What changed in this filing

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Item 9A. Controls and Procedures

2024-04-11 compared with 2023-03-29 · 400 added, 388 removed, 609 unchanged (56% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (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 Exchange Act) as of the end of the period covered by this Annual Report.

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation, that our disclosure controls and procedures were effective as of January 29, 2023.

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation, that our disclosure controls and procedures were effective as of February 4, 2024.

Management's Annual Report on Internal Control over Financial Reporting

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

Our 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.

The Company’s internal control over financial reporting is designed 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 in the United States of America.

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and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of January 29, 2023.

In making this assessment, management used the criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Tread way Commission (COSO) in “Internal Control-Integrated Framework.” Based on management’s assessment using the COSO criteria, management has concluded that the Company’s internal control over financial reporting was effective as of January 29, 2023.The effectiveness of our internal control over financial reporting as of January 29, 2023 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report, included in Part IV of this Annual Report on Form 10-K.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of February 4, 2024.

The effectiveness of our internal control over financial reporting as of February 4, 2024 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report, included within this Item 9A of this Annual Report on Form 10-K.

Remediation of Previously Identified Material Weaknesses

As previously disclosed in Part II, "Item 9A - Controls and Procedures" of our Annual Report on Form 10-K for the year ended January 30, 2022, we identified a material weakness in our internal control over financial reporting relating to ineffective information technology general controls in the areas of user access and segregation of duties related to certain information technology systems that support our financial reporting process.

During the year ended January 29, 2023, we undertook a series of activities to remediate the material weakness, with the following actions designed to strengthen the information technology control environment:

• Evaluating and implementing enhanced process controls around user access management to key information systems which may impact our financial reporting;

• Expanding management and governance over user access and system controls;

• Enhancing our information technology compliance and accounting functions with additional experienced hires including a new Chief Information Officer.

We completed our testing of both the design and operating effectiveness of the informational technology general controls, and have concluded that the material weakness has been remediated as of January 29, 2023.

As previously disclosed in Part II, "Item 9A - Controls and Procedures" of our fiscal 2023 Annual Report on Form 10-K, as amended by Amendment No.

1 and Amendment No.

2 on Form 10-K/A filed on November 2, 2023 and November 30, 2023, respectively (the "2023 Form 10-K/A"), we identified material weaknesses in our internal control over financial reporting relating to an ineffective control environment.

The Company lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and did not maintain appropriate oversight and monitoring activities over accounting processes related to certain accruals and estimates.

During the year ended February 4, 2024, we undertook a series of activities to remediate the material weakness, with the following actions designed to improve the financial reporting control environment and control activities:

• Enhanced the accounting and financial reporting functions with additional experienced hires with public company experience to expand the knowledge of GAAP and SEC accounting rules and regulations.

This included a new Executive Vice President and Chief Financial Officer.

The Company updated its accounting and financial reporting structure, establishing clear lines of authority and communication protocols, and has made changes to align the skills and competencies of accounting and financial reporting personnel to be commensurate with their roles and responsibilities.

The Company also provided relevant training on internal controls over financial reporting to control owners and control preparers.

• Developed and maintained appropriate oversight and monitoring activities over accounting processes that resulted in adding and revising control activities.

The Company added layers of review in accounting processes and increased the use of workflow automation, both of which reduce the reliance on manual processes and risk of errors.

Changes at the control activity level specifically addressed enhancements to our policy on recording manual journal entries, including clarification of review and approval of authorization matrices, as well as enhancing, designing and implementing controls over the transportation accrual and estimation process.

The enhanced control activities have operated for a sufficient period of time in order for us to conclude, through testing, that the controls are designed and are operating effectively.

As such, we concluded that the previously reported material weaknesses have been remediated as of February 4, 2024.

Changes in our Internal Control over Financial Reporting

Other than as described above in connection with our implementation of the remediation actions discussed above, there were no changes in our internal control over financial reporting that occurred during the quarter ended January 29, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than as described above in connection with the remediation to the material weakness, there were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter of the fiscal year ended February 4, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

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Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of The Lovesac Company

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of The Lovesac Company (the “Company”) as of February 4, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 4, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended February 4, 2024, of the Company and our report dated April 11, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting .

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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 the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Stamford, Connecticut

April 11, 2024

Other Information.

Shawn Nelson Amended and Restated Employment Agreement

On March 23, 2023, the Compensation Committee of the Board of Directors (the “Committee”) of the Company approved, and the Company and Shawn Nelson entered into, an Amended and Restated Employment Agreement (the “A&R Employment Agreement”), which replaces and supersedes in its entirety the prior employment agreement between the Company and Mr.

Nelson, dated October 26, 2017, as amended October 2, 2019, and March 24, 2022 (the “Prior Agreement”).

The A&R Employment Agreement extends Mr.

Nelson’s non-competition and non-solicitation covenants from 18 months to 24 months following the termination of his employment and, in connection with this, correspondingly increases the period during which Mr.

Nelson will be entitled to severance compensation and benefits upon a termination of his employment without Cause or for Good Reason (in each case, as defined in Mr.

Nelson’s A&R Employment Agreement) from 18 months to 24 months.

The other material terms and conditions of the A&R Employment Agreement generally remain unchanged from those set forth in the Prior Agreements.

The foregoing description of the A&R Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R Employment Agreement, filed herewith as Exhibit 10.16 of this Form 10-K and is incorporated herein by reference.

Shawn Nelson One-Time Performance and Retention Long-Term Incentive Grant

On March 23, 2023, the Committee approved a one-time performance and retention long-term incentive grant of 235,000 Restricted Stock Units (the “RSU Grant”) for Mr.

Nelson pursuant to the Lovesac Company Second Amended and Restated 2017 Equity Incentive Plan (the “Plan”) and Mr.

Nelson’s Restricted Stock Units Agreement and Grant Notice (the “RSU Agreement”).

The RSU Grant vests on the later to occur of (i) the fifth anniversary of the date of grant so long as, (x) on or prior to such date (subject to certain limited extensions), the Company has achieved a specified level of performance with respect to share price and net sales, and (y) Mr.

Nelson remains in continuous service with the Company as Chief Executive Officer through such date;

or (ii) if the specified level of performance with respect to net sales is not achieved on or prior to the fifth anniversary of the date of grant, but the other conditions in subclause (i) are achieved, the first date that such specified level of performance with respect to net sales is achieved, so long as it is achieved on or prior to the seventh anniversary of the date of grant and so long as Mr.

Nelson remains in continuous service with the Company through such date.

Except as described in the following paragraph, the RSU Grant will be settled in shares of common stock of the Company on the first anniversary of the applicable vesting date.

Nelson’s service with the Company is terminated (a) by the Company without Cause after the fifth anniversary of the date of grant, or (b) by the Company without Cause or by Mr.

Nelson for Good Reason following a Change in Control (as defined in the Plan), the RSU Grant will vest in full as of the date of Mr.

Nelson’s termination of service and will be settled on the first anniversary of such vesting date, except that if such termination of service occurs within two years following a Change in Control, the RSU Grant will be settled immediately upon such vesting date.

Trading Arrangements

On December 12, 2023 , Shawn D.

Nelson , CEO , adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 42,000 shares of the Company’s common stock.

Nelson's plan will expire on December 11, 2024, subject to early termination for certain specified events set forth in the plan.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance.

The following is a list of the names, ages and backgrounds of our current executive officers:

The following is a list of the names, ages and backgrounds of our current executive officers as of April 11, 2024:

Name Age Present Position Business Experience

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Fox graduated from Coventry University in the United Kingdom and holds a degree in manufacturing engineering and business studies.

Jack Krause 60 Chief Strategy Officer, Director Jack Krause is the Chief Strategy Officer of The Lovesac Company and a member of the Board of Directors.

Previously, he served as President and Chief Operating Officer of Lovesac from 2015 until November 2021.

Prior to Lovesac, Mr.

Krause served as President of Vitamin World, a division of NBTY.

He also served as Senior Vice-President of Watch Station Global Retail and Skagen from 2011 to 2013.

Krause also held the position of General Manager of Sunglass Hut North America from 2008 to 2010 along with other executive positions at Luxottica.

Krause worked for 11 years at Bath and Body Works in roles of increasing responsibility leading to Senior Vice-President of Brand Development from 2004 to 2006.

Prior to that he spent 10 years in brand management at Jergens and Marion Consumer Products.

Krause has a Bachelor of Science in Business Administration from Miami University.

Donna Dellomo 58 Executive Vice President and Chief Financial Officer, Treasurer and Secretary of the Company Donna Dellomo is Executive Vice President, Chief Financial Officer, Treasurer and Secretary of The Lovesac Company.

Prior to joining The Lovesac Company, Ms.

Dellomo was Vice-President and Chief Financial Officer of Perfumania Holdings, a $540 million publicly traded company with over 290 retail locations, owned and licensed brands and a wholesale distribution network from January 1998 to January 2017.

She also held progressive positions from October 1988 to December 1997 as Internal Audit Manager, Accounting Manager and Corporate Controller at Cybex International, Inc., a $125 million publicly traded company that manufactured and distributed fitness, rehabilitative and health care equipment.

Dellomo is a Certified Public Accountant with initial focus on audit and tax and is also a former Member of the Board of Trustees of Molloy University and Chair of their Fiscal Affairs Committee.

We will file with the SEC a definitive proxy statement (the “2023 Proxy Statement”) pursuant to Regulation 14A for our 2023 annual meeting of stockholders within 120 days of the fiscal year ended January 29, 2023.

Keith Siegner

49 Executive Vice President and Chief Financial Officer

Keith Siegner is Executive Vice President and Chief Financial Officer of The Lovesac Company.

From April 2021 to February 2023, he served as Chief Financial Officer of Vindex, LLC, a leading global esports technology and infrastructure company that was sold to Savvy Games Group in February 2023.

In this role, Keith led global finance operations for Vindex and its subsidiaries, which included Esports Engine, Vindex Intelligence and Belong Gaming Arenas.

Prior to joining Vindex he served as the Vice President, Investor Relations, Mergers & Acquisitions, and Treasurer at Yum!

Brands (NYSE:

YUM), which included leading the capital markets, global cash management, and risk finance teams, as well as several years in corporate strategy.

Before YUM, Keith was a senior banking executive in equity research for over 15 years at UBS Securities, where he was Executive Director, and at Credit Suisse before that.

He began his career at Arthur Andersen in the International Tax Consulting Division.

Keith received Bachelor’s and Master’s accounting degrees from Wake Forest University, and is a Certified Financial Analyst Charterholder and a Certified Public Accountant (inactive).

We will file with the SEC a definitive proxy statement (the “2024 Proxy Statement”) pursuant to Regulation 14A for our 2024 annual meeting of stockholders within 120 days of the fiscal year ended February 4, 2024.

The additional information required by this Item will appear in the 2024 Proxy Statement and is incorporated by reference herein.

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Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information as of January 29, 2023, about the securities which are either already issued, or authorized for future issuance, under our Second Amended and Restated 2017 Equity Incentive Plan (the “2017 Equity Plan”).

The following table provides information as of February 4, 2024, about the securities which are either already issued, or authorized for future issuance, under our Second Amended and Restated 2017 Equity Incentive Plan (the “2017 Equity Plan”).

Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (1)

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In fiscal 2023, the 2017 Equity Plan was amended and restated to, among other things, increase the shares of our common stock authorized and reserved for issuance by 550,000 shares.

In fiscal 2024, the 2017 Equity Plan was amended and restated to increase the shares of our common stock authorized and reserved for issuance by 225,000 shares, which increased the number of shares of common stock reserved for issuance under the 2017 Equity Plan to 2,879,889 shares of common stock.

The remaining information required by this Item will appear in the 2024 Proxy Statement and is incorporated by reference herein.

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Reports of Independent Registered Public Accounting Firm (PCAOB ID 688 )

Balance Sheets – As of January 29, 2023 and January 30, 2022

Statements of Operations – Years Ended January 29, 2023, January 30, 2022, and January 31, 2021

Statements of Changes in Stockholders’ Equity - Years Ended January 29, 2023, January 30, 2022 , and January 31, 2021

Statements of Cash Flows - Years Ended January 29, 2023, January 30, 2022 , and January 31, 2021

Balance Sheets – As of February 4, 2024 and January 29, 2023

Statements of Operations – Years Ended February 4, 2024, January 29, 2023, and January 30, 2022

Statements of Changes in Stockholders’ Equity - Years Ended February 4, 2024, January 29, 2023, and January 30, 2022

Statements of Cash Flows - Years Ended February 4, 2024, January 29, 2023, and January 30, 2022

Notes to Financial Statements

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3.2 Amended and Restated Bylaws

S-1/A 3.2 6/8/2018

4.1 Form of Amended and Restated Series A Warrant Agreement

S-1/A 4.2 5/23/2018

4.2 Form of Amended and Restated Series A-1 Warrant Agreement

S-1/A 4.3 5/23/2018

4.3 Form of Amended and Restated Series A-2 Warrant Agreement

S-1/A 4.4 5/23/2018

4.4 Form of Representative’s Warrant

S-1/A 4.4 6/25/2018

3.2 12/1/2023

4.5 Description of the Company’s securities registered pursuant to Section 12 of the Exchange Act of 1934

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10-K 10.2 3/30/2022

10.3± Second Amended and Restated 2017 Equit y Incentive Plan

10.3± Second Amended and Restated 2017 Equity Incentive Plan

10-Q 10.1 6/8/2022

Amendment No.

1 to Second Amended and Restated 2017 Equity Incentive Plan

10.1 6/2/2023

Form of Restricted Stock Units Agreement

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10-K 10.15 3/30/2022

Number Description of Exhibit Filed / Incorporated by Reference from Form ** Incorporated by Reference from Exhibit Number Dated Filed

Amended and Restated Employment Agreement dated March 23, 2023, by and between The Lovesac Company and Shawn Nelson

Filed herewith.

10-K 10.16 3/29/2023

Offer Letter between The Lovesac Company and Mary Fox, dated September 30, 2021

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8-K 10.4 11/12/2021

Number Description of Exhibit Filed / Incorporated by Reference from Form ** Incorporated by Reference from Exhibit Number Dated Filed

Form of Stock Option Award Agreement

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The Lovesac Company Director Compensation Policy

Filed herewith.

10.21 3/29/2023

Amendment No.

7 to Credit Agreement between The Lovesac Company and Wells Fargo Bank, N.A.

10.22 3/29/2023

Employment Agreement between the Company and Keith Siegner, dated June 1, 2023

Filed herewith.

Offer Letter between the Company and Keith Siegner, dated May 12, 2023

Filed herewith.

Senior Strategic Advisor Agreement between the Company and Donna Dellomo, dated June 30, 2023

10.4 11/03/2023

10.27 Retailer Program Agreement between Synchrony Bank (formerly GE Capital Retail Bank) and the Company (formerly SAC Acquisition LLC), dated April 1, 2013

Filed herewith.

10.28 First Amendment to R etailer Program Agreement between Synchrony Bank (formerly GE Capital Retail Bank) and the Company (formerly SAC Acquisition LLC) , dated September 1, 2014

Filed herewith.

10.29 Second Amendment to Retailer Program Agreement between Synchrony Bank (formerly SAC Acquisition LLC), dated M ay 11, 2018, and effective as of January 1, 2018

Filed herewith.

10.30 Third Amendment to Retailer Program Agreement between Synchrony Bank and the Company (formerly SAC Acquisition LLC), dated March 24, 2023 , and effective as of January 1, 20 23

Filed herewith.

21.1 List of Subsidiaries

10-K 21.1 4/14/2021

23.1 Consent of D eloitte & Touche LLP

23.1 Consent of Deloitte & Touche LLP

Filed herewith.

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Filed herewith.

The L ovesac Dodd-Frank Clawback Policy

Filed herewith.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

Number Description of Exhibit Filed / Incorporated by Reference from Form ** Incorporated by Reference from Exhibit Number Dated Filed

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

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* This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (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.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on March 29, 2023.

The Lovesac Company

/s/ Shawn Nelson

April 11, 2024

Chief Executive Officer

(Principal Executive Officer)

/s/ Keith Siegner

Keith Siegner

April 11, 2024

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Shawn Nelson and Donna Dellomo, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Shawn Nelson and Keith Siegner, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Shawn Nelson March 29, 2023

/s/ Shawn Nelson April 11, 2024

Chief Executive Officer and Director

(Principal Executive Officer)

/s/ Donna Dellomo March 29, 2023

Donna Dellomo

/s/ Keith Siegner

April 11, 2024

Keith Siegner

Executive Vice President and

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(Principal Financial Officer and Principal Accounting Officer)

/s/ Andrew Heyer March 29, 2023

/s/ Andrew Heyer April 11, 2024

Chairman and Director

/s/ Walter McLallen March 29, 2023

/s/ Walter McLallen April 11, 2024

Walter McLallen

/s/ Sharon M.

Leite March 29, 2023

/s/ Shirley Romig March 29, 2023

Leite April 11, 2024

/s/ Shirley Romig April 11, 2024

Shirley Romig

/s/ John Grafer March 29, 2023

/s/ Jack Krause March 29, 2023

/s/ Vineet Mehra March 29, 2023

/s/ John Grafer April 11, 2024

/s/ Jack Krause April 11, 2024

/s/ Vineet Mehra April 11, 2024

THE LOVESAC COMPANY

FINANCIAL STATEMENTS

AS OF JANUARY 29, 2023 AND JANUARY 30, 2022 AND FOR THE YEARS ENDED JANUARY 29, 2023, JANUARY 30, 2022, AND JANUARY 31, 2021

AS OF FEBRUARY 4, 2024 AND JANUARY 29, 2023 AND FOR THE YEARS ENDED FEBRUARY 4, 2024, JANUARY 29, 2023, AND JANUARY 30, 2022

THE LOVESAC COMPANY

Report of Independent Registered Public Accounting Firm as of and for the years ended February 4, 2024 and January 29, 2023 (PCAOB ID 34 )

Report of Independent Registered Public Accounting Firm as of and for the year ended January 30, 2022 (PCAOB ID 688 )

Report of Independent Registered Public Accounting Firm as of and for the year s ended January 30, 2022 and January 31 , 2021 (PCAOB ID 688 )

Financial Statements

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Statements of Changes in Stockholders’ Equity

S tatements of Cash Flows

S ta tement s of Cash Flows

Notes to the Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of The Lovesac Company

To the Stockholders and the Board of Directors of The Lovesac Company

Opinion on the Financial Statements

We have audited the accompanying balance sheet of The Lovesac Company (the “Company”) as of January 29, 2023, the related statements of operations, changes in stockholders’ equity, and cash flows for the year ended January 29, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended January 29, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 29, 2023, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have audited the accompanying balance sheets of The Lovesac Company (the "Company") as of February 4, 2024 and January 29, 2023, the related statements of operations, changes in stockholders' equity, and cash flows, for each of the two years in the period ended February 4, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 4, 2024 and January 29, 2023, and the results of its operations and its cash flows for each of the two years in the period ended February 4, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 4, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 11, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Critical Audit Matter Description

The Company has a bartering arrangement with a third-party vendor, in which the Company sells returned open-box inventory in exchange for media credits.

The Company has a bartering arrangement with a third-party vendor, in which the Company repurposes returned open-box inventory in exchange for media credits.

Barter sale transactions with commercial substance are recorded at a transaction price based on the estimated fair value of the non-cash consideration of the media credits to be received and the revenue is recognized when control of inventory is transferred, which is when the inventory is picked up from the Company’s warehouse.

Fair value is estimated using various considerations including the cost of similar media advertising if transacted directly, the expected sales price of product given up in exchange for the media credits, and the expected usage of media credits prior to expiration based on a marketing spend forecast.

For the year ended January 29, 2023, the Company recognized $ 21.3 million of barter sales in exchange for media credits.

For the year ended February 4, 2024, the Company recognized $12.3 million of barter sales in exchange for media credits.

The Company recognizes an asset for media credits which is subsequently evaluated for impairment at each reporting period for any changes in circumstances.

As of January 29, 2023, the Company had $ 25.2 million of unused media credits and did not recognize any impairment.

We identified the barter arrangement as a critical audit matter because of the significant estimate and assumptions management makes to determine the transaction price based on the estimated fair value of the non-cash consideration received in exchange for the media credits.

As of February 4, 2024, the Company had $32.8 million of unused media credits and did not recognize any impairment.

received in exchange for the media credits.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimate of the fair value of the sale transaction price.

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◦ We tested the effectiveness of controls over the determination of the transaction price.

• We read the underlying barter transaction agreement

◦ We read the underlying barter transaction agreements.

◦ For a sample of barter sale transactions, we tested that the sale occurred and the estimated fair value of the sale transaction price, as follows:

• Obtained shipping documents that evidenced the transfer of control of the related inventory.

◦ Compared management’s independent estimate of advertising costs to the actual advertising costs incurred under the barter arrangement from the third-party vendor

• Compared management’s estimate of advertising costs to the actual advertising costs incurred for selected promotional campaigns subject to the barter arrangement from the third-party vendor.

• Compared the transaction price of the inventory sold through the bartering agreement to the transaction price of like inventory sold to other third-party customers.

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Stamford, Connecticut

March 29, 2023

April 11, 2024

We have served as the Company’s auditor since fiscal 2023.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of The Lovesac Company

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of The Lovesac Company (the “Company”) as of January 29, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material aspects, effective internal control over financial reporting as of January 29, 2023 based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO .

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended January 29, 2023, of the Company and our report dated March 29, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.