DULUTH HOLDINGS INC. 10-Q

Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Section 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires management of an issuer subject to the Exchange Act to evaluate, with the participation of the issuer’s principal executive and principal financial officers, or persons performing similar functions, the effectiveness of the issuer’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of each fiscal quarter. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective over certain financial reporting areas due to the material weakness in our internal control over financial reporting described below. Management has performed additional analysis and other procedures to ensure that our condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the condensed consolidated financial statements for the period covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP. Material Weakness As disclosed in the section titled “Evaluation of Disclosure Controls and Procedures” in Item 9A of the Company’s 2023 Annual Report on Form 10-K, we previously identified control deficiencies in the implementation of our internal control over financial reporting that constituted a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weakness identified in our internal control over financial reporting related to control deficiencies in effective risk assessment related to the mapping of general ledger accounts to the consolidated financial statements resulting in manual controls in the financial reporting process that were not designed to sufficiently mitigate the risk of incorrect presentation of certain general ledger accounts in the consolidated financial statements. Remediation Plans Management has simplified the process related to the mapping of general ledger accounts to the consolidated financial statements and performed a thorough risk assessment of the updated process to identify all risk points and design and implemented new process-level controls to mitigate the risk of incorrect presentation of general ledger accounts in the consolidated financial statements. However, the material weakness cannot be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Changes in Internal Control Over Financial Reporting We are taking the appropriate actions to remediate the material weakness relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION