What changed in this filing

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Item 1A. Risk Factors

2026-04-02 compared with 2025-04-10 · 140 added, 103 removed, 600 unchanged (29% of the section changed)

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Additional risks and uncertainties not presently known to us, or that we currently believe are not material, also may become important factors that affect us and impair our business operations.

The occurrence of any of the events or developments discussed in the risk factors below could have a material and adverse impact on our business, results of operations, financial condition and cash flows, and in such case, our future prospects would likely be materially

and adversely affected.

If any of such events or developments were to happen, the trading price of our common stock could decline.

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The principal factors and uncertainties that make investing in our common stock risky include, among others:

• our ability to sustain profitability, and raise capital;

• our ability to accurately forecast our operating results and growth rate or manage our growth effectively;

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

• our ability to maintain our brand image, engage new and existing customers and gain market share;

• our ability to compete successfully;

• our ability to effectively market and launch our products and increase customer traffic;

• our ability to attract, develop, motivate and maintain well-qualified associates;

• systems interruptions that impair customer access to our sites or other performance failures in our technology infrastructure, including significant disruptions of or breach in security of information technology systems and violation of data privacy laws;

• our ability to maintain effective internal controls over financial reporting;

• the impact related to the restatement of our previously issued financial statements;

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

• our dependence on a small number of suppliers, including international suppliers and those in developing countries, foreign manufacturing and imports;

• our ability to successfully develop U.S.

domestic manufacturing capabilities and achieve expected cost, capacity, and supply‑chain benefits;

• the impact of increases in demand for, or the price of, raw materials used to manufacture our products;

• our inability to manage our inventory levels and products, including the complexities created by our omni-channel operations, and sustain our Internet sales levels;

• our ability to effectively market and launch our products and increase customer traffic;

• our ability to successfully open and operate new showrooms and continue to achieve showroom growth rates that we have achieved in the past;

• our ability to successfully adapt to consumer shopping preferences;

• our ability to sustain profitability, and raise capital;

• our ability to maintain effective internal controls over financial reporting;

• the impact related to the restatement of our previously issued financial statements;

• our ability to accurately forecast our operating results and growth rate or manage our growth effectively;

• our ability to protect our trademarks, brand image, or other intellectual property rights;

• the impact of potential product recalls or product safety issues that could result in significant costs and damage to our brand;

• unfavorable changes to government regulation, including of the Internet and ecommerce;

• failure to meet our publicly announced guidance.

• our ability to protect our trademarks, brand image, or other intellectual property rights.

Business and Industry Risks

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Our historical growth rates may not be sustainable or indicative of future growth.

To manage our growth effectively, we must continue to implement our operational plans and strategies, acquire new and retain existing customers, increase our showroom base, optimize our omni-channel operations, and improve and expand our infrastructure of people and

information systems.

The success of our growth strategy depends, in part, on our ability to keep existing customers engaged and attract new customers to our brand.

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Consumer purchases of discretionary items, including our products, generally decline during recessionary periods and other times when disposable income is lower.

Factors impacting discretionary consumer spending include general economic conditions, inflation, reduction in wages and discretionary income, levels of unemployment, consumer debt, reductions in net worth based on severe market declines, residential real estate and mortgage markets, taxation, regulations and new or increased tariffs, including retaliatory tariffs, export controls, volatility of fuel and energy prices, fluctuations in interest rates or currency exchange rates, consumer confidence, closure or restricted operating conditions for businesses, political and economic uncertainty, inclement weather, natural disasters, health epidemics or pandemics and other macroeconomic factors, including geopolitical conditions and regional conflicts.

Factors impacting discretionary consumer spending include general economic conditions, inflation,

reduction in wages and discretionary income, levels of unemployment, consumer debt, reductions in net worth based on severe market declines, residential real estate and mortgage markets, taxation, regulations and new or increased tariffs, including retaliatory tariffs, export controls, volatility of fuel and energy prices, fluctuations in interest rates or currency exchange rates, consumer confidence, closure or restricted operating conditions for businesses, political and economic uncertainty, inclement weather, natural disasters, health epidemics or pandemics and other macroeconomic factors, including geopolitical conditions and regional conflicts.

Deterioration in economic conditions, increasing inflation or increasing unemployment levels may reduce the level of discretionary consumer spending and inhibit consumers’ use of credit, which may adversely affect our sales.

In recessionary periods and other periods where disposable income is adversely affected, we may have to increase the number of promotional sales or otherwise dispose of inventory for which we have previously paid to manufacture, which could further adversely affect our financial performance.

In recessionary periods and other periods where disposable income is adversely affected, we may have to increase the number of promotional sales or otherwise dispose of inventory we have previously paid to manufacture, which could further adversely affect our financial performance.

A downturn in the economic environment can also lead to financial instability, increased credit and collectability risk on our receivables, the failure of important partners, including suppliers, manufacturers, logistics providers, and other financial institutions.

difficult to predict when or for how long any of these conditions could affect our business and a prolonged economic downturn could have a material adverse effect on our business, financial condition, operating results and prospects.

It is difficult to predict when or for how long any of these conditions could affect our business and a prolonged economic downturn could have a material adverse effect on our business, financial condition, operating results and prospects.

Our inability to maintain our brand image, engage new and existing customers and gain market share could have a material adverse effect on our growth strategy and our business, financial condition, operating results and prospects.

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Our marketing expenses have varied from period to period, and we expect this trend to continue as we test new channels and refine our marketing strategies.

Until now, these efforts have allowed us to acquire new customers at what we believe is a reasonable cost and rate.

However, there is no guarantee that these methods will continue to be successful or will drive customer acquisition rates necessary for us to achieve revenue growth or profitability.

There is no guarantee that these methods will continue to be successful or will drive customer acquisition rates necessary for us to achieve revenue growth or profitability.

We also utilize non-paid advertising.

Our non-paid advertising efforts include search engine optimization, non-paid social media, mobile "push" notifications and email.

We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google, Bing and Yahoo!.

Although we employ search engine optimization and search engine marketing strategies, our ability to maintain and increase the number of visitors directed to our website and application is not entirely within our control.

We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google.

We employ search engine optimization and search engine marketing strategies, and our ability to maintain and increase the number of visitors directed to our website and application is not entirely within our control.

Search engines frequently update and change the logic that determines the placement and display of results of a user's search, such that the purchased or algorithmic placement of links to our sites can be negatively affected.

Moreover, a search engine could, for competitive or other purposes, alter its search algorithms or results, causing our sites to place lower in search query results.

Moreover, a search engine could, for competitive or other purposes, alter its search algorithms or results, causing our sites to place

lower in search query results.

A major search engine could change its algorithms in a manner that negatively affects our paid or non-paid search ranking, and competitive dynamics could impact the effectiveness of search engine marketing or search engine optimization.

Furthermore, major search engines can and have shifted to artificial intelligence-generated search results, which may cause us to experience a significant decrease in traffic to our sites.

Mobile “push” notifications and emails are also an important source of traffic to our sites.

Regulatory changes could limit our ability to send such communications or impose additional requirements upon us in connection with sending such communications.

Further, changes in how web and mail services block, organize and prioritize email may reduce the number of prospective customers who receive or open our emails.

Our use of email and other messaging services to send communications to consumers may also result in legal claims against us, which may cause us increased expenses, and if successful might result in fines and orders with costly reporting and compliance obligations or might limit or prohibit our ability to send emails or other messages.

We also obtain a significant amount of traffic via social networking websites or other channels used by our current and prospective customers.

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Further, some of our new customers originate from word of mouth or other non-paid referrals from existing customers.

If our efforts to satisfy our existing customers are not successful, we may not be able to acquire new customers or reactivate

prior customers through these referrals, which may adversely affect how we continue to grow our business, or may require us to incur significantly higher marketing expenses in order to acquire new customers.

If our efforts to satisfy our existing customers are not successful, we may not be able to acquire new customers or reactivate prior customers through these referrals, which may adversely affect how we continue to grow our business, or may require us to incur significantly higher marketing expenses in order to acquire new customers.

Our business is highly competitive.

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We have faced and may face price competition in the future.

In addition, competitors with whom we compete, or who can obtain better pricing, more favorable contractual terms and conditions, or more favorable allocations of products during periods of limited supply may be able to offer lower prices than we are able to offer.

In addition, competitors with whom we compete, or who can obtain better pricing, more favorable contractual terms and conditions, or more favorable allocations of products during

periods of limited supply may be able to offer lower prices than we are able to offer.

Our operating results and financial condition may be adversely affected by these and other industry-wide pricing pressures.

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If we are unable to attract, develop, motivate and retain well-qualified associates, our business could be harmed.

We believe our success has depended, and continues to depend, on the efforts and talents of Shawn Nelson, our founder, member of the Board of Directors and Chief Executive Officer, Mary Fox, our President and Chief Operating Officer, Keith Siegner, our Executive Vice President, Chief Financial Officer and Treasurer, and other members of our management team.

We believe our success has depended, and continues to depend, on the efforts and talents of Shawn Nelson, our founder, member of the Board of Directors and Chief Executive Officer;

Mary Fox, our President;

Keith Siegner, our Executive Vice President, Chief Financial Officer and Treasurer;

and other members of our management team.

Our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled associates.

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The systems of these third parties must work efficiently in order to give customers real-time credit availability.

Changes in the risk underwriting or technologies of these third parties may result in lower credit availability to our potential customers and therefore reduced sales.

Changes in the risk underwriting or technologies of these

third parties may result in lower credit availability to our potential customers and therefore reduced sales.

The occurrence of any of the foregoing could substantially harm our business and results of operations.

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Moreover, a substantial portion of our business is dependent on a small number of suppliers.

Sacs are currently manufactured by two manufacturers in Texas and North Carolina, which have previously experienced, and may continue to experience in the future, disruptions to its manufacturing operations.

Sactionals are manufactured by suppliers in Vietnam, China, Malaysia, Indonesia, Mexico, Taiwan, and India.

Sacs are currently manufactured by one manufacturer in North Carolina, which has previously experienced, and may continue to experience in the future, disruptions to its manufacturing operations.

Sactionals are currently manufactured by suppliers in Vietnam, Malaysia, China, Indonesia, Taiwan, and India.

If our relationship with these suppliers or the suppliers' services are disrupted, terminated or otherwise negatively impacted, we could have difficulty or incur additional costs in replacing these suppliers.

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As such, any issue, or perceived issue, regarding the quality and safety of any items we sell, regardless of the cause, could adversely affect our brand, reputation, operations and financial results.

subject to risks of fraud from our suppliers.

We are also subject to risks of fraud from our suppliers.

If our suppliers violate our agreements, applicable laws or regulations, or implement fraudulent practices regarding their products, it could harm our business, reputation and brands and our operating results may be negatively affected.

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While we rely on long-term relationships with many of our vendors, we have no long-term contracts with them and generally transact business with them on an order-by-order basis.

Our current suppliers are located in China, Vietnam, Taiwan, India, Indonesia, Malaysia, Mexico and the United States.

Our reliance on international suppliers increases our risk of supply chain disruption.

Our current suppliers operate manufacturing facilities located in Vietnam, Malaysia, China, Indonesia, Taiwan, and India.

We are developing additional relationships with domestic manufacturing partners.

Our reliance on international suppliers for the substantial majority of our products increases our risk of supply chain disruption.

Events that have in the past and could in the future cause disruptions to our supply chain include but are not limited to, the imposition of additional trade laws or regulations;

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Many of our imported products are subject to existing duties, tariffs, anti-dumping duties and quotas that may limit the quantity or affect the price of some types of goods that we import into the United States.

In addition, recent events have resulted in substantial regulatory uncertainty regarding international trade and trade policy, both in the United States and abroad.

Government has also raised the possibility of other initiatives that may affect importation of goods including renegotiation of trade agreements with other countries and the introduction of new or increased import duties or tariffs with respect to products from a number of different countries.

has imposed or proposed the imposition of new tariffs on products imported into the U.S.

from a number of countries, including China, Mexico, Canada and other countries and could propose additional tariffs or increases to those already in place.

A substantial portion of our products sourced from China has been affected by increased tariffs and may be subject to further increased tariffs.

We rely upon vendors outside of the U.S.

for the substantial majority of our products.

The possible implementation of a border tax or new or increased tariffs could materially increase our cost of goods sold with respect to merchandise that we purchase from vendors who manufacture products outside the U.S., which could in turn require us to increase our prices and, in the event consumer demand declines as a result, negatively impact our results of operations.

from a number of countries, and could propose additional tariffs or increases to those already in place.

A portion of our products have been affected by increased tariffs and may be subject to further increased tariffs.

The possible implementation of a border tax or new or increased tariffs, or the uncertainty surrounding existing or invalidated tariffs and any related refund processes, could materially increase our cost of goods sold with respect to merchandise that we purchase from vendors who manufacture products outside the U.S., which could in turn require us to increase our prices and, in the event consumer demand declines as a result, negatively impact our results of operations.

Furthermore, certain of our competitors may be better positioned than us to withstand or react to border taxes, tariffs or other restrictions on global trade and as a result, we may lose market share to such competitors.

Due to broad uncertainty regarding the timing, content and extent of any regulatory changes in the U.S.

Due to broad uncertainty regarding the timing, content

and extent of any regulatory changes in the U.S.

or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition and results of operations.

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Any such disagreement could result in the retroactive assessment of additional duties with interest, the imposition of penalties, or other enforcement actions without the ability to mitigate such penalties, thereby adversely affecting our operations or financial results.

In addition, recent events have resulted in substantial regulatory uncertainty regarding international trade and trade policy, both in the United States and abroad.

For example, in February 2026, the Supreme Court of the U.S.

issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”).

To preserve its rights to recover such duties, we filed a complaint and a protective action with the U.S.

Court of International Trade seeking a full refund of all tariffs paid under the invalidated IEEPA authorities, but the ultimate availability, timing and amount of any potential refunds of these tariffs remain uncertain.

Following the Supreme Court decision, the U.S.

Administration announced a new 15% global tariff under Section 122 of the Trade Act of 1974, subject to certain carveouts.

At this time we cannot reasonably estimate the total financial impact of this ruling, however it, and any additional tariffs, may materially affect our future results of operations and cash flows.

Additionally, the availability of certain goods could be affected if suppliers choose to limit their exposure to U.S.

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In addition, while we may be able to continue to expand and shift our sourcing options, such expansion is time consuming and would be difficult or impracticable for many products and may result in an increase in our manufacturing costs.

Due to broad uncertainty regarding the timing, content and extent of any

regulatory changes in the United States or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition and results of operations.

Due to broad uncertainty regarding the timing, content and extent of any regulatory changes in the United States or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition and results of operations.

Our reliance on suppliers in developing countries increases our risk with respect to available manufacturing infrastructure, labor and employee relations, political and economic stability, corruption, and regulatory, environmental, health and safety compliance.

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Any of these events could have a material adverse effect on our reputation, business, financial condition, operating results and prospects.

We may not be able to achieve expected returns from additional investments in U.S.

domestic manufacturing capabilities.

We have commenced efforts to support supply chain redundancy in the United States for our Sactionals product line with goals to expand our production capabilities and de-risk our exposure to the volatile international trade landscape in a cost-neutral fashion.

Our efforts to identify and on-board domestic manufacturing partners may not be successful in achieving these goals for a variety of reasons, including that labor costs in the U.S.

generally exceed those of the countries from which we obtain products from our overseas manufacturing partners.

As a result, it may be difficult to find manufacturing partners in the United States with capabilities and production capacity to permit us to develop this manufacturing channel on favorable terms.

Most of our products are shipped from our suppliers by ocean vessel.

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While the pandemic-era disruptions have largely subsided, if in the future there are transportation delays, increases on costs of shipping containers, more extensive travel restrictions, closures or disruptions of businesses and facilities or social, economic, political or labor instability in the affected areas, as a result of pandemics or otherwise, these developments could have a material adverse effect on our business, financial condition, operating results and prospects.

Additionally, a recent proposal by the U.S.

to impose new port fees on Chinese-operated and built vessels and to restrict a percentage of U.S.

Additionally, a port fee implemented by the U.S.

on Chinese-operated and built vessels restricts a percentage of U.S.

products from being transported on non-U.S.

vessels could have the potential to dramatically impact shipping capacity and costs.

The actual implementation of these proposed actions remains uncertain.

The final form, scope, and effective dates of any measures that are ultimately adopted may significantly differ from the current proposals.

vessels, which could have the potential to dramatically impact shipping capacity and costs.

Furthermore, retaliatory measures from China or other nations could further compound disruptions and cost increases within the global shipping industry.

This proposal could result in a significant increase in our shipping costs, cause inventory disruptions and have a material adverse effect on our operations and financial results.

This fee, or other similar fees, could result in a significant increase in our shipping costs, cause inventory disruptions and have a material adverse effect on our operations and financial results.

Additionally, we cannot guarantee that products we receive from suppliers will be of sufficient quality or free from damage, or that such products will not be damaged during shipping, while stored in one of our distribution facilities, or when returned by customers.

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Our gross margin depends, in part, on our ability to mitigate rising costs or shortages of raw materials used to manufacture our products.

Raw materials used to manufacture our products are subject to availability constraints and price volatility impacted by a number of factors, including supply and demand for fabrics, steel and metal components, and electronic components, weather, government regulations, economic conditions, economic and political instability, and other

unpredictable factors.

In addition, our sourcing costs may fluctuate due to labor conditions, transportation or freight costs, energy prices, currency fluctuations, tariffs and trade restrictions, public health crises, or other unpredictable factors.

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For example, members of the U.S.

Government have called for substantial changes to tax policies, including the possible implementation of a border tax.

The U.S Government has also raised the possibility of other initiatives that may affect importation of goods including renegotiation of trade agreements with other countries and the introduction of new or increased import duties or tariffs with respect to products from a number of different countries.

Government have called for substantial changes to tax policies, including the imposition of new or increased tariffs or trade restrictions.

has imposed or proposed the imposition of new tariffs on products imported into the U.S.

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Higher raw material prices and costs of sourced products could have an adverse effect on our future margins.

We expect raw material prices to remain at historically high levels in many categories during fiscal 2026 due to price inflation and increased tariffs in certain raw materials and global supply chain complexities.

We expect raw material prices to remain

at historically high levels in many categories during fiscal 2027 due to price inflation and increased tariffs in certain raw materials and global supply chain complexities.

Macroeconomic factors, such as inflation, will continue to introduce uncertainty into many markets, especially with respect to freight and labor availability.

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We are required to make substantial lease payments under our leases, and any failure to make these lease payments when due would likely harm our business.

In addition, many of our leases contain relocation clauses that allow the landlord to move the location of our showrooms.

In addition, many of our leases contain use restrictions that may limit our ability to introduce new products or relocation clauses that allow the landlord to move the location of our showrooms.

As our leases expire, we may be unable to negotiate acceptable renewals.

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We depend on cash flow from operations to pay our lease expenses and to fulfill our other cash needs.

If our business does not generate sufficient cash flow from operating activities,

and sufficient funds are not otherwise available to us from other sources, we may not be able to service our substantial lease expenses, which would harm our business.

If our business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to us from other sources, we may not be able to service our substantial lease expenses, which would harm our business.

Our substantial lease obligations could have significant negative consequences, including, among others:

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If an existing or future showroom is not profitable, and we decide to close it, we may nonetheless be required to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term if we cannot negotiate a mutually acceptable termination payment.

Many of our leases include relocation clauses that allow the landlord to move the location of our showrooms.

Many of our leases contain use clauses that restrict the types of products we may offer at specific locations.

These provisions may limit our operations to particular categories of merchandise or restrict us from entering the market for new rooms of furniture or offering certain types of merchandise without landlord consent, which such consent may be withheld, conditioned or delayed.

If we are unable to timely obtain landlord consent to expand into new rooms or categories or modify our merchandise offerings, we may be prevented from capitalizing on new revenue opportunities, implementing strategic initiatives, or optimizing our product assortment.

In addition, any required negotiations with landlords could result in increased costs, lease amendments on less favorable terms, or operational disruptions.

Many of our leases also include relocation clauses that allow the landlord to move the location of our showrooms.

If any of our showrooms are relocated, there can be no assurance that the new location will experience the same levels of customer traffic or success that the prior location experienced.

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If our competitors increase their spending on marketing, if our marketing is less effective than that of our competitors, or if we do not adequately leverage the technology and data analytics needed to generate concise competitive insight, our business, financial condition, operating results and prospects could be adversely affected.

Additionally, if the online market for our products does not continue to gain acceptance, a significant portion of our business may suffer.

We use digital advertising to drive sales and traffic to our e-commerce sites.

As a result, if the online market for our products does not continue to gain acceptance, a significant portion of our business may suffer.

Our success will depend, in part, on our ability to attract consumers who have historically purchased furniture through traditional retailers.

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We market our products globally through a range of advertising and promotional programs and campaigns, including social media.

Customer response to our advertisements depends on merchandise assortment, availability and creative presentation, as well as the general retail sales environment, current domestic and global economic conditions and competition.

If we do not successfully market our products or invest in the right campaigns or promotions for the right products at the right time, the lack of success or increased costs of promotional programs could have an adverse effect on our business, financial condition, and results of operations.

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We incur significant research and development and other expenditures in the pursuit of improvements and additions to our product line.

The success of new product introductions depend on a number of factors including, but not limited to, timely and successful research and development, pricing, market and consumer acceptance, the ability to successfully identify and originate product trends, effective forecasting and management of product demand, purchase commitments and inventory levels, availability of products in appropriate quantities to meet anticipated demand, ability to obtain timely and adequate delivery of components for our new products from third-party suppliers, management of any changes in major component suppliers, management of manufacturing and supply costs, management of risks and delays associated with new product design and production ramp-up issues, logistics, and the risk that new products may have quality issues or other defects or bugs in the early stages of introduction including testing of new parts and features.

manufacturing and supply costs, management of risks and delays associated with new product design and production ramp-up issues, logistics, and the risk that new products may have quality issues or other defects or bugs in the early stages of introduction including testing of new parts and features.

Failure to successfully develop or market new products or delays in the development of new products could have a material adverse effect on our financial condition, results of operations and business.

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We may be unable to successfully open and operate new showrooms, which could have a material adverse effect on our business, financial condition, operating results and prospects.

As of February 2, 2025, we had 257 showrooms, including 1 kiosk and 2 mobile concierges, but our growth strategy requires us to increase our showroom base.

As of February 1, 2026, we had 278 showrooms.

Our growth strategy relies in part on our ability to increase our showroom base.

There can be no assurance that we will succeed in opening additional showrooms.

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While we are seeking to mitigate some of the risks related to our mall-based showrooms by opening high traffic street and lifestyle center-based showrooms and continuing to build our online sales, there can be no assurance that this strategy will be successful or lead to greater sales.

As we expand our showroom base and expend capital remodeling our existing showrooms, we may not be able to achieve the showroom sales growth rates that we have achieved in the past and there is no guarantee that this will result in incremental showroom traffic or sales and there is no guarantee that this will result in incremental showroom traffic or sales and there is no guarantee that this will result in incremental showroom traffic or sales, which could cause our share price to decline.

As we expand our showroom base, we may not be able to achieve the showroom sales growth rates that we have achieved historically.

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We intend to continue remodeling our existing showroom base to reflect our new showroom design, and we intend to expend capital doing so.

Our new showroom concept is designed to increase customer traffic and sales by emphasizing our

unique product platform and using experiential technology.

Our new showroom concept is designed to increase customer traffic and sales by emphasizing our unique product platform and using experiential technology.

However, there is no guarantee that the capital spent on these remodeled showrooms will result in increased showroom traffic or increased sales.

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Accordingly, our success depends to a large degree on continually evolving the processes and technology that enable us to plan and manage inventory levels and fulfill orders, address any related operational issues and further align channels to optimize our omni-channel operations.

Additionally, while we interact with many of our customers through our showrooms, our customers are increasingly using computers, tablets and smartphones to make purchases online and to help them make purchasing decisions when in our showrooms.

Additionally, while we interact with many of our

customers through our showrooms, our customers are increasingly using computers, tablets and smartphones to make purchases online and to help them make purchasing decisions when in our showrooms.

Our customers also engage with us online through our social media channels, including Facebook and Instagram, by providing feedback and public commentary about aspects of our business.

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As our business changes, we may also be subject to different rules under existing standards, which may require new assessments that involve costs above what we currently pay for compliance.

If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or have restrictions placed upon, our ability to accept credit card and debit card payments from consumers or our ability to facilitate other types of online payments.

to accept credit card and debit card payments from consumers or our ability to facilitate other types of online payments.

In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs.

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In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements.

We may also have difficulty accessing capital on favorable terms, or at all, be subject to fines, penalties or judgments, and incur reputational harm which may materially and adversely affect our business, results of operations and financial condition.

We may also have difficulty accessing capital on favorable terms, or at all, be subject to fines, penalties or judgments, and incur reputational harm

which may materially and adversely affect our business, results of operations and financial condition.

Additionally, investors may lose confidence in our financial reporting and our stock price may decline as a result.

Additionally, we have in the past experienced high employee turnover in our accounting department which has results in significant time and expense relating to identifying, recruiting, hiring, relocating and integrating qualified individuals.

Additionally, we have in the past experienced high employee turnover in our accounting department which has resulted in significant time and expense relating to identifying, recruiting, hiring, relocating and integrating qualified individuals.

High employee turnover of key personnel may deplete our institutional knowledge base, erode our competitiveness and impact our internal controls and our financial reporting.

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Specifically, we were involved in a putative securities class action that was filed against us and certain of our current and former officers, which we have settled.

We are currently involved in certain putative shareholder derivative actions filed on behalf of the Company against certain of its current and former officers and directors.and may in the future be subject to additional litigation or other disputes, which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement.

We were also involved in certain putative shareholder derivative actions filed on behalf of the Company against certain of its current and former officers and directors, which have concluded.

We may in the future be subject to additional litigation or other disputes, which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement.

We cannot assure that all of the risks and challenges described above will be eliminated or that general reputational harm will not persist.

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We may not be able to accurately forecast our operating results and growth rate.

We use a variety of factors in our forecasting and planning processes, including historical results, recent history and assessments of economic and market

We use a variety of factors in our forecasting and planning processes, including historical results, recent history and assessments of economic and market conditions.

Our growth rates may not be sustainable, and our growth depends on the continued growth of demand for the products we offer.

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Our agreements with certain customers and business partners may also subject us to certain requirements related to our processing of personal information, including obligations to use industry-standard or reasonable security measures to safeguard personal information.

We also expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and we cannot yet determine always predict the impact of such future laws, regulations, and standards may have on our business.

have on our business.

We expect that existing laws, regulations, and standards may even be interpreted differently or inconsistently relative to each other in the future.

We are also subject to numerous laws and regulations including those relating to the production, sale, marketing, labeling, content, safety and distribution of our products, employment and occupational health and safety, and environmental, social and governance matters and reporting, among others.

We are also subject to numerous laws and regulations including those relating to the production, sale, marketing, labeling, content, safety and distribution of our products, anti-corruption (such as the Foreign Corrupt Practices Act), employment and occupational health and safety, and environmental, social and governance matters and reporting, among others.

Compliance with these laws and regulations is costly and complex given the nature of our business, our reliance on third party suppliers in foreign countries and our exposure to the laws of those countries, and the frequent adoption of new laws and regulations.

Failure to comply with such laws or regulations can subject us to criminal or civil investigations or enforcement actions, fines, penalties, injunctions or restrictions, all of which can adversely affect our business.

We may be unable to protect our trademarks or brand image, which could harm our business.

We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand.

We regard our customer and prospect lists, trademarks, domain names, copyrights, patents and similar intellectual property as critical to our success, and we rely on trademark, copyright and patent law, trade secret protection, agreements and other methods with our associates and others to protect our proprietary rights.

Our inability to enforce or the expiration of our intellectual property rights may harm our competitive position and our business.

If we are unable to protect our technology and to adequately maintain and protect our intellectual property rights, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create the innovative solutions that have enabled us to be successful to date.

The loss or expiration of our intellectual property rights and exclusivity agreements can have a significant adverse effect on our revenues.

Additionally, there can be no assurance that the actions we have taken to establish and protect our trademarks will be adequate to prevent counterfeiting or infringement of our trademarks by others.

We may not be able to claim or assert trademark or unfair competition claims against third parties for any number of reasons, and our trademarks may be found invalid or unenforceable.

A judge, jury or other adjudicative body may find that the conduct of competitors does not infringe or violate our trademark rights.

Third parties may claim that the use of our trademarks and branding infringe, dilute or otherwise violate the common law or registered marks of that party, or that our sales and marketing efforts constitute unfair competition.

Such claims could result in injunctive relief prohibiting the use of our marks, branding and marketing activities, and significant damages, treble damages and attorneys’ fees and costs could be awarded as a result of such claims.

Moreover, United States and foreign trademark offices may refuse to grant existing and future trademark applications and may cancel or partially cancel trademark registrations.

The laws of certain foreign countries may not protect the use of unregistered trademarks to the same extent as do the laws of the United States.

As a result, international protection of our brand image may be limited, and our right to use our trademarks outside the United States could be impaired.

Other persons or entities may have rights to trademarks that contain portions of our marks or may have registered similar or competing marks for furniture and/or accessories in foreign countries where our products are manufactured.

There may also be other prior registrations of trademarks identical or similar to our trademarks in other foreign countries of which we are not aware.

Accordingly, it may be possible for others

to prevent the manufacture of our branded merchandise in certain foreign countries or the sale or exportation of our branded merchandise from certain foreign countries to the United States.

If we were unable to reach a licensing arrangement with these parties, we might be unable to manufacture our products in those countries.

Our inability to register our trademarks or purchase or license the right to use the relevant trademarks or logos in these jurisdictions could limit our ability to manufacture our products in less costly markets or penetrate new markets in jurisdictions outside the United States.

The occurrence of any of the foregoing could harm our business.

We may not be able to adequately protect our intellectual property rights.

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Any litigation or other dispute resolution mechanism, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which may materially adversely affect our business, financial condition, operating results and prospects.

For example, we rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand.

Additionally, there can be no assurance that the actions we have taken to establish and protect our trademarks will be adequate to prevent counterfeiting or infringement of our trademarks by others.

Further, the laws of certain foreign countries may not protect the use of unregistered trademarks to the same extent as do the laws of the United States.

As a result, international protection of our brand image may be limited, and our right to use our trademarks outside the United States could be impaired.

There may also be other prior registrations of trademarks identical or similar to our trademarks in other foreign countries of which we are not aware.

Accordingly, it may be possible for others to prevent the manufacture of our branded merchandise in certain foreign countries or the sale or exportation of our branded merchandise from certain

foreign countries to the United States.

If we were unable to reach a licensing arrangement with these parties, we might be unable to manufacture our products in those countries.

The occurrence of any of the foregoing could harm our business.

Evolving government regulations and investor expectations on environmental, social and governance factors may impose additional costs and expose us to new risks.

There is uncertainty regarding potential laws, regulations and policies related to global environmental sustainability matters, climate change laws and regulations, including disclosure obligations and reporting on such matters.

Changes in the legal or regulatory environment affecting ESG and sustainability disclosure, responsible sourcing, supply chain transparency, or environmental protection, among others, including regulations to limit carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic or to limit or to impose additional costs on commercial water use may result in increased compliance costs for us and our business partners, all of which may negatively impact our results of operations, financial condition and cash flows.The expectations related to ESG and sustainability matters are rapidly evolving, and from time to time, we announce certain initiatives and goals, related to these matters.

The expectations related to ESG and sustainability matters are rapidly evolving, and from time to time, we announce certain initiatives and goals, related to these matters.

We could fail, or be perceived to fail to act responsibly, in our efforts, or we could fail in accurately reporting our progress on such initiatives and goals.

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Product warranty claims could have a material adverse effect on our business.

We provide a lifetime warranty on the hard insert pieces of our Sactionals and the soft insert pieces of our Sacs and a limited warranty on our StealthTech components which, if deficient, could lead to warranty claims.

We provide a lifetime warranty on the hard insert pieces of our Sactionals and the soft insert pieces of our Sacs and a limited warranty on our StealthTech components and covers which, if deficient, could lead to warranty claims.

The Company maintains a reserve for warranty claims.

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Material warranty claims could, among other things, harm our reputation and damage our brand, cause us to incur significant repair and/or replacement costs, and have a material adverse effect on our business, financial condition, operating results and prospects.

Product recalls and other claims could affect our financial position and results of operations.

As a retailer of consumer products, we could be required to repurchase or recall one or more of our products if they are found to not meet quality or safety standards or be defective.

A repurchase or recall of our products could be costly to us and could damage the reputation of our brands.

If we were required to remove, or voluntarily remove our products from the market, our reputation could be impaired and our ability to sell affected inventory could be challenged.

As a result, product recalls could have a material adverse effect on our business, results of operations and financial condition.

We are and may in the future be subject to securities litigation, which is expensive and could divert management attention.

We are involved in and may in the future be subject to litigation or other disputes, which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatements, market price volatility or other factors.

In particular, on December 19, 2023, a putative securities class action was filed against us and certain of our current and former officers in the United States District Court for the District of Connecticut captioned Gutknecht v.

The Lovesac Company, No.

3:23-cv-1640 to recover damages allegedly caused by violations of federal securities law in connection with the restatements.

Additionally, three putative shareholder derivative actions have been filed in the United States District Court for the District of Connecticut on behalf of the Company against certain of its current and former officers and directors.

The cases assert claims on behalf of the Company for breach of fiduciary duty, violations of the Exchange Act, unjust enrichment, corporate waste, and aiding and abetting primary violations.

Other potential plaintiffs may also file additional lawsuits in connection with the restatement.

The outcome of any such litigation is uncertain.

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As a result, we may be the target of securities class action litigation in the future.

The defense or settlement of this litigation and any future litigation could be time-consuming and expensive, divert the attention of management away from our business, and, if any litigation is adversely resolved against us, could have a material adverse effect on our financial condition.

The defense or settlement of this litigation and any future litigation could be time-consuming and

expensive, divert the attention of management away from our business, and, if any litigation is adversely resolved against us, could have a material adverse effect on our financial condition.

Any additional regulatory consequences, litigation, claim or dispute, whether successful or not, could subject us to additional costs, divert the attention of our management, or impair our reputation.

Each of these consequences could have a material adverse effect on our business, results of operations and financial condition.

Our insurance coverage may be insufficient to cover litigation or other claims asserted against us, which could have a material adverse effect on our business, financial condition and results of operation.

We are subject to the risk of litigation from time to time, including relating to claims involving the federal and state securities laws, product liability claims, wage and hour claims, and pricing-related claims.

Our insurance coverage may be insufficient to fully cover any such claims that may be asserted against us.

Certain types of claims may not be covered by our insurance policies, may be subject to significant exclusions or limitations, or may exceed applicable policy limits, potentially exposing us to substantial cash exposure upon settlement or judgment.

In addition, our insurers may deny coverage for certain claims, assert that exclusions apply, or become insolvent or otherwise unable to satisfy their coverage obligations.

We may also be required to incur substantial deductibles or self-insured retentions before insurance coverage applies.

Even where insurance coverage is available, we may incur significant legal fees and other costs in defending claims that are not fully reimbursed by insurance.

If we are required to pay substantial amounts in connection with litigation or other claims that are not covered by insurance, or that exceed our coverage limits, such payments could materially and adversely affect our business, financial condition, cash flows, and results of operations.

Furthermore, we may be unable to obtain certain types or levels of commercial insurance at acceptable rates or on commercially reasonable terms, and in some cases coverage may be unavailable entirely.

As a result, we may elect to self‑insure for certain exposures, and if we experience a significant loss that exceeds our insurance coverage or our self‑insurance reserves, our expenses could increase and our business, financial condition, and operating results could be materially adversely affected.

Government regulation of the Internet and ecommerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.

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It is possible that general business regulations and laws, or those specifically governing the Internet or ecommerce, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.

Additionally, we are subject to various federal, state and local consumer protection, pricing transparency and false advertising laws that regulate retailers and

govern the marketing, advertising, promotion and sale of merchandise, including California’s Consumer Legal Remedies Act.

Additionally, we are subject to various federal, state and local consumer protection, pricing transparency and false advertising laws that regulate retailers and govern the marketing, advertising, promotion and sale of merchandise, including California’s Consumer Legal Remedies Act.

Though we seek at all times to be in full compliance with all such laws, we cannot be sure that our practices have complied, comply or will comply fully with all such laws and regulations.

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We cannot guarantee that our share repurchase program will be fully consummated or will enhance long-term stockholder value, and share repurchases could increase the volatility of the trading price of our common stock and diminish our cash reserves.

In June 2024, our Board of Directors approved a share repurchase program under which we are authorized to purchase up to $40.0 million of our common stock from time to time.

In June 2024, our Board of Directors approved a share repurchase program.

As of February 1, 2026, $14.1 million remained available for future purchases under the share repurchase program.

In March 2026, subsequent to the end of the fiscal period, our Board of Directors authorized the repurchase of an additional $40.0 million of our outstanding common stock under the share repurchase program.

As a result, total remaining availability under the share repurchase program increased to $54.1 million.

Our share repurchase program does not have an expiration date and does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares on any particular timetable or at all.

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In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law ("DGCL"), which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any holder of at least 15% of our capital stock for a period of three years following the date on which the stockholder became a 15% stockholder.

Actions of activist stockholders could be costly and time-consuming, divert management’s attention and resources, and have an adverse effect on our business.

Activist stockholders could take actions that could be costly and time-consuming to us, disrupt our operations, and divert the attention of our board of directors, management, and employees, such as public proposals and requests for potential nominations of candidates for election to our board of directors, requests to pursue a strategic combination or other transaction, or other special requests.

If an activist campaign were to be launched against us, we may retain legal, financial and communications advisers, the costs of which could be significant and negatively impact our future financial results.

In addition, perceived uncertainties as to our future direction, strategy, or leadership created as a consequence of activist stockholder initiatives could result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers, directors, employees or other partners, and cause our stock price to experience periods of volatility or stagnation.

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

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In light of the foregoing, investors are urged not to rely upon our guidance in making an investment decision regarding our securities.

Any failure to successfully implement

our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors” section, many of which are outside of our control, could result in the actual operating results being different from our guidance, and the differences may be adverse and material.

Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors” section, many of which are outside of our control, could result in the actual operating results being different from our guidance, and the differences may be adverse and material.

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 1A. Risk Factors