amortization and recognized additional stock-based compensation expense during the thirteen weeks ended August 1, 2021 of approximately $0.2 million.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A summary of the status of our stock options as of August 1, 2021 and August 2, 2020, and the changes during the twenty-six weeks ended August 1, 2021 and August 2, 2020 is presented below:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of options</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted  average  remaining contractual life (in years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average intrinsic value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Outstanding at February 2, 2020</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">495,366</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">38.10</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2.34</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-72">              -</div></td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Exercised</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-73">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Expired and canceled</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-74">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Outstanding at August 2, 2020</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">495,366</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">38.10</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3.84</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-75">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Exercisable at the end of the period</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-76">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-77">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-78">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-79">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of options</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted  average  remaining contractual life (in years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average intrinsic value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Outstanding at January 31, 2021</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">495,366</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">38.10</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">3.35</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-80">-</div></td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Granted</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-81">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-82">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Canceled and forfeited</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-83">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-84">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Outstanding at August 1, 2021</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">495,366</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">38.10</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2.85</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">35.32</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Exercisable at the end of the period</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-85">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-86">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-87">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-88">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Restricted Stock Units</i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A summary of the status of our unvested restricted stock units as of August 1, 2021 and August 2, 2020, and changes during the twenty-six weeks then ended, is presented below:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of shares</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average grant date fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%">Unvested at February 2, 2020</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">183,053</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">21.34</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Granted</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">607,656</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17.67</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Forfeited</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(782</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">13.49</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Vested</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(82,611</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14.83</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Unvested at August 2, 2020</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">707,316</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">19.07</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> </table><p style="margin: 0"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of shares</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average grant date fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%">Unvested at January 31, 2021</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">655,558</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">18.86</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Granted</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">63,456</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">80.40</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Forfeited</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(7,904</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">19.27</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Vested</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(153,089</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">20.20</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Unvested at August 1, 2021</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">558,021</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">25.52</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">  </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity based compensation expense was approximately $1.1 million and $1.8 million for the thirteen and twenty-six weeks ended August 1, 2021 and $0.7 million and $1.6 million and for the thirteen and twenty-six weeks ended August 2, 2020, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The total unrecognized equity-based compensation cost related to unvested restricted stock awards was approximately $6.1 million as of August 1, 2021 and will be recognized in operations over a weighted average period of 1.89 years.</span></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average  exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of warrants</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted  average  remaining contractual life (in years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%">Warrants Outstanding at February 2, 2020</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">16.83</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,039,120</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1.93</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Warrants issued</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-59">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-60">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-61">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Expired and canceled</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-62">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-63">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-64">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Exercised</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-65">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-66">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-67">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at August 2, 2020</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16.83</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,039,120</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1.43</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Warrants Outstanding at January 31, 2021</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">19.07</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">293,973</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2.57</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Warrants issued</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-68">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-69">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-70">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Expired and canceled</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">9.83</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(98</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-71">-</div></td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Exercised</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">16.00</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(12,125</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0.09</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at August 1, 2021</td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">19.20</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">281,750</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1.91</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> 16.83 1039120 P1Y11M4D 16.83 1039120 P1Y5M4D 19.07 293973 P2Y6M25D 9.83 -98 16.00 -12125 P0Y1M2D 19.20 281750 P1Y10M28D 5625 10956 98 P10Y 2104889 495366 38.10 1 75 495366 874000 315000 75 200000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of options</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted  average  remaining contractual life (in years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average intrinsic value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Outstanding at February 2, 2020</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">495,366</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">38.10</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2.34</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-72">              -</div></td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Exercised</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-73">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Expired and canceled</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-74">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Outstanding at August 2, 2020</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">495,366</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">38.10</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3.84</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-75">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Exercisable at the end of the period</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-76">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-77">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-78">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-79">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of options</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted  average  remaining contractual life (in years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average intrinsic value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Outstanding at January 31, 2021</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">495,366</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">38.10</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">3.35</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-80">-</div></td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Granted</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-81">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-82">-</div></td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Canceled and forfeited</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-83">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-84">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Outstanding at August 1, 2021</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">495,366</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">38.10</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2.85</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">35.32</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Exercisable at the end of the period</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-85">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-86">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-87">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-88">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> 495366 38.10 P2Y4M2D 495366 38.10 P3Y10M2D 495366 38.10 P3Y4M6D 495366 38.10 P2Y10M6D 35.32 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of shares</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average grant date fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%">Unvested at February 2, 2020</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">183,053</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">21.34</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Granted</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">607,656</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17.67</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Forfeited</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(782</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">13.49</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Vested</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(82,611</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14.83</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Unvested at August 2, 2020</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">707,316</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">19.07</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> </table><p style="margin: 0"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of shares</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average grant date fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%">Unvested at January 31, 2021</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">655,558</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">18.86</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Granted</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">63,456</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">80.40</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Forfeited</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(7,904</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">19.27</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Vested</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(153,089</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">20.20</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Unvested at August 1, 2021</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">558,021</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">25.52</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">  </span></p> 183053 21.34 607656 17.67 782 13.49 82611 14.83 707316 19.07 655558 18.86 63456 80.40 7904 19.27 153089 20.20 558021 25.52 1100000 1800000 700000 1600000 6100000 P1Y10M20D <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 9 – EMPLOYEE BENEFIT PLAN</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In February 2017, the Company established the TLC 401(k) Plan (the “401(k) Plan”) with Elective Deferrals beginning May 1, 2017. The 401(k) Plan calls for Elective Deferral Contributions, Safe Harbor Matching Contributions and Profit-Sharing Contributions. All associates of the Company will be eligible to participate in the 401(k) Plan as of the day of the month which is coincident with or next follows the date on which they attain age 21 and complete one month of service. Participants will be able to contribute up to 100% of their eligible compensation to the 401(k) Plan subject to limitations with the IRS. The employer contributions to the 401(k) Plan were $242,801 and $398,483 for the thirteen weeks and the twenty-six weeks ended August 1, 2021 and $117,190 and $234,470 for the thirteen and twenty-six weeks ended August 2, 2020, respectively.</span></p> 1 242801 398483 117190 234470 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 10 – SEGMENT INFORMATION</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company has determined that the Company operates within a single reporting segment. The chief operating decision makers of the Company are the Chief Executive Officer and President. The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of net sales. </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Thirteen weeks ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Twenty-six weeks ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 2,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 2,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td> </td> <td colspan="2"> </td><td> </td><td> </td> <td colspan="2"> </td><td> </td><td> </td> <td colspan="2"> </td><td> </td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Sactionals</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">89,173,770</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">53,544,454</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">163,184,299</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">97,352,021</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Sacs</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,716,347</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">7,868,761</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">18,857,220</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17,525,833</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,557,222</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">532,195</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,321,239</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,439,963</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">102,447,339</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">61,945,410</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">185,362,758</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">116,317,817</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table> The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of net sales. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Thirteen weeks ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Twenty-six weeks ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 2,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 1,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">August 2,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td> </td> <td colspan="2"> </td><td> </td><td> </td> <td colspan="2"> </td><td> </td><td> </td> <td colspan="2"> </td><td> </td><td> </td> <td colspan="2"> </td><td> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Sactionals</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">89,173,770</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">53,544,454</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">163,184,299</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">97,352,021</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Sacs</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,716,347</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">7,868,761</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">18,857,220</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">17,525,833</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,557,222</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">532,195</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,321,239</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,439,963</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">102,447,339</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">61,945,410</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">185,362,758</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">116,317,817</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table> 89173770 53544454 163184299 97352021 11716347 7868761 18857220 17525833 1557222 532195 3321239 1439963 102447339 61945410 185362758 116317817 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 11 – BARTER ARRANGEMENTS</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has a bartering arrangement with Icon International, Inc. (“Icon”), a vendor, whereby the Company will provide inventory in exchange for media credits. During fiscal 2021, the Company exchanged $3,169,825 of inventory plus the cost of freight for certain media credits. To account for the exchange, the Company recorded the transfer of the inventory asset as a reduction of inventory and an increase to a prepaid media asset account of $2,937,035 which is included in “Prepaid and other current assets” on the accompanying condensed consolidated balance sheet. During the first half of fiscal 2022, the Company used $1,084,292 in media credits. There were no additional barter arrangements entered into during the thirteen weeks and twenty-six weeks ended August 1, 2021. The Company had $1,436,979 and $2,521,271 of unused media credits remaining as of August 1, 2021 and January 31, 2021, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for barter transactions under ASC Topic No. 845 “Nonmonetary Transactions.” Barter transactions with commercial substance are recorded at the estimated fair value of the products exchanged, unless the products received have a more readily determinable estimated fair value. Revenue associated with barter transactions is recorded at the time of the exchange of the related assets.</p> 3169825 2937035 1084292 1436979 2521271 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 12 – REVENUE RECOGNITION</b> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s revenue consists substantially of product sales. The Company reports product sales net of discounts and recognizes them at the point in time when control transfers to the customer, which occurs when shipment is confirmed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Estimated refunds for returns and allowances are recorded using our historical return patterns, adjusting for any changes in returns policies. The Company records estimated refunds for net sales returns on a monthly basis as a reduction of net sales and cost of sales on the condensed consolidated statement of operations and an increase in inventory and customers returns liability on the condensed consolidated balance sheet. As of August 1, 2021 and January 31, 2021, there was a returns allowance recorded on the condensed consolidated balance sheet in the amount of $1,534,078 and $2,226,723, respectively, which was included in accrued expenses and $319,361 and $334,896, respectively, associated with sales returns included in merchandise inventories.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In some cases, deposits are received before the Company transfers control, resulting in contract liabilities. These contract liabilities are reported as deposits on the Company’s condensed consolidated balance sheet. As of August 1, 2021 and January 31, 2021, the Company recorded under customer deposit liabilities the amount of $13,365,940 and $5,992,633, respectively. During the twenty-six weeks ended August 1, 2021 and August 2, 2020, the Company recognized approximately $5,992,633 and $1,653,597, respectively, related to our customer deposits.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon adoption of ASC 606, we have elected the following accounting policies and practical expedients:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes shipping and handling expense as fulfilment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, we record the expenses for shipping and handling activities at the same time we recognize revenue.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company excludes from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company offers its products through an inventory lean omni-channel platform that provides a seamless and meaningful experience to its customers in showrooms and through the internet. The Other channel predominantly represents sales through the use of online pop-up-shops and shop-in-shops that are staffed with associates trained to demonstrate and sell our product. The following represents sales disaggregated by channel:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Thirteen weeks ended</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Twenty-six weeks ended</b></td><td style="padding-bottom: 1.5pt"><b> </b></td></tr> <tr style="vertical-align: bottom"> <td><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 1,<br/> 2021</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 2,<br/> 2020</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 1,<br/> 2021</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 2,<br/> 2020</b></td><td style="padding-bottom: 1.5pt"><b> </b></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Showrooms</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">62,594,191</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,850,565</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">111,580,066</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">30,968,706</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Internet</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">29,480,191</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">46,074,015</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">54,655,220</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">76,138,052</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Other</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">10,372,957</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,020,830</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">19,127,472</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,211,059</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">102,447,339</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">61,945,410</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">185,362,758</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">116,317,817</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has no foreign operations and its sales to foreign countries was less than .01% of total net sales in both fiscal 2022 and 2021.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had no customers in fiscal 2022 or 2021 that comprise more than 10% of total net sales.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">See Note 10 for sales disaggregated by product<b>.</b></p> 1534078 2226723 319361 334896 13365940 5992633 5992633 1653597 The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods.  <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Thirteen weeks ended</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Twenty-six weeks ended</b></td><td style="padding-bottom: 1.5pt"><b> </b></td></tr> <tr style="vertical-align: bottom"> <td><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 1,<br/> 2021</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 2,<br/> 2020</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 1,<br/> 2021</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>August 2,<br/> 2020</b></td><td style="padding-bottom: 1.5pt"><b> </b></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%">Showrooms</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">62,594,191</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,850,565</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">111,580,066</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">30,968,706</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td>Internet</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">29,480,191</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">46,074,015</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">54,655,220</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">76,138,052</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Other</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">10,372,957</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,020,830</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">19,127,472</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,211,059</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; "> <td> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">102,447,339</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">61,945,410</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">185,362,758</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">116,317,817</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> 62594191 12850565 111580066 30968706 29480191 46074015 54655220 76138052 10372957 3020830 19127472 9211059 102447339 61945410 185362758 116317817 The Company has no foreign operations and its sales to foreign countries was less than .01% of total net sales in both fiscal 2022 and 2021.  The Company had no customers in fiscal 2022 or 2021 that comprise more than 10% of total net sales.  Lovesac Co false --01-31 Q2 2022 0001701758 XML 12 R1.htm IDEA: XBRL DOCUMENT v3.21.2
Document And Entity Information - shares
6 Months Ended
Aug. 01, 2021
Sep. 07, 2021
Document Information Line Items    
Entity Registrant Name Lovesac Co  
Trading Symbol LOVE  
Document Type 10-Q  
Current Fiscal Year End Date --01-31  
Entity Common Stock, Shares Outstanding   15,118,514
Amendment Flag false  
Entity Central Index Key 0001701758  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Document Period End Date Aug. 01, 2021  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q2  
Entity Small Business false  
Entity Emerging Growth Company true  
Entity Shell Company false  
Entity Ex Transition Period false  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 001-38555  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 32-0514958  
Entity Address, Address Line One Two Landmark Square  
Entity Address, Address Line Two Suite 300  
Entity Address, City or Town Stamford  
Entity Address, State or Province CT  
Entity Address, Postal Zip Code 06901  
City Area Code 888  
Local Phone Number 636-1223  
Title of 12(b) Security Common Stock, $0.00001 par value per share  
Security Exchange Name NASDAQ  
Entity Interactive Data Current Yes  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.21.2
Condensed Consolidated Balance Sheets - USD ($)
Aug. 01, 2021
Jan. 31, 2021
Current Assets    
Cash and cash equivalents $ 68,487,569 $ 78,341,101
Trade accounts receivable 7,363,359 4,513,460
Merchandise inventories 74,991,843 50,416,712
Prepaid expenses and other current assets 10,602,702 10,128,353
Total Current Assets 161,445,473 143,399,626
Property and equipment, net 29,530,483 25,867,980
Operating lease right-of-use assets 88,900,462
Other Assets    
Goodwill 143,562 143,562
Intangible assets, net 1,189,013 1,517,032
Deferred financing costs, net 45,335 90,671
Total Other Assets 1,377,910 1,751,265
Total Assets 281,254,328 171,018,871
Current Liabilities    
Accounts payable 25,888,209 24,310,972
Accrued expenses 19,867,021 17,187,694
Payroll payable 4,821,714 6,361,677
Customer deposits 13,365,940 5,992,633
Current operating lease liabilities 14,536,004  
Sales taxes payable 2,139,824 2,470,593
Total Current Liabilities 80,618,712 56,323,569
Deferred Rent   6,748,747
Operating Lease Liability, long-term 83,707,124  
Line of Credit 115
Total Liabilities 164,325,951 63,072,316
Stockholders’ Equity    
Preferred Stock $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of August 1, 2021 and January 31, 2021.
Common Stock $.00001 par value, 40,000,000 shares authorized, 15,105,826 shares issued and outstanding as of August 1, 2021 and 15,011,556 shares issued and outstanding as of January 31, 2021. 151 150
Additional paid-in capital 169,855,660 171,382,086
Accumulated deficit (52,927,434) (63,435,681)
Stockholders’ Equity 116,928,377 107,946,555
Total Liabilities and Stockholders’ Equity $ 281,254,328 $ 171,018,871
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.21.2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares
Aug. 01, 2021
Jan. 31, 2021
Statement of Financial Position [Abstract]    
Preferred stock, par value (in Dollars per share) $ 0.00001 $ 0.00001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in Dollars per share) $ 0.00001 $ 0.00001
Common stock, shares authorized 40,000,000 40,000,000
Common stock, shares issued 15,105,826 15,011,556
Common stock, shares outstanding 15,105,826 15,011,556
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.21.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Income Statement [Abstract]        
Net sales $ 102,447,339 $ 61,945,410 $ 185,362,758 $ 116,317,817
Cost of merchandise sold 43,415,701 30,889,870 80,255,012 57,978,708
Gross profit 59,031,638 31,055,540 105,107,746 58,339,109
Operating expenses        
Selling, general and administration expenses 35,385,196 23,383,525 66,103,378 49,214,927
Advertising and marketing 13,035,551 7,166,537 23,715,916 15,362,122
Depreciation and amortization 1,602,543 1,543,902 4,022,247 3,179,562
Total operating expenses 50,023,290 32,093,964 93,841,541 67,756,611
Operating income (loss) 9,008,348 (1,038,424) 11,266,205 (9,417,502)
Interest (expense) income, net (45,426) (34,729) (89,564) 21,627
Net income (loss) before taxes 8,962,922 (1,073,153) 11,176,641 (9,395,875)
Provision for income taxes (515,208) (33,771) (668,394) (58,800)
Net income (loss) $ 8,447,714 $ (1,106,924) $ 10,508,247 $ (9,454,675)
Net income (loss) per common share:        
Basic (in Dollars per share) $ 0.56 $ (0.08) $ 0.70 $ (0.65)
Diluted (in Dollars per share) $ 0.52 $ (0.08) $ 0.66 $ (0.65)
Weighted average number of common shares outstanding:        
Basic (in Shares) 15,096,528 14,518,929 15,034,954 14,499,505
Diluted (in Shares) 16,100,927 14,518,929 16,039,352 14,499,505
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.21.2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)
Common Shares
Additional Paid-in Capital
Accumulated Deficit
Total
Balance at Feb. 02, 2020 $ 145 $ 168,317,210 $ (78,162,828) $ 90,154,527
Balance (in Shares) at Feb. 02, 2020 14,472,611      
Net income (loss) (8,347,751) (8,347,751)
Equity based compensation 898,077 898,077
Vested restricted stock units
Vested restricted stock units (in Shares) 35,776      
Taxes paid for net share settlement of equity awards (149,512) (149,512)
Balance at May. 03, 2020 $ 145 169,065,775 (86,510,579) 82,555,341
Balance (in Shares) at May. 03, 2020 14,508,387      
Net income (loss) (1,106,924) (1,106,924)
Equity based compensation 677,106 677,106
Vested restricted stock units
Vested restricted stock units (in Shares) 19,192      
Taxes paid for net share settlement of equity awards (305,908) (305,908)
Balance at Aug. 02, 2020 $ 145 169,436,973 (87,617,503) 81,819,615
Balance (in Shares) at Aug. 02, 2020 14,527,579      
Balance at Jan. 31, 2021 $ 150 171,382,086 (63,435,681) 107,946,555
Balance (in Shares) at Jan. 31, 2021 15,011,556      
Net income (loss) 2,060,533 2,060,533
Equity based compensation 654,472 654,472
Vested restricted stock units
Vested restricted stock units (in Shares) 4,868      
Exercise of Warrants 20,000 20,000
Exercise of Warrants (in Shares) 2,106      
Balance at May. 02, 2021 $ 150 172,056,558 (61,375,148) 110,681,560
Balance (in Shares) at May. 02, 2021 15,018,530      
Net income (loss) 8,447,714 8,447,714
Equity based compensation 1,084,716 1,084,716
Vested restricted stock units $ 1 (1)
Vested restricted stock units (in Shares) 78,446      
Exercise of Warrants 84,000 84,000
Exercise of Warrants (in Shares) 8,850      
Taxes paid for net share settlement of equity awards (3,369,613) (3,369,613)
Balance at Aug. 01, 2021 $ 151 $ 169,855,660 $ (52,927,434) $ 116,928,377
Balance (in Shares) at Aug. 01, 2021 15,105,826      
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.21.2
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Cash Flows from Operating Activities    
Net income (loss) $ 10,508,247 $ (9,454,675)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization of property and equipment 3,479,175 3,015,012
Amortization of other intangible assets 543,072 164,550
Amortization of deferred financing fees 45,336 42,394
Net loss on disposal of property and equipment 5,487
Equity based compensation 1,739,188 1,575,183
Deferred rent 2,360,113
Non-cash operating lease cost 9,012,071
Impairment of right of use lease asset 553,990
Changes in operating assets and liabilities:    
Trade accounts receivable (2,849,899) 961,404
Merchandise inventories (24,575,131) (4,614,759)
Prepaid expenses and other current assets 460,419 2,375,123
Accounts payable and accrued expenses 2,830,247 8,201,988
Operating lease liabilities (8,351,325)
Customer deposits 7,373,307 7,441,436
Net Cash Provided by Operating Activities 768,697 12,073,256
Cash Flows from Investing Activities    
Purchase of property and equipment (7,141,678) (4,917,262)
Payments for patents and trademarks (215,053) (354,143)
Net Cash Used in Investing Activities (7,356,731) (5,271,405)
Cash Flows from Financing Activities    
Taxes paid for net share settlement of equity awards (3,369,613) (455,420)
Proceeds from the exercise of warrants 104,000
Proceeds from the line of credit 115
Payment of deferred financing costs (50,000)
Net Cash Used in Financing Activities (3,265,498) (505,420)
Net Change in Cash and Cash Equivalents (9,853,532) 6,296,431
Cash and Cash Equivalents - Beginning 78,341,101 48,538,827
Cash and Cash Equivalents - Ending 68,487,569 54,835,258
Supplemental Cash Flow Disclosures    
Cash paid for taxes 669,899 58,800
Cash paid for interest $ 31,504 $ 37,557
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Basis of Presentation, Operations and Liquidity
6 Months Ended
Aug. 01, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION, OPERATIONS AND LIQUIDITY

NOTE 1 - BASIS OF PRESENTATION, OPERATIONS AND LIQUIDITY

 

The condensed consolidated balance sheet of The Lovesac Company (the “Company”, “we”, “us” or “our”) as of January 31, 2021, which has been derived from our audited financial statements as of and for the 52-week year ended January 31, 2021, and the accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. Certain information and note disclosures normally included in annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to those rules and regulations. The financial information presented herein, which is not necessarily indicative of results to be expected for the full current fiscal year, reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the interim unaudited condensed consolidated financial statements. Such adjustments are of a normal, recurring nature. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements filed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2021.

 

Due to the seasonality of the Company’s business, with the majority of our activity occurring in the fourth quarter of each fiscal year, the results of operations for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020 are not necessarily indicative of results to be expected for the full fiscal year.

 

Nature of Operations

 

The Company is a technology driven company that designs, manufactures and sells unique, high quality furniture derived through its proprietary “Designed for Life” approach which results in products that are built to last a lifetime and designed to evolve as our customers’ lives do. The Company markets and sells its products through modern and efficient showrooms and, increasingly, through online sales directly at www.lovesac.com, supported by direct-to-consumer touch-feel points in the form of our own showrooms as well as through shop-in-shops and online pop-up-shops with third party retailers. The Company was formed as a Delaware corporation on January 3, 2017, in connection with a corporate reorganization with SAC Acquisition LLC, a Delaware limited liability company (“SAC LLC”), the predecessor entity to the Company.

 

COVID-19

 

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic and, in the following weeks, the U.S. federal, state and local governments issued lockdown orders and related safety measures impacting the operations of our showrooms and consumer demand. Although there has been a general improvement in conditions, there continues to be significant uncertainties around the scope and severity of the pandemic, its impact on the global economy, including supply chains, and other business disruptions that may impact our operating results and financial condition. We continue to follow the guidance issued by federal, state and local governments and health organizations and have taken measures to protect the safety of our associates and customers.

 

Operations and Liquidity 

 

The Company had incurred significant operating losses and used cash in its operating activities since inception through fiscal 2020. Operating losses resulted from inadequate sales levels for the cost structure and expenses as a result of impact of tariffs on inventory, expanding into new markets, opening new showrooms, and investments into advertising, marketing and infrastructure to support increases in revenues. The Company plans to continue to open new retail showrooms in larger markets and increase its shop-in-shop relationships to increase sales levels invest in advertising and marketing initiatives to increase brand awareness and invest in infrastructure to support growth of the Company. There can be no assurance that anticipated sales levels will be achieved. The Company believes that based on its current sales and expense levels, projections for the next twelve months, current cash on hand and the credit facility with Wells Fargo Bank, National Association, see Note 7, the Company will have sufficient working capital to cover operating cash needs through the twelve-month period from the financial statement issuance date.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.21.2
Recent Accounting Pronouncements
6 Months Ended
Aug. 01, 2021
ASU 2018-12 Transition [Abstract]  
RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

 

Except as described below, the Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. The Company, as an emerging growth company, has elected to use the extended transition period for complying with new or revised financial accounting standards.   

 

The following new accounting pronouncements were adopted in fiscal 2022:

 

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) amending lease guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2020-05 extended the effective date to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted the guidance in fiscal 2022 and there was not a material effect on the Company’s consolidated results of operations.

 

Adoption of this standard resulted in the recognition of operating lease right-to-use (“ROU”) assets and corresponding lease liabilities of approximately $90 million and $97 million, respectively, and reclassification of deferred rent of $6.7 million as a reduction of the right-of-use assets on the consolidated balance sheet as of February 1, 2021. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all of our leases.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.21.2
Intangible Assets, Net
6 Months Ended
Aug. 01, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS, NET

NOTE 3 – INTANGIBLE ASSETS, NET

 

A summary of intangible assets follows:

 

      August 1, 2021 
   Estimated Life  Gross Carrying Amount   Accumulated Amortization   Net carrying amount 
Patents  10 Years   $2,559,400   $(1,532,308)  $1,027,092 
Trademarks  3 Years    1,282,315    (1,120,394)   161,921 
Other intangibles  5 Years    839,737    (839,737)   
-
 
Total     $4,681,452   $(3,492,439)  $1,189,013 

 

      January 31, 2021 
   Estimated Life  Gross Carrying Amount   Accumulated Amortization   Net carrying amount 
Patents  10 Years  $2,387,328   $(1,128,997)  $1,258,331 
Trademarks  3 Years   1,239,334    (980,633)   258,701 
Other intangibles  5 Years   839,737    (839,737)   
-
 
Total     $4,466,399   $(2,949,367)  $1,517,032 

 

Amortization expense associated with intangible assets subject to amortization is included in depreciation and amortization expense on the accompanying condensed consolidated statements of operations. Amortization expense on other intangible assets was $79,751 and $86,179 and $543,072 and $164,550 for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively.

 

As of August 1, 2021, estimated future amortization expense associated with intangible assets subject to amortization is as follows:

 

Remainder of Fiscal 2022  $136,604 
2023   175,868 
2024   158,462 
2025   129,307 
2026   125,848 
2027   124,195 
Thereafter   338,729 
   $1,189,013 
XML 21 R10.htm IDEA: XBRL DOCUMENT v3.21.2
Income Taxes
6 Months Ended
Aug. 01, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 4 – INCOME TAXES

 

The Company continues to provide a full valuation allowance against its net deferred tax assets due to the uncertainty as to when business conditions will improve sufficiently to enable it to utilize its deferred tax assets. As a result, the Company did not record a federal or state tax benefit on its operating losses for the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020.

 

The Company does not anticipate any material adjustments relating to unrecognized tax benefits within the next twelve months; however, the ultimate outcome of tax matters is uncertain and unforeseen results can occur. We had no material interest or penalties during the thirteen and twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively, and we do not anticipate any such items during the next twelve months. Our policy is to record interest and penalties directly related to uncertain tax positions as income tax expense in the condensed consolidated statements of operations.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.21.2
Basic and Diluted Net Income (Loss) Per Common Share
6 Months Ended
Aug. 01, 2021
Earnings Per Share [Abstract]  
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE

NOTE 5 – BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding and common stock equivalents outstanding during the period. Diluted net income (loss) per common share includes, in periods in which they are dilutive, the effect of those potentially dilutive securities where the average market price of the common stock exceeds the exercise prices for the respective periods.

 

For the thirteen and twenty-six weeks ended August 1, 2021, the effects of 558,021 shares of common stock related to restricted stock units, 495,366 shares of common stock underlying stock options and warrants to purchase 281,750 shares of common stock were included in the diluted share calculation.

 

As of August 2, 2020, there were 2,241,802 potentially dilutive shares which may be issued in the future, including 707,316 shares of common stock related to restricted stock units, 495,366 shares of common stock underlying stock options and warrants to purchase 1,039,120 shares of common stock. These were excluded from the diluted loss per share calculation in the thirteen and twenty-six weeks ended August 2, 2020, because the effect of including these potentially dilutive shares was antidilutive.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties
6 Months Ended
Aug. 01, 2021
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS, CONTINGENCY AND RELATED PARTIES

NOTE 6 – COMMITMENTS, CONTINGENCY AND RELATED PARTIES

 

Leases

 

The Company leases its office, warehouse facilities and retail showrooms under operating lease agreements which expire at various dates through June 2031. The Company determines if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. Certain operating leases have renewal options and rent escalation clauses. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement.

 

Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components for our showroom real estate leases in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, where applicable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

 

Lease expense for operating leases consists of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. In addition, certain of our equipment lease agreements include variable lease payments, which are based on the usage of the underlying asset. The variable portion of payments are not included in the initial measurement of the asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.

 

ASC 842 requires companies to use the rate implicit in the lease whenever that rate is readily determinable and if the interest rate is not readily determinable, then a lessee may use its incremental borrowing rate. Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determined our incremental borrowing rate by computing the rate of interest that we would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) at an amount equal to the total lease payments and (iv) in a similar economic environment. We used the incremental borrowing rates we determined as of February 1, 2021 for operating leases that commenced prior to that date. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. The lease term for all of our lease arrangements include the noncancelable period of the lease plus, if applicable, any additional periods covered by an option to extend the lease that is reasonably certain to be exercised by the Company. Our leases generally do not include termination options for either party to the lease or restrictive financial or other covenants. Some of our leases contain variable lease payments based on a Consumer Price Index or percentage of sales, which are excluded from the measurement of the lease liability.

 

The Company’s lease terms and rates are as follows:

 

   August 1,
2021
 
Weighted average remaining lease term (in years)    
Operating Leases   7.0 
      
Weighted average discount rate     
Operating Leases   3.76%

 

During the thirteen and twenty-six weeks ended August 1, 2021, we recognized operating lease expense of $4.6 million and $9.1 million, respectively. In addition, during the thirteen and twenty-six weeks ended August 1, 2021, we recognized $3.0 million and $4.3 million, respectively, for index-based changes in rent, maintenance, real estate taxes, insurance and other charges included in the lease as well as rental expenses related to short term leases.

 

During the thirteen and twenty-six weeks ended August 1, 2021, we recognized impairment charges totaling $0.6 million associated with showroom-level ROU assets that are included as part of selling, general and administrative expenses. We did not recognize any impairment charges associated with showroom-level ROU assets during fiscal year 2021 as we did not adopt the guidance in ASU No. 2016-02, Leases (Topic 842) until fiscal 2022.

 

The following table discloses the location and amount of our operating lease costs within our condensed consolidated balance sheets:

 

   Balance sheet location  August 1,
2021
 
Assets       
Operating leases  Operating lease right-of-use assets (non-current)  $88,900,462 
         
Liabilities        
Current:        
Operating leases  Current operating lease liabilities   14,536,004 
         
Noncurrent:        
Operating leases  Operating lease liability, long term   83,707,124 
         
Total lease liabilities     $98,243,128 

 

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable leases with terms of more than one year to the total lease liabilities recognized on the condensed consolidated balance sheet as of August 1, 2021:

 

Remainder 2022  $7,512,755 
2023   17,725,139 
2024   17,140,692 
2025   15,967,063 
2026   14,291,166 
Thereafter   40,311,548 
Total undiscounted future minimum lease payments   112,948,363 
Less:inputed interest   (14,705,235)
Total present value of lease obligations   98,243,128 
Less: current operating lease liability   (14,536,004)
Operating lease liability- long term  $83,707,124 

 

Supplemental Cash Flow information and non-cash activity related to our operating leases is as follows (in thousands):

 

   For the
twenty-six
weeks ended
August 1,
2021
 
Operating cash flow information:    
Amounts paid on operating lease liabilities  $8,351 
Non-cash activities     
Right-of-use assets obtained in exchange for lease obligations  $96,560 

  

Severance Contingency

 

The Company has various employment agreements with its senior level executives. A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $4.7 million at August 1, 2021 if all executives with employment agreements were terminated without cause and the full amount of severance was payable.

 

Legal Contingency

 

The Company is involved in various legal proceedings in the ordinary course of business. Management cannot presently predict the outcome of these matters, although management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a materially adverse effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

 

Related Parties

 

Our equity sponsor Mistral Capital Management, LLC (“Mistral”) performed management services for the Company under a contractual agreement that ended on January 31, 2021. Certain of our directors are members and principals of Mistral. Management fees totaled approximately $100,000 and $200,000 for the thirteen and twenty-six weeks ended August 2, 2020, respectively, and are included in selling, general and administrative expenses. There were no amounts payable to Mistral as of August 1, 2021. Amounts payable to Mistral as of January 31, 2021 were $15,213 related to reimbursable fees and were included in accrued liabilities in the accompanying condensed consolidated balance sheets.

 

Our equity sponsor Satori Capital, LLC (“Satori”) performed management services for the Company under a contractual agreement that ended on January 31, 2021. One of our directors is a partner at Satori. Management fees totaled approximately $25,000 and $50,000 for the thirteen and twenty-six weeks ended August 2, 2020, respectively, and are included in selling, general and administrative expenses. There were no amounts payable to Satori as of August 2, 2021. Amounts payable to Satori as of January 31, 2021 were $8,333 consisting of management fees which were included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. In addition, the Company reimbursed Satori for expenses incurred in the amount of $0 and $36,401 for out-of-pocket expenses for the twenty-six weeks ended August 1, 2021 and August 2, 2020, respectively. There were no such reimbursements during the thirteen weeks ended August 1, 2021 and August 2, 2020, respectively.

 

The Company engaged Blueport Commerce (“Blueport”), a company owned in part by investment vehicles affiliated with Mistral, as an ecommerce platform in February 2018. One of our directors was also a director of Blueport. The Company terminated the Blueport contract in fiscal 2021 in order to launch a new enhanced ecommerce platform. There were $1,218,278 and $1,701,126 of fees incurred with Blueport sales transacted through the Blueport platform during the thirteen and twenty-six weeks ended August 2, 2020, respectively. There were no amounts payable to Blueport as of August 1, 2021 and January 31, 2021, respectively.  

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.21.2
Financing Arrangements
6 Months Ended
Aug. 01, 2021
Financing Arrangements [Abstract]  
FINANCING ARRANGEMENTS

NOTE 7 – FINANCING ARRANGEMENTS

 

The Company has a line of credit with Wells Fargo Bank, National Association (“Wells”). The line of credit with Wells allows the Company to borrow up to $25.0 million and will mature in February 2023. Borrowings are limited to 90% of eligible credit card receivables plus 85% of eligible wholesale receivables plus 85% of the net recovery percentage for the eligible inventory multiplied by the value of such eligible inventory of the Company for the period from December 16 of each year until October 14 of the immediately following year, with a seasonal increase to 90% of the net recovery percentage for the period from October 15 of each year until December 15 of such year, seasonal advance rate, minus applicable reserves established by Wells. As of August 1, 2021 and January 31, 2021, the Company’s borrowing availability under the line of credit with Wells was $22.5 million and $15.9 million, respectively. As of August 1 2021, we had borrowings of $115 relating to fees associated with the line of credit. As of January 31, 2021, there were no borrowings outstanding on this line of credit.

 

Under the line of credit with Wells, the Company may elect that revolving loans bear interest at a rate per annum equal to the base rate plus the applicable margin or the LIBOR rate plus the applicable margin. The applicable margin is based on tier’s relating to the quarterly average excess availability. The tiers range from 2.00% to 2.25%. The loan agreement calls for certain covenants including a timing of the financial statement’s threshold and a minimum excess availability threshold.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity
6 Months Ended
Aug. 01, 2021
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Common Stock Warrants

 

The following represents warrant activity during the twenty-six weeks ended August 1, 2021 and August 2, 2020:

 

   Average  exercise price   Number of warrants   Weighted  average  remaining contractual life (in years) 
Warrants Outstanding at February 2, 2020  $16.83    1,039,120    1.93 
Warrants issued   
-
    
-
    
-
 
Expired and canceled   
-
    
-
    
-
 
Exercised   
-
    
-
    
-
 
Outstanding at August 2, 2020  $16.83    1,039,120    1.43 
                
Warrants Outstanding at January 31, 2021  $19.07    293,973    2.57 
Warrants issued   
-
    
-
    
-
 
Expired and canceled   9.83    (98)   
-
 
Exercised   16.00    (12,125)   (0.09)
Outstanding at August 1, 2021  $19.20    281,750    1.91 

 

In the twenty-six weeks ended August 1, 2021, a total of 5,625 warrants were exercised on a cashless basis, whereby the holders received fewer shares of common stock in lieu of a cash payment to the Company. Warrants exercised in the twenty-six weeks ended August 1, 2021 resulted in the issuance of 10,956 common shares. There were 98 warrants that expired in the twenty-six weeks ended August 1, 2021.

 

Equity Incentive Plan

 

The Company adopted the 2017 Equity Incentive Plan (the “2017 Equity Plan”) which provides for awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units, cash-based awards and other stock-based Awards. All awards shall be granted within 10 years from the effective date of the 2017 Equity Plan. The number of shares of common stock reserved for issuance under the 2017 Equity Plan was 2,104,889 at August 1, 2021.

 

Stock Options

 

In June 2019, the Company granted 495,366 non-statutory stock options to certain officers of the Company with an option price of $38.10 per share. 100% of the stock options are subject to vesting on the third anniversary of the date of grant if the officers is still employed by the Company and the average closing price of the Company’s common stock for the prior 40 consecutive trading days has been at least $75 by the third anniversary of the grant. Both the employment and the market condition must be satisfied no later than June 5, 2024 or the options will terminate. These options were valued using a Monte Carlo simulation model to account for the path dependent market conditions that stipulate when and whether or not the options shall vest. The 495,366 stock options were modified in fiscal 2021 to extend the term of the options through June 5, 2024. This resulted in additional compensation of approximately $874,000, of which, $315,000 was recorded upon modification and the remaining expense to be recognized over the remaining expected term. The market condition was met on June 5, 2021, which was the date on which the average closing price of the Company’s common stock had been at least $75 for 40 consecutive trading days. The options will vest and become exercisable on June 5, 2022 as long as the officers are still employed on that date. As a result of the market condition being met, the Company accelerated the amortization and recognized additional stock-based compensation expense during the thirteen weeks ended August 1, 2021 of approximately $0.2 million.

 

A summary of the status of our stock options as of August 1, 2021 and August 2, 2020, and the changes during the twenty-six weeks ended August 1, 2021 and August 2, 2020 is presented below:

 

   Number of options   Weighted average exercise price   Weighted  average  remaining contractual life (in years)   Average intrinsic value 
Outstanding at February 2, 2020   495,366   $38.10    2.34    
              -
 
Exercised   
-
                
Expired and canceled   
-
                
Outstanding at August 2, 2020   495,366   $38.10    3.84    
-
 
Exercisable at the end of the period   
-
    
-
    
-
    
-
 
                     
   Number of options   Weighted average exercise price   Weighted  average  remaining contractual life (in years)   Average intrinsic value 
Outstanding at January 31, 2021   495,366   $38.10    3.35    
-
 
Granted   
-
    
-
           
Canceled and forfeited   
-
    
-
           
Outstanding at August 1, 2021   495,366   $38.10    2.85   $35.32 
Exercisable at the end of the period   
-
    
-
    
-
    
-
 

 

Restricted Stock Units

 

A summary of the status of our unvested restricted stock units as of August 1, 2021 and August 2, 2020, and changes during the twenty-six weeks then ended, is presented below:

 

   Number of shares   Weighted average grant date fair value 
Unvested at February 2, 2020   183,053   $21.34 
Granted   607,656    17.67 
Forfeited   (782)   13.49 
Vested   (82,611)   14.83 
Unvested at August 2, 2020   707,316   $19.07 

 

   Number of shares   Weighted average grant date fair value 
Unvested at January 31, 2021   655,558   $18.86 
Granted   63,456    80.40 
Forfeited   (7,904)   19.27 
Vested   (153,089)   20.20 
Unvested at August 1, 2021   558,021   $25.52 

  

Equity based compensation expense was approximately $1.1 million and $1.8 million for the thirteen and twenty-six weeks ended August 1, 2021 and $0.7 million and $1.6 million and for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

 

The total unrecognized equity-based compensation cost related to unvested restricted stock awards was approximately $6.1 million as of August 1, 2021 and will be recognized in operations over a weighted average period of 1.89 years.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.21.2
Employee Benefit Plan
6 Months Ended
Aug. 01, 2021
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLAN

NOTE 9 – EMPLOYEE BENEFIT PLAN

 

In February 2017, the Company established the TLC 401(k) Plan (the “401(k) Plan”) with Elective Deferrals beginning May 1, 2017. The 401(k) Plan calls for Elective Deferral Contributions, Safe Harbor Matching Contributions and Profit-Sharing Contributions. All associates of the Company will be eligible to participate in the 401(k) Plan as of the day of the month which is coincident with or next follows the date on which they attain age 21 and complete one month of service. Participants will be able to contribute up to 100% of their eligible compensation to the 401(k) Plan subject to limitations with the IRS. The employer contributions to the 401(k) Plan were $242,801 and $398,483 for the thirteen weeks and the twenty-six weeks ended August 1, 2021 and $117,190 and $234,470 for the thirteen and twenty-six weeks ended August 2, 2020, respectively.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.21.2
Segment Information
6 Months Ended
Aug. 01, 2021
Segment Reporting [Abstract]  
SEGMENT INFORMATION

NOTE 10 – SEGMENT INFORMATION

 

The Company has determined that the Company operates within a single reporting segment. The chief operating decision makers of the Company are the Chief Executive Officer and President. The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of net sales. 

 

   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
                 
Sactionals  $89,173,770   $53,544,454   $163,184,299   $97,352,021 
Sacs   11,716,347    7,868,761    18,857,220    17,525,833 
Other   1,557,222    532,195    3,321,239    1,439,963 
   $102,447,339   $61,945,410   $185,362,758   $116,317,817 
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.21.2
Barter Arrangements
6 Months Ended
Aug. 01, 2021
Barter Arrangements [Abstract]  
BARTER ARRANGEMENTS

NOTE 11 – BARTER ARRANGEMENTS

 

The Company has a bartering arrangement with Icon International, Inc. (“Icon”), a vendor, whereby the Company will provide inventory in exchange for media credits. During fiscal 2021, the Company exchanged $3,169,825 of inventory plus the cost of freight for certain media credits. To account for the exchange, the Company recorded the transfer of the inventory asset as a reduction of inventory and an increase to a prepaid media asset account of $2,937,035 which is included in “Prepaid and other current assets” on the accompanying condensed consolidated balance sheet. During the first half of fiscal 2022, the Company used $1,084,292 in media credits. There were no additional barter arrangements entered into during the thirteen weeks and twenty-six weeks ended August 1, 2021. The Company had $1,436,979 and $2,521,271 of unused media credits remaining as of August 1, 2021 and January 31, 2021, respectively.

 

The Company accounts for barter transactions under ASC Topic No. 845 “Nonmonetary Transactions.” Barter transactions with commercial substance are recorded at the estimated fair value of the products exchanged, unless the products received have a more readily determinable estimated fair value. Revenue associated with barter transactions is recorded at the time of the exchange of the related assets.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.21.2
Revenue Recognition
6 Months Ended
Aug. 01, 2021
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION

NOTE 12 – REVENUE RECOGNITION 

 

The Company’s revenue consists substantially of product sales. The Company reports product sales net of discounts and recognizes them at the point in time when control transfers to the customer, which occurs when shipment is confirmed.

 

Estimated refunds for returns and allowances are recorded using our historical return patterns, adjusting for any changes in returns policies. The Company records estimated refunds for net sales returns on a monthly basis as a reduction of net sales and cost of sales on the condensed consolidated statement of operations and an increase in inventory and customers returns liability on the condensed consolidated balance sheet. As of August 1, 2021 and January 31, 2021, there was a returns allowance recorded on the condensed consolidated balance sheet in the amount of $1,534,078 and $2,226,723, respectively, which was included in accrued expenses and $319,361 and $334,896, respectively, associated with sales returns included in merchandise inventories.

 

In some cases, deposits are received before the Company transfers control, resulting in contract liabilities. These contract liabilities are reported as deposits on the Company’s condensed consolidated balance sheet. As of August 1, 2021 and January 31, 2021, the Company recorded under customer deposit liabilities the amount of $13,365,940 and $5,992,633, respectively. During the twenty-six weeks ended August 1, 2021 and August 2, 2020, the Company recognized approximately $5,992,633 and $1,653,597, respectively, related to our customer deposits.

 

Upon adoption of ASC 606, we have elected the following accounting policies and practical expedients:

 

The Company recognizes shipping and handling expense as fulfilment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, we record the expenses for shipping and handling activities at the same time we recognize revenue.

 

The Company excludes from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes).

 

The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods.

 

The Company offers its products through an inventory lean omni-channel platform that provides a seamless and meaningful experience to its customers in showrooms and through the internet. The Other channel predominantly represents sales through the use of online pop-up-shops and shop-in-shops that are staffed with associates trained to demonstrate and sell our product. The following represents sales disaggregated by channel:

 

   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
Showrooms  $62,594,191   $12,850,565   $111,580,066   $30,968,706 
Internet   29,480,191    46,074,015    54,655,220    76,138,052 
Other   10,372,957    3,020,830    19,127,472    9,211,059 
   $102,447,339   $61,945,410   $185,362,758   $116,317,817 

 

The Company has no foreign operations and its sales to foreign countries was less than .01% of total net sales in both fiscal 2022 and 2021.

 

The Company had no customers in fiscal 2022 or 2021 that comprise more than 10% of total net sales.

 

See Note 10 for sales disaggregated by product.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.21.2
Intangible Assets, Net (Tables)
6 Months Ended
Aug. 01, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of intangible assets
      August 1, 2021 
   Estimated Life  Gross Carrying Amount   Accumulated Amortization   Net carrying amount 
Patents  10 Years   $2,559,400   $(1,532,308)  $1,027,092 
Trademarks  3 Years    1,282,315    (1,120,394)   161,921 
Other intangibles  5 Years    839,737    (839,737)   
-
 
Total     $4,681,452   $(3,492,439)  $1,189,013 

 

      January 31, 2021 
   Estimated Life  Gross Carrying Amount   Accumulated Amortization   Net carrying amount 
Patents  10 Years  $2,387,328   $(1,128,997)  $1,258,331 
Trademarks  3 Years   1,239,334    (980,633)   258,701 
Other intangibles  5 Years   839,737    (839,737)   
-
 
Total     $4,466,399   $(2,949,367)  $1,517,032 

 

Schedule of estimated future amortization expense associated with intangible assets
Remainder of Fiscal 2022  $136,604 
2023   175,868 
2024   158,462 
2025   129,307 
2026   125,848 
2027   124,195 
Thereafter   338,729 
   $1,189,013 
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties (Tables)
6 Months Ended
Aug. 01, 2021
Commitments and Contingencies Disclosure [Abstract]  
Schedule of lease terms and rates
   August 1,
2021
 
Weighted average remaining lease term (in years)    
Operating Leases   7.0 
      
Weighted average discount rate     
Operating Leases   3.76%

 

Schedule of location and amount of operating lease costs within condensed consolidated balance sheets
   Balance sheet location  August 1,
2021
 
Assets       
Operating leases  Operating lease right-of-use assets (non-current)  $88,900,462 
         
Liabilities        
Current:        
Operating leases  Current operating lease liabilities   14,536,004 
         
Noncurrent:        
Operating leases  Operating lease liability, long term   83,707,124 
         
Total lease liabilities     $98,243,128 

 

Schedule of reconciles undiscounted future minimum lease payments
Remainder 2022  $7,512,755 
2023   17,725,139 
2024   17,140,692 
2025   15,967,063 
2026   14,291,166 
Thereafter   40,311,548 
Total undiscounted future minimum lease payments   112,948,363 
Less:inputed interest   (14,705,235)
Total present value of lease obligations   98,243,128 
Less: current operating lease liability   (14,536,004)
Operating lease liability- long term  $83,707,124 

 

Schedule of supplemental cash flow information and non-cash activity related to operating leases
   For the
twenty-six
weeks ended
August 1,
2021
 
Operating cash flow information:    
Amounts paid on operating lease liabilities  $8,351 
Non-cash activities     
Right-of-use assets obtained in exchange for lease obligations  $96,560 

  

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity (Tables)
6 Months Ended
Aug. 01, 2021
Stockholders' Equity Note [Abstract]  
Schedule of warrant activity
   Average  exercise price   Number of warrants   Weighted  average  remaining contractual life (in years) 
Warrants Outstanding at February 2, 2020  $16.83    1,039,120    1.93 
Warrants issued   
-
    
-
    
-
 
Expired and canceled   
-
    
-
    
-
 
Exercised   
-
    
-
    
-
 
Outstanding at August 2, 2020  $16.83    1,039,120    1.43 
                
Warrants Outstanding at January 31, 2021  $19.07    293,973    2.57 
Warrants issued   
-
    
-
    
-
 
Expired and canceled   9.83    (98)   
-
 
Exercised   16.00    (12,125)   (0.09)
Outstanding at August 1, 2021  $19.20    281,750    1.91 

 

Schedule of stock option activity
   Number of options   Weighted average exercise price   Weighted  average  remaining contractual life (in years)   Average intrinsic value 
Outstanding at February 2, 2020   495,366   $38.10    2.34    
              -
 
Exercised   
-
                
Expired and canceled   
-
                
Outstanding at August 2, 2020   495,366   $38.10    3.84    
-
 
Exercisable at the end of the period   
-
    
-
    
-
    
-
 
                     
   Number of options   Weighted average exercise price   Weighted  average  remaining contractual life (in years)   Average intrinsic value 
Outstanding at January 31, 2021   495,366   $38.10    3.35    
-
 
Granted   
-
    
-
           
Canceled and forfeited   
-
    
-
           
Outstanding at August 1, 2021   495,366   $38.10    2.85   $35.32 
Exercisable at the end of the period   
-
    
-
    
-
    
-
 

 

Schedule of unvested restricted stock
   Number of shares   Weighted average grant date fair value 
Unvested at February 2, 2020   183,053   $21.34 
Granted   607,656    17.67 
Forfeited   (782)   13.49 
Vested   (82,611)   14.83 
Unvested at August 2, 2020   707,316   $19.07 

 

   Number of shares   Weighted average grant date fair value 
Unvested at January 31, 2021   655,558   $18.86 
Granted   63,456    80.40 
Forfeited   (7,904)   19.27 
Vested   (153,089)   20.20 
Unvested at August 1, 2021   558,021   $25.52 

  

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.21.2
Segment Information (Tables)
6 Months Ended
Aug. 01, 2021
Segment Reporting [Abstract]  
Schedule of operating segments
   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
                 
Sactionals  $89,173,770   $53,544,454   $163,184,299   $97,352,021 
Sacs   11,716,347    7,868,761    18,857,220    17,525,833 
Other   1,557,222    532,195    3,321,239    1,439,963 
   $102,447,339   $61,945,410   $185,362,758   $116,317,817 
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.21.2
Revenue Recognition (Tables)
6 Months Ended
Aug. 01, 2021
Revenue from Contract with Customer [Abstract]  
Schedule of sales disaggregated by channel
   Thirteen weeks ended   Twenty-six weeks ended 
   August 1,
2021
   August 2,
2020
   August 1,
2021
   August 2,
2020
 
Showrooms  $62,594,191   $12,850,565   $111,580,066   $30,968,706 
Internet   29,480,191    46,074,015    54,655,220    76,138,052 
Other   10,372,957    3,020,830    19,127,472    9,211,059 
   $102,447,339   $61,945,410   $185,362,758   $116,317,817 

 

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.21.2
Recent Accounting Pronouncements (Details)
$ in Millions
Feb. 01, 2021
USD ($)
ASU 2018-12 Transition [Abstract]  
Operating lease rights-to-use assets $ 90.0
Operating lease liabilities 97.0
Deferred rent $ 6.7
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.21.2
Intangible Assets, Net (Details) - USD ($)
3 Months Ended 6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Goodwill and Intangible Assets Disclosure [Abstract]        
Amortization expense on other intangible assets $ 79,751 $ 543,072 $ 86,179 $ 164,550
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.21.2
Intangible Assets, Net (Details) - Schedule of intangible assets - USD ($)
6 Months Ended 12 Months Ended
Aug. 01, 2021
Jan. 31, 2021
Finite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount $ 4,681,452 $ 4,466,399
Accumulated Amortization (3,492,439) (2,949,367)
Net carrying amount $ 1,189,013 $ 1,517,032
Patents [Member]    
Finite-Lived Intangible Assets [Line Items]    
Estimated Life 10 years 10 years
Gross Carrying Amount $ 2,559,400 $ 2,387,328
Accumulated Amortization (1,532,308) (1,128,997)
Net carrying amount $ 1,027,092 $ 1,258,331
Trademarks [Member]    
Finite-Lived Intangible Assets [Line Items]    
Estimated Life 3 years 3 years
Gross Carrying Amount $ 1,282,315 $ 1,239,334
Accumulated Amortization (1,120,394) (980,633)
Net carrying amount $ 161,921 $ 258,701
Other intangibles [Member]    
Finite-Lived Intangible Assets [Line Items]    
Estimated Life 5 years 5 years
Gross Carrying Amount $ 839,737 $ 839,737
Accumulated Amortization (839,737) (839,737)
Net carrying amount
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.21.2
Intangible Assets, Net (Details) - Schedule of estimated future amortization expense associated with intangible assets
Aug. 01, 2021
USD ($)
Schedule of estimated future amortization expense associated with intangible assets [Abstract]  
Remainder of Fiscal 2022 $ 136,604
2023 175,868
2024 158,462
2025 129,307
2026 125,848
2027 124,195
Thereafter 338,729
Total $ 1,189,013
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.21.2
Basic and Diluted Net Income (Loss) Per Common Share (Details) - shares
1 Months Ended 3 Months Ended 6 Months Ended
Aug. 02, 2020
Aug. 01, 2021
Aug. 01, 2021
Basic and Diluted Net Income (Loss) Per Common Share (Details) [Line Items]      
Potentially dilutive shares 2,241,802    
Restricted stock units [Member]      
Basic and Diluted Net Income (Loss) Per Common Share (Details) [Line Items]      
Potentially dilutive shares 707,316 558,021 558,021
Stock options [Member]      
Basic and Diluted Net Income (Loss) Per Common Share (Details) [Line Items]      
Potentially dilutive shares 495,366 495,366 495,366
Warrants [Member]      
Basic and Diluted Net Income (Loss) Per Common Share (Details) [Line Items]      
Potentially dilutive shares 1,039,120 281,750 281,750
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties (Details) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Jan. 31, 2021
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Commitments, Contingency and Related Parties (Details) [Line Items]          
Operating lease expense   $ 4,600,000   $ 9,100,000  
Other rental expenses   3,000,000.0   $ 4,300,000  
Impairment charges   $ 600,000      
Severance contingency, description       A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $4.7 million at August 1, 2021 if all executives with employment agreements were terminated without cause and the full amount of severance was payable.  
Accrued liabilities $ 15,213        
Out of pocket expenses       $ 0 $ 36,401
Blueport sales     $ 1,218,278   1,701,126
Satori Capital, LLC [Member]          
Commitments, Contingency and Related Parties (Details) [Line Items]          
Management fees $ 8,333   25,000   50,000
Mistral Capital Management, LLC [Member]          
Commitments, Contingency and Related Parties (Details) [Line Items]          
Management fees     $ 100,000   $ 200,000
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties (Details) - Schedule of lease terms and rates
Aug. 01, 2021
Weighted average remaining lease term (in years)  
Operating Leases, Weighted average remaining lease term (in years) 7 years
Weighted average discount rate  
Operating Leases, Weighted average discount rate 3.76%
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties (Details) - Schedule of location and amount of operating lease costs within condensed consolidated balance sheets
Aug. 01, 2021
USD ($)
Assets  
Operating leases, Operating lease right-of-use assets (non-current) $ 88,900,462
Current:  
Operating leases, Current operating lease liabilities 14,536,004
Noncurrent:  
Operating leases, Operating lease liability, long term 83,707,124
Total lease liabilities $ 98,243,128
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties (Details) - Schedule of reconciles undiscounted future minimum lease payments
Aug. 01, 2021
USD ($)
Schedule of reconciles undiscounted future minimum lease payments [Abstract]  
Remainder 2022 $ 7,512,755
2023 17,725,139
2024 17,140,692
2025 15,967,063
2026 14,291,166
Thereafter 40,311,548
Total undiscounted future minimum lease payments 112,948,363
Less:inputed interest (14,705,235)
Total present value of lease obligations 98,243,128
Less: current operating lease liability (14,536,004)
Operating lease liability- long term $ 83,707,124
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments, Contingency and Related Parties (Details) - Schedule of supplemental cash flow information and non-cash activity related to operating leases
6 Months Ended
Aug. 01, 2021
USD ($)
Operating cash flow information:  
Amounts paid on operating lease liabilities $ 8,351
Non-cash activities  
Right-of-use assets obtained in exchange for lease obligations $ 96,560
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.21.2
Financing Arrangements (Details) - USD ($)
6 Months Ended
Aug. 01, 2021
Jan. 31, 2021
Financing Arrangements (Details) [Line Items]    
Borrowings amount (in Dollars) $ 115  
Mature date 2023-02  
Eligible credit card receivables percentage 90.00%  
Eligible wholesale receivables percentage 85.00%  
Net recovery percentage 85.00%  
Increase the net recovery percentage 90.00%  
Borrowing availability under the line of credit (in Dollars) $ 22,500,000 $ 15,900,000
Wells [Member]    
Financing Arrangements (Details) [Line Items]    
Borrowings amount (in Dollars) $ 25,000,000.0  
Minimum [Member]    
Financing Arrangements (Details) [Line Items]    
Tiers range percentage 2.00%  
Maximum [Member]    
Financing Arrangements (Details) [Line Items]    
Tiers range percentage 2.25%  
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity (Details) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Jun. 05, 2021
Jun. 30, 2019
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Stockholders' Equity (Details) [Line Items]            
Cashless warrant exercised (in Shares)         5,625  
Number of expired warrants (in Shares)         98  
Stock options are subject to vesting percentage   100.00%        
Stock price $ 75 $ 75        
Stock option modified (in Shares)   495,366        
Additional compensation   $ 874,000        
Modification and remaining expense was recognized   $ 315,000        
Stock-based compensation         $ 200,000  
Equity based compensation expense     $ 1,100,000 $ 700,000 1,800,000 $ 1,600,000
Total unrecognized equity based compensation cost related to unvested stock option and restricted unit awards     $ 6,100,000   $ 6,100,000  
Weighted average period         1 year 10 months 20 days  
2017 Equity Incentive Plan [Member]            
Stockholders' Equity (Details) [Line Items]            
Granted term         10 years  
Common stock reserved issuance (in Shares)     2,104,889   2,104,889  
Non statutory stock options granted (in Shares)   495,366        
Stock option price exercise (in Dollars per share)   $ 38.10        
Warrant [Member]            
Stockholders' Equity (Details) [Line Items]            
Issuance of common shares (in Shares)         10,956  
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity (Details) - Schedule of warrant activity - Warrants Activity [Member] - $ / shares
6 Months Ended
Feb. 02, 2020
Aug. 01, 2021
Class of Warrant or Right [Line Items]    
Average exercise price, Warrants Outstanding, Beginning balance (in Dollars per share) $ 16.83 $ 19.07
Number of warrants, Warrants Outstanding, Beginning balance 1,039,120 293,973
Weighted average remaining contractual life (in years), Warrants Outstanding, Beginning balance 1 year 11 months 4 days 2 years 6 months 25 days
Average exercise price, Warrants issued
Number of warrants, Warrants issued
Weighted average remaining contractual life (in years), Warrants issued
Average exercise price, Expired and canceled (in Dollars per share) $ 9.83
Number of warrants, Expired and canceled (98)
Weighted average remaining contractual life (in years), Expired and canceled
Average exercise price, Exercised 16.00
Number of warrants, Exercised (12,125)
Weighted average remaining contractual life (in years), Exercised 1 month 2 days
Average exercise price, Warrants Outstanding, Ending balance (in Dollars per share) $ 16.83 $ 19.20
Number of warrants, Warrants Outstanding, Ending balance 1,039,120 281,750
Weighted average remaining contractual life (in years), Warrants Outstanding, Ending balance 1 year 5 months 4 days 1 year 10 months 28 days
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity (Details) - Schedule of stock option activity - Stock Options [Member]
6 Months Ended
Aug. 01, 2021
USD ($)
$ / shares
shares
Aug. 02, 2020
USD ($)
$ / shares
shares
Stockholders' Equity (Details) - Schedule of stock option activity [Line Items]    
Number of options, Outstanding, Beginning balance 495,366 495,366
Weighted average exercise price, Outstanding, Beginning balance (in Dollars per share) | $ / shares $ 38.10 $ 38.10
Weighted average remaining contractual life (in years), Outstanding, Beginning balance 3 years 4 months 6 days 2 years 4 months 2 days
Average intrinsic value, Outstanding, Beginning balance (in Dollars) | $
Number of options, Granted  
Weighted average exercise price, Granted (in Dollars per share) | $ / shares  
Number of options, Canceled and forfeited  
Weighted average exercise price, Canceled and forfeited (in Dollars per share) | $ / shares  
Number of options, Exercised  
Number of options, Expired and canceled  
Number of options, Outstanding, Ending balance 495,366 495,366
Weighted average exercise price, Outstanding, Ending balance (in Dollars per share) | $ / shares $ 38.10 $ 38.10
Weighted average remaining contractual life (in years), Outstanding, Ending balance 2 years 10 months 6 days 3 years 10 months 2 days
Average intrinsic value, Outstanding, Ending balance (in Dollars) | $ $ 35.32
Number of options, Exercisable at the end of the period
Weighted average exercise price, Exercisable at the end of the period
Weighted average remaining contractual life (in years), Exercisable at the end of the period
Average intrinsic value, Exercisable at the end of the period
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.21.2
Stockholders' Equity (Details) - Schedule of unvested restricted stock - Restricted Stock [Member] - $ / shares
6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Stockholders' Equity (Details) - Schedule of unvested restricted stock [Line Items]    
Number of shares, Unvested, Beginning balance 655,558 183,053
Weighted average grant date fair value, Unvested, Beginning balance $ 18.86 $ 21.34
Number of shares, Granted 63,456 607,656
Weighted average grant date fair value, Granted $ 80.40 $ 17.67
Number of shares, Forfeited (7,904) (782)
Weighted average grant date fair value, Forfeited $ 19.27 $ 13.49
Number of shares, Vested (153,089) (82,611)
Weighted average grant date fair value, Vested $ 20.20 $ 14.83
Number of shares, Unvested, Ending balance 558,021 707,316
Weighted average grant date fair value, Unvested, Ending balance $ 25.52 $ 19.07
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.21.2
Employee Benefit Plan (Details) - USD ($)
3 Months Ended 6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Retirement Benefits [Abstract]        
Contributions plan, percentage     100.00%  
Employer contribution plan, cost $ 242,801 $ 117,190 $ 398,483 $ 234,470
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.21.2
Segment Information (Details)
6 Months Ended
Aug. 01, 2021
Segment Reporting [Abstract]  
Operating segments, description The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of net sales.
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.21.2
Segment Information (Details) - Schedule of operating segments - USD ($)
3 Months Ended 6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Segment Reporting Information [Line Items]        
Net sales $ 102,447,339 $ 61,945,410 $ 185,362,758 $ 116,317,817
Sactionals [Member]        
Segment Reporting Information [Line Items]        
Net sales 89,173,770 53,544,454 163,184,299 97,352,021
Sacs [Member]        
Segment Reporting Information [Line Items]        
Net sales 11,716,347 7,868,761 18,857,220 17,525,833
Other [Member]        
Segment Reporting Information [Line Items]        
Net sales $ 1,557,222 $ 532,195 $ 3,321,239 $ 1,439,963
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.21.2
Barter Arrangements (Details) - USD ($)
Jan. 31, 2022
Aug. 01, 2021
Jan. 31, 2021
Barter Arrangements (Details) [Line Items]      
Inventory     $ 3,169,825
Prepaid media asset     2,937,035
Unused media credits   $ 1,436,979 $ 2,521,271
Subsequent Event [Member]      
Barter Arrangements (Details) [Line Items]      
Unused media credits $ 1,084,292    
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.21.2
Revenue Recognition (Details) - USD ($)
6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Jan. 31, 2021
Revenue from Contract with Customer [Abstract]      
Returns allowance $ 1,534,078   $ 2,226,723
Accrued expenses 319,361   334,896
Customer deposit liabilities 13,365,940   $ 5,992,633
Recognized related to customer deposits $ 5,992,633 $ 1,653,597  
Contract duration, description The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods.     
Foreign operations, description The Company has no foreign operations and its sales to foreign countries was less than .01% of total net sales in both fiscal 2022 and 2021.     
net sales, description The Company had no customers in fiscal 2022 or 2021 that comprise more than 10% of total net sales.     
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.21.2
Revenue Recognition (Details) - Schedule of sales disaggregated by channel - USD ($)
3 Months Ended 6 Months Ended
Aug. 01, 2021
Aug. 02, 2020
Aug. 01, 2021
Aug. 02, 2020
Disaggregation of Revenue [Line Items]        
Sales $ 102,447,339 $ 61,945,410 $ 185,362,758 $ 116,317,817
Showrooms [Member]        
Disaggregation of Revenue [Line Items]        
Sales 62,594,191 12,850,565 111,580,066 30,968,706
Internet [Member]        
Disaggregation of Revenue [Line Items]        
Sales 29,480,191 46,074,015 54,655,220 76,138,052
Other [Member]        
Disaggregation of Revenue [Line Items]        
Sales $ 10,372,957 $ 3,020,830 $ 19,127,472 $ 9,211,059
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