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Item 9A. Controls and Procedures

2025-03-24 compared with 2024-03-22 · 51 added, 39 removed, 117 unchanged (43% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers as appropriate, to allow timely decisions regarding required disclosure.

The Company carried out an evaluation, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of January 28, 2024.

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 as of January 28, 2024 due to the material weakness in our internal control over financial reporting, as described below.

In light of the material weakness described below, management performed additional analysis and other procedures to ensure that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Accordingly, management believes that the Company’s consolidated financial statements in this Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented, in conformity with U.S.

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.

The Company carried out an evaluation, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at the reasonable assurance level pursuant to Rule 13a-15 of the Exchange Act.

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 effective at the reasonable assurance level.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, under the oversight of our Audit Committee of the Board of Directors, assessed the effectiveness of our internal control over financial reporting as of January 28, 2024.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013).

Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of January 28, 2024, due to the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis.

The Company did not perform 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.

The material weakness resulted in immaterial misstatements related to the presentation of prepaid expenses, property and equipment, and finance lease right-of-use assets, net, on our Consolidated Balance Sheets, Consolidated Statements of Cash Flows and related notes as of and for each of years ended January 28, 2024 and January 29, 2023, some of which have been corrected prior to issuance of the consolidated financial statements included in this Form 10-K.

Furthermore, the control deficiency described above created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

Therefore, we concluded that the deficiency represents a material weakness in our internal control over financial reporting and, as a result, our internal control over financial reporting was not effective as of January 28, 2024.

Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements as of and for the year ended January 28, 2024 included in this Annual Report on Form 10-K, issued an adverse opinion on the

effectiveness of our internal control over financial reporting.

KPMG LLP’s report is included in Item 8 of Part II of this Annual Report on Form 10-K.

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act).

Management assessed the effectiveness of its internal control over financial reporting as of February 2, 2025.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the Internal Control-Integrated Framework (2013), or the COSO Report.

Based on this assessment, management concluded that our internal control over financial reporting is effective as of February 2, 2025.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15( f ) and 15d-15( f ) under the Exchange Act ), that occurred during the fiscal quarter ended January 28, 2024, that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting.

Remediation Plan

To address the material weakness, management has initiated a project to simplify the process related to the mapping of general ledger accounts to the consolidated financial statements.

Management will perform a thorough risk assessment of the updated process to identify all risk points and design and implement new process-level controls to mitigate the risk of incorrect presentation of general ledger accounts in the consolidated financial statements.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15( f ) and 15d-15( f ) under the Exchange Act ), that occurred during the fiscal quarter ended February 2, 2025, that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item concerning our directors, audit committee, and audit committee financial experts and compliance with Section 16(a) of the Exchange Act is incorporated by reference to information under the captions “Proposal One:

Election of Directors” and “Delinquent Section 16(a) Reports” in our definitive proxy statement for our 2024 annual meeting of shareholders to be held on May 23, 2024 (the “Proxy Statement”).

Information required by this Item concerning our directors, audit committee, and audit committee financial experts, insider trading policy and compliance with Section 16(a) of the Exchange Act is incorporated by reference to information under the sections “Proposal One:

Election of Directors,” “Executive Compensation—Insider Trading Policy” and “Delinquent Section 16(a) Reports” in our definitive proxy statement for our 2025 annual meeting of shareholders to be held on May 29, 2025 (the “Proxy Statement”).

It is anticipated that our Proxy Statement will be filed with the Securities and Exchange Commission on or about April 11, 2025.

6 unchanged sentences

EXECUTIVE COMPENSATION

Information required by this Item is incorporated by reference to the sections of the Proxy Statement entitled “Executive Compensation,” “Director Compensation,” and “Compensation Committee Interlocks and Insider Participation.”

Information required by this Item is incorporated by reference to the sections of the Proxy Statement entitled “Executive Compensation” ( excluding the information under the caption “Pay Versus Performance”), “Director Compensation,” and “Compensation Committee Interlocks and Insider Participation.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

Information required by this Item is incorporated by reference to the sections of the Proxy Statement entitled “Security Ownership of Certain Beneficial Owners.” Further, information required by this Item concerning our Equity Compensation Plan Information is incorporated by reference to the section of the Proxy Statement entitled “Proposal Four:

Approval of the 2024 Equity Incentive Plan of Duluth Holdings, Inc.”.

Information required by this Item is incorporated by reference to the sections of the Proxy Statement entitled “Security Ownership of Certain Beneficial Owners.”

Number of securities

remaining available for

Number of securities to

Weighted-average

future issuance under

be issued upon exercise

exercise price of

equity compensation plans

of outstanding options,

outstanding options,

(excluding securities

Plan category

warrants and rights

reflected in first column) (1)

Equity compensation plans approved

‎ by security holders

Equity compensation plans not approved

‎ by security holders (2)

Equity Compensation Plan Information:

The following table sets forth information as of February 2, 2025 about shares of common stock outstanding and available for issuance under our existing equity compensation plans.

3,931,585 shares are available under the Company’s 2024 Equity Incentive Plan and 1,087,128 shares are available under the Company’s Employee Stock Purchase Plan.

All of our existing equity compensation plans have been approved by shareholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

18 unchanged sentences

Schlecht, as trustee, and Duluth Holdings Inc., incorporated by reference to Exhibit 9.1 of the Company’s Annual Report on Form 10-K filed March 25, 2022.

Summary of Outside Director Compensation Program.

Outside Director Compensation Policy, incorporated by reference to Exhibit 10.1 of the Company’s Annual Report on Form 10-K for the year ended January 28, 2024.

2015 Equity Incentive Plan of Duluth Holdings Inc., incorporated by reference to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q, filed December 18, 2015.

2024 Equity Incentive Plan of Duluth Holdings Inc., incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed on April 5, 2025.

Form of Restricted Stock Agreement for non-employee directors under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 (File No.

7 unchanged sentences

333-207300), filed October 13, 2015.

Annual Incentive Plan, As Amended February 21, 2018.

Amended and Restated Annual Incentive Plan, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated February 20, 2024.

Form of Restricted Stock Agreement for executives under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q dated May 1, 2016.

5 unchanged sentences

Sato dated May 3, 2021, incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on 10-Q dated June 4, 2021.

Offer Letter Dated July 14, 2017 by and between Dave Loretta and Duluth Holdings Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated July 24, 2017.

Offer Letter dated January 24, 2020 by and between David S.

10 unchanged sentences

First Amendment, dated as of July 8, 2022, among Duluth Holdings Inc., the Lenders party thereto, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, BofA Securities, Inc., as a Joint Lead Arranger and Sole Bookrunner, and Keybanc Capital Markets Inc., as a Joint Lead Arranger, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated July 8, 2022.

Offer Letter dated March 14, 2022 by and between Neala Shepherd and Duluth Holdings Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated July 8, 2022.

Offer Letter dated July 27, 2022 by and between Albert J.

2 unchanged sentences

Inducement Restricted Stock Award Agreement, dated February 12, 2024, by and between Heena Agrawal and Duluth Holdings Inc., incorporated by reference to the Company’s Current Report on Form 8-K dated February 12, 2024.

Offer Letter dated July 18, 2024 by and between Ei Getson and Duluth Holdings Inc.*

Offer Letter dated August 5, 2024 by and between Garth Weber and Duluth Holdings Inc.*

Second Amendment to Employment Agreement, dated as of February 26, 2025, by and between Stephen L.

Schlecht and Duluth Holdings Inc.*

Form of Restricted Stock Agreement for executives under the 2024 Equity Incentive Plan, incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 28, 2024.*

Form of Restricted Stock Agreement for non-employee directors under the 2024 Equity Incentive Plan, incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 28, 2024.

Second Amendment, dated as of January 31, 2025, among Duluth Holdings Inc., the Lenders party thereto, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, BofA Securities, Inc., as a Joint Lead Arranger and Sole Bookrunner, and Keybanc Capital Markets Inc., as a Joint Lead Arranger, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated January 31, 2025.

Duluth Holdings Inc.

Statement of Policy on Securities Trading.*

Consent of KPMG LLP.*

6 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

Executive Officer Compensation Recovery Policy.

Executive Officer Compensation Recovery Policy , incorporated by reference to Exhibit 97 of the Company’s Annual Report on Form 10-K for the year ended January 28, 2024.

XBRL Instance Document**

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** In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall be deemed to be “furnished” and not “filed.”

FO RM 10-K SUMMARY

FORM 10-K SUMMARY

Not applicable.

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March 21, 2025

/s/ Michael Murphy

Michael Murphy

Vice President and Treasury

Chief Accounting Officer

(Principal Accounting Officer)

March 22, 2024

Sato, Brett L.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures