Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 02, 2020 | Apr. 15, 2020 | Aug. 02, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Lovesac Co | ||
Entity Central Index Key | 0001701758 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --02-02 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 2, 2020 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Common Stock, Shares Outstanding | 14,472,611 | ||
Entity Public Float | $ 173,298,214 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity File Number | 001-38555 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Feb. 02, 2020 | Feb. 03, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 48,538,827 | $ 49,070,952 |
Trade accounts receivable | 7,188,925 | 3,955,124 |
Merchandise inventories | 36,399,862 | 26,154,314 |
Prepaid expenses and other current assets | 8,050,122 | 5,933,872 |
Total Current Assets | 100,177,736 | 85,114,262 |
Property and Equipment, Net | 23,844,261 | 18,595,079 |
Other Assets | ||
Goodwill | 143,562 | 143,562 |
Intangible assets, net | 1,352,161 | 942,331 |
Deferred financing costs, net | 146,047 | 219,071 |
Total Other Assets | 1,641,770 | 1,304,964 |
Total Assets | 125,663,767 | 105,014,305 |
Current Liabilities | ||
Accounts payable | 19,887,611 | 16,836,816 |
Accrued expenses | 8,567,580 | 3,701,090 |
Payroll payable | 887,415 | 2,269,834 |
Customer deposits | 1,653,597 | 1,059,957 |
Sales taxes payable | 1,404,792 | 750,922 |
Total Current Liabilities | 32,400,995 | 24,618,619 |
Deferred rent | 3,108,245 | 1,594,179 |
Line of credit | 31,373 | |
Total Liabilities | 35,509,240 | 26,244,171 |
Commitments and contingencies (see Note 6) | ||
Stockholders' Equity | ||
Preferred Stock $.00001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of February 2, 2020 and February 3, 2019. | ||
Common Stock $.00001 par value, 40,000,000 shares authorized, 14,472,611 shares issued and outstanding as of February 2, 2020 and 13,588,568 shares issued and outstanding as of February 3, 2019. | 145 | 136 |
Additional paid-in capital | 168,317,210 | 141,727,807 |
Accumulated deficit | (78,162,828) | (62,957,809) |
Stockholders' Equity | 90,154,527 | 78,770,134 |
Total Liabilities and Stockholders' Equity | $ 125,663,767 | $ 105,014,305 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 02, 2020 | Feb. 03, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 14,472,611 | 13,588,568 |
Common stock, shares outstanding | 14,472,611 | 13,588,568 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 233,377,379 | $ 165,881,297 |
Cost of merchandise sold | 116,687,055 | 75,000,476 |
Gross profit | 116,690,324 | 90,880,821 |
Operating expenses | ||
Selling, general and administration expenses | 98,146,524 | 76,426,892 |
Advertising and marketing | 29,194,289 | 18,363,491 |
Depreciation and amortization | 5,158,062 | 3,133,751 |
Total operating expenses | 132,498,875 | 97,924,134 |
Operating loss | (15,808,551) | (7,043,313) |
Interest income, net | 646,844 | 355,364 |
Net loss before taxes | (15,161,707) | (6,687,949) |
Provision for income taxes | (43,312) | (16,407) |
Net loss | $ (15,205,019) | $ (6,704,356) |
Net loss per common share: | ||
Basic and diluted | $ (1.07) | $ (3.28) |
Weighted average number of common shares outstanding: | ||
Basic and diluted | 14,260,395 | 10,536,721 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Feb. 04, 2018 | $ 61 | $ 10 | $ 79,891,835 | $ (56,253,453) | $ 23,638,453 |
Balance, shares at Feb. 04, 2018 | 6,064,500 | 1,018,600 | |||
Net loss | (6,704,356) | (6,704,356) | |||
Equity based compensation | 3,310,018 | 3,310,018 | |||
Equity based compensation, shares | 50,000 | ||||
Vested restricted stock units | $ 2 | (382,535) | (382,533) | ||
Vested restricted stock units, shares | 125,633 | ||||
Exercise of warrants | |||||
Exercise of warrants, shares | 35,994 | ||||
Preferred stock conversion | $ 33 | $ (10) | (23) | ||
Preferred stock conversion, shares | 3,287,441 | (1,018,600) | |||
Initial public offering, net | $ 40 | 58,908,512 | 58,908,552 | ||
Initial public offering, net, shares | 4,025,000 | ||||
Balance at Feb. 03, 2019 | $ 136 | 141,727,807 | (62,957,809) | 78,770,134 | |
Balance, shares at Feb. 03, 2019 | 13,588,568 | ||||
Net loss | (15,205,019) | (15,205,019) | |||
Equity based compensation | $ 1 | 5,245,587 | 5,245,588 | ||
Equity based compensation, shares | 101,883 | ||||
Issuance of common shares, net | $ 8 | 25,609,992 | 25,610,000 | ||
Issuance of common shares, net, shares | 750,000 | ||||
Vested restricted stock units | $ 2 | (2) | |||
Vested restricted stock units, shares | 180,304 | ||||
Taxes paid for net share settlement of equity awards | (4,278,176) | (4,278,176) | |||
Exercise of warrants | 12,000 | 12,000 | |||
Exercise of warrants, shares | 27,246 | ||||
Cancelation of shares | $ (2) | 2 | |||
Cancelation of shares, shares | (175,390) | ||||
Balance at Feb. 02, 2020 | $ 145 | $ 168,317,210 | $ (78,162,828) | $ 90,154,527 | |
Balance, shares at Feb. 02, 2020 | 14,472,611 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Cash Flows from Operating Activities | ||
Net loss | $ (15,205,019) | $ (6,704,356) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization of property and equipment | 4,894,220 | 2,935,202 |
Amortization of other intangible assets | 263,842 | 198,549 |
Amortization of deferred financing fees | 73,024 | 121,173 |
Net (gain) loss on disposal of property and equipment | (166,865) | 254,720 |
Equity based compensation | 5,245,588 | 3,310,018 |
Deferred rent | 1,514,066 | 530,707 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,233,801) | (1,149,938) |
Merchandise inventories | (10,245,548) | (14,512,832) |
Prepaid expenses and other current assets | (2,116,250) | 129,074 |
Accounts payable and accrued expenses | 7,188,736 | 7,729,293 |
Customer deposits | 593,640 | 150,721 |
Net Cash Used in Operating Activities | (11,194,367) | (7,007,669) |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (10,276,537) | (10,747,712) |
Payments for patents and trademarks | (673,672) | (614,510) |
Proceeds from disposal of property and equipment | 300,000 | |
Net Cash Used in Investing Activities | (10,650,209) | (11,362,222) |
Cash Flows from Financing Activities | ||
Proceeds from the issuance of common shares, net | 25,610,000 | 58,908,552 |
Taxes paid for net share settlement of equity awards | (4,278,176) | (382,533) |
Proceeds from the issuance of warrants, net | 12,000 | |
(Paydowns of) proceeds from line of credit | (31,373) | 30,968 |
Payments of deferred financing costs | (292,095) | |
Net Cash Provided by Financing Activities | 21,312,451 | 58,264,892 |
Net Change in Cash and Cash Equivalents | (532,125) | 39,895,001 |
Cash and Cash Equivalents - Beginning | 49,070,952 | 9,175,951 |
Cash and Cash Equivalents - End | 48,538,827 | 49,070,952 |
Supplemental Cash Flow Disclosures | ||
Cash paid for taxes | 43,312 | 18,246 |
Cash paid for interest | $ 62,670 | $ 61,436 |
Operations and Significant Acco
Operations and Significant Accounting Policies | 12 Months Ended |
Feb. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS AND LIQUIDITY The Lovesac Company (the "Company") designs and sells foam filled furniture, sectional couches, and related accessories throughout the world. As of February 2, 2020, the Company operated 91 leased retail showrooms located throughout the United States. In addition, the Company operates a retail internet website and does business to business transactions through its wholesale operations. The Company was formed as a Delaware corporation on January 3, 2017, in connection with a corporate reorganization with SAC Acquisition LLC, a Delaware limited liability company ("SAC LLC"), the predecessor entity to the Company. The Company has incurred significant operating losses and used cash in its operating activities since inception. Operating losses have resulted from inadequate sales levels for the cost structure and expenses as a result of expanding into new markets, opening new showrooms, investments into marketing and infrastructure to support increase in revenues. The Company continues to enter into new retail showrooms in larger markets to increase sales levels and invest in marketing initiatives to increase brand awareness. Of course, there can be no assurance that the anticipated sales levels will be achieved. The Company believes that based on its current sales and expense levels, projections for the next twelve months, the credit facility with Wells Fargo Bank, see Note 9, and the proceeds from the IPO and recently completed offering in May 2019, the Company will have sufficient working capital to cover operating cash needs through the twelve month period from the financial statement issuance date. On June 22, 2018, the board of directors of the Company approved a 1-for-2.5 reverse stock split of the Company's shares of common stock. The reverse stock split became effective immediately prior to the closing of its initial public offering ("IPO"). All stock amounts included in these financial statements have been adjusted to reflect this reverse stock split. On June 27, 2018, the Company completed its IPO, selling 4,025,000 shares of common stock at a price of $16.00 per share. Net proceeds to the Company from the offering was approximately $58.9 million after legal and underwriting expenses. On October 29, 2018, certain selling stockholders conducted a secondary offering of 2,220,000 shares of common stock of the Company. The Company did not sell any shares or receive any proceeds from the sale of the common stock by the selling stockholders. On May 21, 2019, the Company and certain of the Company's stockholders completed a primary and secondary public offering of an aggregate of 2,500,000 shares of common stock, which included 750,000 shares offered by the Company and 1,750,000 shares offered by certain selling stockholders of the Company, at a public offering price of $36.00 per share. Net proceeds to the Company from the offering were approximately $25.6 million after legal and underwriting expenses. On May 29, 2019, the underwriters also exercised an option to purchase up to an additional 375,000 shares of common stock from the selling stockholders. The Company did not receive any proceeds from the sale of the common stock by the selling stockholders. Immediately prior to the follow-on offerings in October 2018 and May 2019, various investment vehicles affiliated with our equity sponsor Mistral Capital Managements, LLC ("Mistral"), which included SAC LLC, owned approximately 56% and 41% of our common stock, respectively. Immediately after the completion of the follow-on offerings, such entities owned approximately 41% and 29% of the Company's common stock, respectively. As a result, the Company is no longer a "controlled company" within the meaning of the corporate governance standards of Nasdaq, the Company may no longer rely on exemptions from corporate governance requirements that are available to controlled companies. In December 2019, SAC LLC distributed the shares of the Company's common stock to its members, which included certain affiliates of Mistral. Following the distribution by SAC LLC, Mistral and its affiliates owned approximately 19% of the Company's common stock. See Note 7. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. FISCAL YEAR The Company's fiscal year is determined on a 52/53 week basis ending on the Sunday closest to January 31st. Hereinafter, the periods from February 4, 2019 through February 2, 2020 and February 5, 2018, through February 3, 2019 are referred to as fiscal 2020 and fiscal 2019, respectively. Both fiscal 2020 and fiscal 2019 were a 52 week fiscal year. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of the revisions are reflected in the period the change is determined. REVENUE RECOGNITION The Company implemented ASU 2015-04, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606, "ASC 606"), in the first quarter of fiscal 2020 using modified retrospective method, which required the company to apply the new guidance retrospectively to revenue transactions completed on or after the effective date. Adopting this new standard had no material financial impact on our condensed consolidated financial statements but did result in enhanced presentation and disclosures. Our revenue consists substantially of product sales. The Company reports product sales net of discounts and recognize them at the point in time when control transfers to the customer, which occurs when shipment is confirmed. Estimated refunds for returns and allowances are recorded using our historical return patterns, adjusting for any changes in returns policies. The Company records estimated refunds for net sales returns on a monthly basis as a reduction of net sales and cost of sales on the statement of operations and an increase in inventory and customers returns liability on the balance sheet. As of February 2, 2020, there was a returns allowance recorded on the balance sheet in the amount $2,177,715 which was in accrued expenses and $442,390 associated with sales returns in merchandise inventories. In some cases, deposits are received before the company transfers control, resulting in contract liabilities. These contract liabilities are reported as deposits on the Company's balance sheet. As of February 2, 2020, and February 3, 2019, the Company recorded under customer deposit liabilities the amount of $1,653,597 and $1,059,957 respectively. During fiscal year ended February 2, 2020, the Company recognized $1,059,957 related to its customer deposits from fiscal 2019. Upon adoption of ASC 606, the Company has elected the following accounting policies and practical expedients: The Company recognizes shipping and handling expense as fulfilment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, the Company records the expenses for shipping and handling activities at the same time the Company recognizes revenue. The Company excludes from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue- producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods. The Company offers its products through an inventory lean omni-channel platform that provides a seamless and meaningful experience to its customers in showrooms and through the internet. The other channel predominantly represents sales through the use of pop-up shops that typically average ten days at a time and are staffed with associates trained to demonstrate and sell our product. The following represents sales disaggregated by channel: For the fiscal years ended February 2, February 3, Showrooms $ 148,003,995 $ 113,105,029 Internet 55,781,186 33,024,079 Other 29,592,198 19,752,189 Total net sales $ 233,377,379 $ 165,881,297 The Company has no foreign operations and its sales to foreign countries was less than .05% of total net sales in both fiscal 2020 and 2019. The Company had no customers in fiscal 2020 or 2019 that comprise more than 10% of total net sales. See Note 10 for sales disaggregated by product . CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity at purchase of three months or less to be cash equivalents. The Company has deposits with financial institutions that maintain Federal Deposit Insurance Corporation "FDIC" deposit insurance up to $250,000 per depositor. The portion of the deposit in excess of this limit represents a credit risk to the Company. Due to the high cash balance maintained by the Company, the Company does maintain depository balances in excess of the insured amounts. TRADE ACCOUNTS RECEIVABLE Trade accounts receivable are carried at their estimated realizable amount and do not bear interest. Management determines the allowance for doubtful accounts by regularly evaluating individual customer accounts, considering the customer's financial condition, and credit history, and general and industry current economic conditions. Trade accounts receivable are reserved for when deemed uncollectible. Recoveries of amounts previously written off are recorded when received. Historically, collection losses have been immaterial as a significant portion of the Company's receivables are related to individual credit card transactions and one wholesale customer for which the Company has no history of collection losses. Management has concluded that an allowance was not necessary at February 2, 2020 and February 3, 2019, respectively. Breakdown of accounts receivable is as follows: As of As of Credit card receivables $ 1,073,855 $ 838,373 Wholesale receivables 4,724,154 2,850,000 Other receivables 1,390,916 266,751 $ 7,188,925 $ 3,955,124 The Company has one wholesale customer that comprised approximately 97% and 100% of wholesale receivables at February 2, 2020 and February 3, 2019, respectively. PREPAID EXPENSES AND OTHER CURRENT ASSETS The Company recognizes payments made for goods and services to be received in the near future as prepaid expenses and other current assets. Prepaid expenses and other current assets consist primarily of payments related to insurance premiums, catalogue costs, barter credits, deposits, prepaid rent, prepaid inventory, and other costs. MERCHANDISE INVENTORIES Merchandise inventories are comprised of finished goods which are carried at the lower of cost or net realizable value. Cost is determined on a weighted-average method basis. Merchandise inventories consist primarily of foam filled furniture, sectional couches, and related accessories. The Company adjusts its inventory for obsolescence based on historical trends, aging reports, specific identification and its estimates of future retail sales prices. In addition, the Company includes capitalized freight and warehousing costs in inventory relative to the finished goods in inventory. GIFT CERTIFICATES AND MERCHANDISE CREDITS The Company sells gift certificates and issues merchandise credits to its customers in the showrooms and through its website. Revenue associated with gift certificates and merchandise credits is deferred until redemption of the gift certificate and merchandise credits. The Company did not recognize any breakage revenue in fiscal 2020 or fiscal 2019 as the Company continues to honor all outstanding gift certificates. PROPERTY AND EQUIPMENT, NET Property and equipment are stated at cost less accumulated depreciation and amortization. Office and showroom furniture and equipment, software and vehicles are depreciated using the straight-line method over their estimated useful lives. Leasehold improvements are amortized using the straight-line method over their expected useful lives or lease term, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation or amortization is removed from the accounts, and any resulting gain or loss is reflected in operations for the period. Expenditures for major betterments that extend the useful lives of property and equipment are capitalized. GOODWILL Goodwill represents the excess of the purchase price over the fair value of the identified net assets of each business acquired. Goodwill and other indefinite-lived intangible assets are tested annually for impairment in the fourth fiscal quarter and in interim periods if certain events occur indicating that the carrying amounts may be impaired. If a qualitative assessment is used and the Company determines that the fair value of a reporting unit or indefinite-lived intangible asset is more likely than not (i.e., a likelihood of more than 50%) less than its carrying amount, a quantitative impairment test will be performed. If goodwill is quantitatively assessed for impairment, a two-step approach is applied. In the first step, the Company compares the fair value of the reporting unit, generally defined as the same level as or one level below an operating segment, to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is considered not impaired and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the second step of the impairment test must be performed in order to determine the implied fair value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then an impairment loss equal to the difference would be recorded. There were no impairments during either fiscal 2020 or 2019. The fair value of the Company's reporting unit is determined by using a discounted cash flow analysis. The determination of fair value requires assumptions and estimates of many critical factors, including among others, the nature and history of the Company, financial and economic conditions affecting the Company, the industry and the general economy, past results, current operations and future prospects, sales of similar businesses or capital stock of publicly held similar businesses, as well as prices, terms and conditions affecting past sales of similar businesses. Forecasts of future operations are based, in part, on operating results and management's expectations as to future market conditions. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgments to estimate industry economic factors and the profitability of future business strategies. However, if actual results are not consistent with the Company's estimates and assumptions, there may be exposure to future impairment losses that could be material. PATENTS AND LICENSES Patents and licenses are recorded at cost and amortized on a straight-line basis over the estimated remaining life of the patent or license. Ongoing maintenance costs are expensed as incurred. INTANGIBLE ASSETS Intangible assets with finite useful lives, including a vendor relationship, and patents and trade names, are being amortized on a straight-line basis over their estimated lives. Other intangible assets with finite useful lives are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the asset might not be recovered. If the estimates of the useful lives should change, the Company will amortize the remaining book value over the remaining useful life, or it is deemed to be impaired a write-down of the value of the asset may be required at such time. There were no impairments during either fiscal 2020 or 2019. DEFERRED FINANCING COSTS The Company's financing costs are capitalized and amortized over the life of the related financing. The financing costs are treated as debt discounts with the exception of revolving lines of credit. Previously acquired debt discounts were amortized over the life of the loans as interest expense. The debt discounts were fully amortized in fiscal 2019. In 2019, the Company paid $292,095 in connection with the renegotiated terms of its line of credit. The Company amortized to interest expense $73,024 in 2020 and $121,173 in 2019 of financing costs. IMPAIRMENT OF LONG-LIVED ASSETS The Company's long-lived assets consist of property and equipment, which includes leasehold improvements, and other intangible assets. Long-lived assets are reviewed for potential impairment at such time that events or changes in circumstances indicate that the carrying amount of an asset might not be recovered. The Company evaluates property and equipment for impairment at the individual showroom level, which is the lowest level at which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, the Company will first compare the carrying amount of the assets to the future undiscounted cash flows for the respective long-lived asset. If the estimated future cash flows are less than the carrying amounts of the assets, an impairment loss calculation is prepared. An impairment loss is measured based upon the excess of the carrying value of the asset over its estimated fair value which is generally based on an estimated future discounted cash flow. If required, an impairment loss is recorded for that portion of the asset's carrying value in excess of fair value. There were no impairments of long-lived assets during fiscal 2020 or 2019. ADVERTISING AND CATALOG COSTS The Company capitalizes direct response advertising costs, which consist primarily of catalog production and mailing costs, and recognizes expense over the related revenue stream if the following conditions are met (1) the primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising, and (2) the direct-response advertising results in probable and estimable future benefits. For fiscal years 2020 and 2019 the Company did not have any capitalized deferred direct-response television, postcard and catalogue costs. Direct-response advertising costs, which are included in prepaid expenses and other current assets, are amortized commencing the date the catalogs and post cards are mailed and the television commercial airs through the estimated period of time for the Company has determined the related advertising impacts sales. There was no balance as of February 2, 2020 or February 3, 2019. Advertising costs not associated with direct-response advertising are expensed as incurred and were $29,194,289 in 2020 and $18,363,491 in 2019. SHOWROOM PREOPENING AND CLOSING COSTS Non-capital expenditures incurred in preparation for opening new retail showrooms are expensed as incurred and included in selling, general and administrative expenses. The Company continually evaluates the profitability of its showrooms. When the Company closes or relocates a showroom, the Company incurs unrecoverable costs, including the net book value of abandoned fixtures and leasehold improvements, lease termination payments, costs to transfer inventory and usable fixtures and other costs of vacating the leased location. Such costs are expensed as incurred and are included in selling, general and administrative expenses. PRODUCT WARRANTY Depending on the type of merchandise, the Company offers either a three year limited warranty or a lifetime warranty. The Company's warranties require it to repair or replace defective products at no cost to the customer. At the time product revenue is recognized, the Company reserves for estimated future costs that may be incurred under its warranties based on historical experience. The Company periodically reviews the adequacy of its recorded warranty liability. Product warranty expense was approximately $933,000 in fiscal 2020 and $414,000 in fiscal 2019. Warranty reserve was $1,180,000 in fiscal 2020 and $212,000 in fiscal 2019. OPERATING LEASES Minimum operating lease expenses are recognized on a straight-line basis over the terms of the leases. Tenant allowances are recorded as a receivable when lease is executed. The corresponding liability is recorded and amortized over the term of the lease. The amortization of the liability is a reduction of rent expense over the term of the lease. Our operating leases contain provisions for certain incentives. Incentives are deferred and are amortized over the underlying lease term on a straight-line basis as a reduction to rent expense. When the terms or the Company's leases provide for free rent, concessions and/or escalations, the Company establishes a deferred rent liability or asset for the difference of the scheduled rent payments and a straight line rent expense. This liability or asset increases or decreases depending on where the Company is at any given time in the life of the lease. Percentage rent is not subject to straight-line of expense and is expensed as incurred. FAIR VALUE MEASUREMENTS The carrying amount of the Company's financial instruments classified as current assets and current liabilities approximate fair values based on the short term nature of the accounts. EQUITY BASED COMPENSATION The Company's 2017 Equity Incentive Plan provides for awards in the form of options, stock appreciation rights, restricted stock awards, restricted stock, performance shares, cash-based awards and other stock-based awards. The plan allows for the issuance of up to 1,414,889 shares at February 2, 2020 and 615,066 at February 3, 2019. All awards shall be granted within 10 years from the effective date of the plan. The unit vesting was based on both time and performance. See Note 7 for additional disclosure. SHIPPING AND HANDLING Shipping and handling charges billed to customers are included in revenue. Shipping and handling costs incurred are included in cost of merchandise sold. Shipping and handling costs were $47,148,918 in fiscal 2020 and $25,132,736 in fiscal 2019. INCOME TAXES The Company accounts for uncertainty in income taxes using a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes. In connection with the 2017 reorganization, the intent was that the net operating losses (NOLs) of SAC Acquisition, LLC, a limited liability company that had been historically treated as a C-corporation for federal and state income tax purposes, were to be inherited by the Company. The Company filed a request for a private letter ruling requesting additional time to make a check the box election pursuant to Treas. Reg. 301.7701-3. In PLR-109713-19 dated October 22, 2019 the Company was granted an extension of time of 120 days to file form 8832 "Entity Classification Election." The completed Form 8832 was filed with The IRS on November 11, 2019. The Company has maintained the position that the NOLs were inherited from SAC Acquisition in the 2017 reorganization and consistently maintained a full valuation allowance against its NOLs as they were part of deferred income tax assets not likely to be realized. Accordingly, the resolution of the uncertain tax position regarding the Company's NOL carry forward during the year did not have an impact on the Company's financial position or results of operations. As of February 3, 2019 there are NOLs of approximately $10.8 million identified as an uncertain tax position. As of February 2, 2020, there were no uncertain tax positions. See Note 5 for additional disclosures. Deferred income taxes are provided on temporary differences between the income tax bases of assets and liabilities and the amounts reported in the financial statements and on net operating loss and tax credit carry forwards. A valuation allowance is provided for that portion of deferred income tax assets not likely to be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. BASIC AND DILUTED NET LOSS PER SHARE Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. As a result of the Company's net loss for both years presented, potentially dilutive securities were excluded from the computation of diluted loss per share, as their effect would be anti-dilutive. Potentially dilutive securities include unvested restricted stock units in the amounts of 183,053 and 377,286 for fiscal 2020 and 2019, respectively, common stock warrants outstanding of 1,039,120 and 1,067,475 for fiscal 2020 and 2019, respectively and stock options of 495,366 for fiscal 2020. For fiscal 2020, the warrants and the options have an exercise price that exceeds the market price. Basic and diluted net loss per common share is computed as follows: For the year ended For the year ended Numerator: Net loss - Basic and diluted $ (15,205,019 ) $ (6,704,356 ) Preferred dividends and deemed dividends - (27,832,998 ) Net loss attributable to common shares (15,205,019 ) (34,537,354 ) Denominator: Weighted average number of common shares for basic and diluted net loss per share 14,260,395 10,536,721 Basic and diluted net loss per share $ (1.07 ) $ (3.28 ) NEW ACCOUNTING PRONOUNCEMENTS Except as described below, the Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. The Company, as an emerging growth company, has elected to use the extended transition period for complying with new or revised financial accounting standards. The following new accounting pronouncements were adopted in fiscal 2020: In August 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2015-14, which defers the effective date of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) by one year. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. As a result, ASU 2015-14 is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, which for the Company is fiscal 2020. The Company reviewed substantially all of its contracts and other revenue streams and determined that while the application of the new standard did not have a material change in the amount of or timing for recognizing revenue, it did have a significant impact on our financial statement disclosures which are further discussed in Note 1 - Revenue Recognition. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments, which eliminates the diversity in practice related to classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company adopted the guidance retrospectively effective February 4, 2019, which did not have a material effect on the Company's condensed consolidated financial position and results of operations. The following new accounting pronouncements, and related impacts on adoption are being evaluated by the Company: In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) amending lease guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2019-10 extended the effective date to fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company will adopt this standard beginning with our fiscal 2022. Management has evaluated the impact ASU No. 2016-02 will have on these condensed consolidated financial statements. Based on the initial evaluation, the Company has determined that adopting this standard will have a material impact on our condensed consolidated balance sheet as the Company has a significant number of operating leases. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Feb. 02, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 2 - PROPERTY AND EQUIPMENT, NET Property and equipment as of February 2, 2020 and February 3, 2019 consists of: Estimated Life 2020 2019 Office and store furniture, and equipment 5 Years $ 6,674,950 $ 4,798,414 Software 3 Years 2,652,960 2,707,666 Leasehold improvements Shorter of estimated useful life or lease term 28,071,912 20,088,812 Tools, Dies, Molds 5 Years 97,876 - Construction in process NA 2,193,218 2,222,218 39,690,916 29,817,110 Accumulated depreciation and amortization (15,846,655 ) (11,222,031 ) $ 23,844,261 $ 18,595,079 Depreciation expense was $4,894,220 in fiscal 2020 and $2,935,202 in fiscal 2019. |
Other Intangible Assets, Net
Other Intangible Assets, Net | 12 Months Ended |
Feb. 02, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
OTHER INTANGIBLE ASSETS, NET | NOTE 3 - OTHER INTANGIBLE ASSETS, NET A summary of other intangible assets follows: February 2, 2020 Estimated Life Gross Accumulated Net Patents 10 Years $ 1,965,794 $ (846,898 ) $ 1,118,896 Trademarks 3 Years 982,800 (749,535 ) 233,265 Other intangibles 5 Years 839,737 (839,737 ) - Total $ 3,788,331 $ (2,436,170 ) $ 1,352,161 February 3, 2019 Estimated Life Gross Accumulated Net Patents 10 Years $ 1,406,336 $ (744,715 ) $ 661,621 Trademarks 3 Years 868,586 (589,248 ) 279,338 Other intangibles 5 Years 839,737 (838,365 ) 1,372 Total $ 3,114,659 $ (2,172,328 ) $ 942,331 Amortization expense on other intangible assets was $263,842 in fiscal 2020 and $198,549 in fiscal 2019. Expected amortization expense by fiscal year for these other intangible assets follows: 2021 $ 282,716 2022 242,086 2023 136,870 2024 132,973 2025 132,917 Thereafter 424,599 $ 1,352,161 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Feb. 02, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 4 - PREPAID EXPENSES AND OTHER CURRENT ASSETS A summary of other prepaid and other current assets follows: 2020 2019 Prepaid insurance $ 1,174,920 $ 760,974 Prepaid catalogue costs and related 3,067,302 1,633,960 Barter credits 374,423 - Deposits 892,611 732,938 Prepaid rent 1,297,511 1,036,647 Prepaid inventory 511,100 575,397 Other 732,255 1,193,956 $ 8,050,122 $ 5,933,872 |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 02, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 5 - INCOME TAXES On March 27, 2020, the Federal government of the United States enacted the Coronavirus Aid Relief and Economic Security Act ("CARES Act") which includes a number of significant changes to the existing U.S. tax laws including postponing the filing date of specific federal income tax returns and payments from April 15, 2020 to July 15, 2020, temporarily increasing the 30% limitation on the interest deduction to 50%, introduction of a capital investment deduction for Qualified Improvement Property ("QIP"), and change in the use of net operating losses. The Company's federal net operating losses that have been incurred in tax years beginning on or before December 31, 2017 will have a 20-year carryforward limitation, a two-year carryback period and can offset 100% of future taxable income. Net operating losses incurred in tax years beginning after December 31, 2017 and before January 1, 2021 will have an indefinite life, a five-year carryback period and can offset 100% of future taxable income prior to 2021 and 80% of future taxable income after 2020. Net operating losses incurred in tax years beginning on or after January 1, 2021 will have an indefinite life, generally no carryback period and can offset 80% of future taxable income. The components of deferred income taxes follow: 2020 2019 Deferred Income Tax Assets Federal net operating loss carry forward $ 12,455,237 $ 708,865 State net operating loss carry forward 2,485,074 130,924 Intangible assets 244,053 248,731 Accrued liabilities 1,833,549 1,139,686 Equity based compensation 503,201 171,120 Property and equipment 1,748,593 1,165,359 Merchandise inventories 254,034 154,599 Total Deferred Income Tax Assets 19,523,741 3,719,284 Valuation Allowance (19,523,741 ) (3,719,284 ) Net Deferred Income Tax Asset $ - $ - The income tax provision differs from the amount obtained by applying the statutory Federal income tax rate to pre-tax income as follows: 2020 2019 Benefit at Federal Statutory rates $ (3,183,958 ) $ (1,397,881 ) Permanent adjustments (847,531 ) 406,674 State tax, net of Federal benefit (582,572 ) (15,086 ) Change in Federal rate from 34% to 21% - - Federal and deferred true-ups (393,702 ) (175,845 ) Uncertain tax positions - NOLS (10,753,384 ) 10,753,384 Change in valuation allowance 15,804,459 (9,554,839 ) Income tax provision $ 43,312 $ 16,407 The Company is subject to federal, state and local corporate income taxes. The components of the provision for income taxes reflected on the consolidated statements of operations are set forth below: 2020 2019 Current taxes: U.S. federal $ - $ - State and local 43,312 16,407 Total current tax expense $ 43,312 $ 16,407 Deferred taxes: U.S. federal $ - $ - State and local - - Total deferred tax expense (benefit) $ - $ - Total tax provision $ 43,312 $ 16,407 Differences in terms of percentages are as follows: 2020 2019 Benefit at Federal Statutory rates -21.0 % -21.0 % Permanent adjustments -5.6 % 6.1 % State tax, net of Federal benefit -3.8 % -0.2 % Change in Federal rate from 34% to 21% 0.0 % 0.0 % Federal True-ups -2.6 % -2.6 % Uncertain tax positions- NOLS -70.9 % 161.5 % Change in valuation allowance 104.2 % -143.5 % Income tax provision 0.3 % 0.3 % At February 2, 2020 and February 3, 2019, the Company has net operating loss carryforwards available for federal income tax purposes of approximately $59,311,000 and $45,190,000, respectively, which are scheduled to expire in varying amounts from fiscal 2027 to fiscal 2037. In addition, the Company has approximately $42,618,000 and $35,674,000 of state net operating loss carryforwards as of February 2, 2020 and February 3, 2019, respectively. In fiscal year February 2, 2020 a reserve has been released that was previously recorded against the net operating losses in accordance with ASC 740-10 due to a Private Letter Ruling ("PLR") that was issued by the IRS. The PLR approved the late filing of Form 8832, "Entity Classification Election". Due to the filing of this form, the Company believes that the Federal and State NOLs will be available for future utilization. The reserves were recorded against the net operating losses as of the fiscal year ended February 3, 2019. As defined in Section 382 of the Internal Revenue Code, certain ownership changes limit the annual utilization of federal net operating losses. As a result of issuance, sales and other transactions involving the Company's stock, the Company experienced an ownership change during fiscal years ended January 31, 2011 and February 3, 2019 which have caused such federal net operating losses to be subject to limitation under Section 382. The annual limitation varies between $302,000 and $5,888,000. There is no impact on the overall provision limited since the Company has a full valuation allowance against its deferred tax assets. During fiscal year ending February 2, 2020 and February 3, 2019, the Company increased/(decreased) the valuation allowance by approximately $15,804,000 and ($9,555,000) respectively. The changes in the amount of unrecognized tax benefits in the Fiscal years ending February 2, 2020 and February 3, 2019 were as follows: 2020 2019 Beginning balance $ 10,753,384 $ - Additions for tax positions acquired - - Additions for tax positions related to current year - 10,753,284 Tax positions of prior years: Payments - - Settlements - - Release (10,753,384 ) - Ending balance $ - $ 10,753,284 The Company adopted FAS Accounting Standard 2013-11. The pronouncement requires the Company to offset its uncertain tax positions against certain deferred tax assets in the same jurisdiction. As of February 2, 2020 the Company has released the uncertain tax position of $10,753,384 and has reversed the netting of its uncertain tax positions against its related deferred tax assets. |
Commitments, Contingencies and
Commitments, Contingencies and Related Parties | 12 Months Ended |
Feb. 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND RELATED PARTIES | NOTE 6 - COMMITMENTS, CONTINGENCIES AND RELATED PARTIES OPERATING LEASE COMMITMENTS The Company leases its office, warehouse facilities and retail showrooms under operating lease agreements which expire at various dates through November 2027. Monthly payments related to these leases range from $2,500 to $45,600. Total rent expense including common area maintenance charges sales percentage rent and deferred rent expense was $19,676,958 in fiscal 2020 and $16,245,590 in fiscal 2019. Expected future annual minimum rental payments under these leases follow: 2021 $ 11,169,268 2022 10,197,116 2023 9,653,986 2024 9,350,604 2025 8,332,926 Thereafter 19,932,967 $ 68,636,867 The above disclosure includes lease extensions for various retail showrooms the Company entered into after year end. SEVERANCE CONTINGENCY The Company has various employment agreements with its senior level executives. A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $3,670,533 at February 2, 2020 if all executives with employment agreements were terminated without cause and the full amount of severance was payable. RELATED PARTIES Mistral performs management services for the Company under a contractual agreement. Management fees totaled approximately $400,000 in both fiscal 2020 and in fiscal 2019 and are included in selling, general and administrative expenses. There was $2,000 payable to Mistral as of February 2, 2020 and no amounts payable to Mistral as of February 3, 2019. The amounts payable to Mistral as of February 2, 2020 are included in accrued liabilities in the accompanying consolidated balance sheet. In addition, the Company reimbursed Mistral for expenses incurred in the amount of $44,140 and $55,015 for out of pocket expenses for fiscal 2020 and fiscal 2019, respectively. Transaction fees related to the IPO were $500,000 in fiscal 2019 and are included in selling, general and administrative expenses. There were no such transactions fees related to the IPO for fiscal 2020. Satori Capital, LLC ("Satori"), an affiliate of two stockholders of the Company since April 2017, performs management services for the Company under a contractual agreement. Management fees totaled approximately $100,000 in both fiscal 2020 and fiscal 2019 and are included in selling, general and administrative expenses. Amounts payable to Satori as of February 2, 2020 were $95,000 consisting of $25,000 in management fees and $70,000 of reimbursable expenses which were included in accounts payable and accrued liabilities in the accompanying consolidated balance sheet as of February 2, 2020, respectively. A one-time stock bonus of 50,000 shares of common stock at $14.83 per share, or $741,500, is included in equity-based compensation on the accompanying consolidated statement of changes in stockholders' equity and issued on June 22, 2018. The bonus was issued to Satori in three installments; two equal installments of 5,000 shares of common stock in August 2018 and September 2018 and the remainder of the shares were issued in October 2018. All fees and the stock bonus are included in selling, general and administrative expenses in the accompanying condensed statements of operations. There were no amounts payable to Satori as of February 3, 2019. In addition, the Company reimbursed Satori for expenses incurred in the amount of $70,000 and $0 for out of pocket expenses for fiscal 2020 and fiscal 2019, respectively. Transaction fees related to the IPO were $125,000 fiscal 2019 and are included in selling, general and administrative expenses. There were no such transactions fees related to the IPO for fiscal 2020. The Company engaged Blueport Commerce ("Blueport"), a company owned in part by investment vehicles affiliated with Mistral and an affiliate of Schottenstein Stores Corporation, an indirect investor in SAC Acquisition LLC, our largest shareholder, to evaluate a transition plan to convert to the Blueport platform. Certain directors are members and principals of Mistral or employees of Schottenstein Stores Corporation. The Company launched the Blueport platform in February 2018. There were $1,833,154 and $1,153,844 of fees incurred with Blueport sales transacted through the Commerce platform and on the conversion of the Commerce platform during fiscal 2020 and fiscal 2019, respectively. Amounts payable to Blueport as of February 2, 2020 and February 3, 2019 were $150,508 and $93,211, respectively, and are included in accounts payable in the accompanying consolidated balance sheets. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Feb. 02, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 7 - STOCKHOLDERS' EQUITY On June 22, 2018, the board of directors of the Company approved a 1-for-2.5 reverse stock split of the Company's shares of common stock. The reverse stock split became effective immediately prior to the closing of its initial public offering ("IPO"). All stock amounts included in these financial statements have been adjusted to reflect this reverse stock split. On June 27, 2018, the Company completed its IPO, selling 4,025,000 shares of common stock at a price of $16.00 per share. Net proceeds to the Company from the offering was approximately $59.2 million after legal and underwriting expenses. On October 29, 2018, certain selling stockholders conducted a secondary offering of 2,220,000 shares of common stock of the Company. The Company did not sell any shares or receive any proceeds from the sale of the common stock by the selling stockholders. PREFERRED STOCK In fiscal 2018, the Company completed financing transactions with funds and investment vehicles advised by Mistral, Satori, executive management and third-party investors. As part of the transactions, the Company received $21,139,845 in cash (net of issuance costs of $1,325,156) in exchange for a total of 899 Series A, A-1 and A-2 Preferred Units (preferred stock equivalent of 898,600 shares) and warrants to purchase 798,975 shares of common stock, subject to adjustments in the exercise price. The preferred stock carried an annual dividend of 8% compounded and conversion rights dependent upon certain events occurring. In order to eliminate all outstanding preferred stock upon completion of the IPO, on April 19, 2018, the Company and the majority holders of each of the Series A Preferred Stock, the Series A-1 Preferred Stock and the Series A-2 Preferred Stock agreed to amend and restate each series of preferred stock to, among other things, revise the conversion features of the preferred stock to provide that, immediately prior to the closing of an initial public offering, the preferred stock: (1) will accrue an additional amount of dividends equal to the amount of dividends that would have accrued and accumulated through and including the one-year anniversary of the completion of the initial public offering, (2) will, along with the aggregate accrued or accumulated and unpaid dividends thereon, automatically convert into shares of common stock at a price per share equal to the lesser of (a) 70% of the offering price, or (b) the applicable calculation set forth pursuant to the terms of their respective certificates of designation. All outstanding preferred stock totaling $25,645,000, including the additional year of dividends of $2,037,200 and accumulated dividends at 8% through June 29, 2018 of $2,495,704 was converted into 3,287,441 shares of common stock upon completion of the Company's IPO on June 29, 2018. The preferred stock converted to common stock at $9.13 per share resulting in a deemed dividend of $22,601,161 related to the conversion. COMMON STOCK WARRANTS In fiscal 2018, the Company completed financing transactions with funds and investment vehicles advised by Mistral, Satori, and executive management in which the Company originally issued 930,054 warrants to purchase common stock subject to adjustments in the exercise price as defined below. In consideration for agreeing to amend the outstanding preferred stock to automatically convert immediately prior to the completion of the IPO, on April 19, 2018, the Company and a majority of the holders of the warrants issued along with the preferred stock, agreed to amend and restate the warrants to replace the aggregate dollar value of each warrant with a fixed number of warrant shares. In order to prevent dilution of the purchase rights granted under the warrants, the exercise price was calculated based on certain factors described in the amendment. On April 19, 2018, the above warrants were modified, and the Company updated the fair value of the warrants using the assumptions detailed below using a probability-weighted expected return. As the total fair value of the modified warrants was less than the total fair value of the original warrants, there was no financial statement impact on April 19, 2018. The modification resulted in the cancellation of the 930,054 warrants and the reissuance of 798,975 warrants. On June 29, 2018, the Company completed a Qualified IPO and the exercise price was adjusted to equal the purchase price per share of common stock of $16.00. The Company computed the value of the warrants with the updated assumptions using the Black-Scholes Model, as described below, and recorded the difference between the fair value of the new warrants compared to the old warrants as a deemed dividend of $1,498,079. There were 281,750 warrants, with a five-year term, issued to Roth Capital Partners, LLC as part of the underwriting agreement in connection with the Company's IPO. These warrants were valued using the Black-Scholes model, and remain outstanding as of February 2, 2020. In the third quarter of fiscal 2019, the Company amended and restated warrants totaling 56,077 with a three-year term, valued using the Black-Scholes model. The Company recorded the difference between the fair value of the new warrants compared to the old warrants as a deemed dividend of $408,919. These warrants were exercised in September 2018. In fiscal 2020, the Company issued 18,166 warrants to a third party in connection with previous equity raise. These warrants were valued using the Black-Scholes model, with similar assumptions to the June 2018 warrants. The warrants had a fair value of approximately $130,000. Of these warrants, 17,396 were exercised on May 14, 2019. The warrants may be exercised at any time following the date of issuance during the period prior to their expiration date. The fair value of each warrant is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on comparable Companies' historical volatility, with consideration of the Company's volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current circumstances. The risk-free rate is based on the U.S. treasury yield in effect at the time of the grant. April June June September May Warrants 798,795 798,795 281,750 56,077 18,166 Expected volatility 41.4% - 43.7 % 42.0 % 41 % 44 % 44 % Expected dividend yield 0 % 0 % 0 % 0 % 0 % Expected term (in years) 3.10 3.00 5.00 3.00 3.00 Risk-free interest rate 1.7% - 2.0 % 2.6 % 2.7 % 2.69 % 2.69 % Exercise price $ 14.80 $ 16.00 $ 19.20 $ 9.13 $ 16.00 Calculated fair value of warrant $ 3.12 $ 5.00 $ 8.84 $ 12.87 $ 7.16 The following represents warrant activity during fiscal 2020 and fiscal 2019: Average Number of Weighted Warrants outstanding at February 4, 2018 $ 17.18 930,054 3.24 Warrants issued 18.56 1,136,802 3.65 Expired and canceled 17.18 (930,054 ) (3.20 ) Exercised 10.44 (69,327 ) (2.68 ) Warrants Outstanding at February 3, 2019 16.83 1,067,475 2.93 Warrants issued 16.00 18,166 2.40 Expired and canceled - - - Exercised 16.00 (46,521 ) (2.15 ) Outstanding at February 2, 2020 $ 16.83 1,039,120 $ 1.93 The majority of the 46,521 warrants exercised in fiscal 2020 were cashless, whereby the holders received less shares of common stock in lieu of a cash payment the Company, which resulted in the issuance of 27,246 common shares. EQUITY INCENTIVE PLANS The Company adopted the 2017 Equity Incentive Plan (the "Plan") which provides for Awards in the form of Options, Stock Appreciation rights, Restricted Stock Awards, Restricted Stock Units, Performance shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards. All awards shall be granted within 10 years from the effective date of the Plan. In April 2018, the board of directors of the Company approved an increase in shares of common stock reserved for issuance under the Plan from 420,000 to 604,612 shares of common stock. On May 10, 2018, the Board of Directors approved an increase in shares of common stock reserved for issuance under the Plan from 604,612 to 615,066 shares of common stock. On June 5, 2019, the stockholders approved an amendment and restatement of the Plan that among other things increased the number of shares of common stock reserved for issuance under the Plan from 615,066 to 1,414,889 share of common stock. In June 2019, the Company granted 495,366 Non statutory Stock options to certain officers of the Company with an option price of $38.10 per share. 100% of the stock options are subject to vesting on the first trading day after the date on which the closing price of the Company's stock price has been at least $75 for 60 consecutive trading days so long as this goal has been attained by June 5, 2022 or the options will terminate. These options were valued using a Monte Carlo simulation model to account for the path dependent market conditions that stipulate when and whether or not the options shall vest. In December 2019, SAC LLC distributed the shares of the Company's common stock it held. In connection with the distribution officers of the Company agreed to exchange and modify options that were held at SAC LLC for shares of vested common stock of the Company. Pursuant to the exchange SAC LLC transferred 175,478 shares of common stock to the Company and the Company immediately cancelled these shares. The Company then issued to the former option holders the number of those shares pursuant to the Plan and withheld 73,507 shares to satisfy taxes associated with the issuance. A summary of the status of our stock options February 2, 2020, and the changes during fiscal 2020 is presented below: For the year ended February 2, 2020 Number of Weighted Weighted Average Outstanding at February 3, 2019 - $ - Granted 495,366 38.10 Exercised - - Canceled and forfeited - - Expired and canceled - - Vested - - Outstanding at February 2, 2020 495,366 $ 38.10 2.34 - Exercisable at the end of the period - - - - A summary of the status of our unvested restricted stock units as of February 2, 2020 and February 3, 2019, and changes during fiscal years then ended, is presented below: Number of Weighted Unvested at February 4, 2018 193,500 $ 10.83 Granted 330,799 14.76 Forfeited (4,629 ) 14.83 Vested (142,384 ) 13.62 Unvested at February 3, 2019 377,286 11.16 Granted 130,898 23.63 Forfeited (20,470 ) 16.21 Vested (304,661 ) 12.75 Unvested at February 2, 2020 183,053 $ 21.34 Equity based compensation expense was approximately $4.9 million and $3.3 million and for fiscal 2020 and fiscal 2019, respectively. In fiscal 2020, all the unvested restricted stock units for certain senior executives of the Company that were granted prior the accelerated vesting trigger, vested according to the accelerated vesting trigger in their restricted stock unit agreements. The triggering event was the market capitalization of the Company post IPO, exceeding $300 million for 60 consecutive trading days and the expiration of the lockup- period. This accelerated vesting resulted in equity-based compensation in the amount of $2.9 million. In December 2019, the exchange and modification of options that were held at SAC LLC resulted in approximately $313,000 of equity based compensation expense. The total unrecognized restricted stock unit compensation cost related to non-vested awards was $4,393,453 as of February 2, 2020 and will be recognized in operations over a weighted average period of 2.3 years. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Feb. 02, 2020 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | NOTE 8 - EMPLOYEE BENEFIT PLAN In February 2017, the Company established The Lovesac Company 401(k) Plan (the "401(k) Plan") with Elective Deferrals beginning May 1, 2017. The 401(k) Plan calls for Elective Deferral Contributions, Safe Harbor Matching Contributions and Profit Sharing Contributions. All employees of the Company will be eligible to participate in the 401(k) Plan as of the day of the month which is coincident with or next follows the date on which they attain age 21 and complete 1 month of service. Participants will be able to contribute up to 100% of their eligible Compensation to the plan subject to limitations with the IRS. The employer contributions to the 401(k) Plan for fiscal 2020 and 2019 were approximately $406,000 and $303,000, respectively. |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Feb. 02, 2020 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | NOTE 9 - FINANCING ARRANGEMENTS CREDIT LINES The Company had a line of credit with Siena Lending Group, LLC to borrow up to $7.0 million, which matured on May 14, 2018. Borrowings were limited to the lesser of 75% of inventory or 85% of the net orderly liquidation value of inventory and may be reduced by certain liabilities of the Company. All amounts outstanding bore interest at the base rate, defined as the greatest of (i) Prime Rate published by The Wall Street Journal, (ii) Federal Funds Rate plus 0.5% or (iii) 3.25%, plus 3% (7.00% at February 4, 2018). The line was subject to a monthly unused line fee of .75%. The agreement was secured by the first lien on substantially all assets of the Company. In February 2018, the Company paid the outstanding loan balance of $405, an early termination fee of $70,000 and fully amortized the remaining deferred financing fees of $48,149 on its line of credit with Siena Lending Group, LLC. On February 6, 2018, the Company established a line of credit with Wells Fargo Bank, National Association ("Wells"). The line of credit with Wells allows the Company to borrow up to $25.0 million and will mature in February 2023. Borrowings are limited to 90% of eligible credit card receivables plus 85% of eligible wholesale receivables plus 85% of the net recovery percentage for the eligible inventory multiplied by the value of such eligible inventory of the Company for the period from December 16 of each year until October 14 of the immediately following year, with a seasonal increase to 90% of the net recovery percentage for the period from October 15 of each year until December 15 of such year, seasonal advance rate, minus applicable reserves established by Wells. As of February 2, 2020, the Company's borrowing availability under the line of credit with Wells Fargo was $12.5 million. As of February 2, 2020, there was no outstanding balance on this line of credit. Under the line of credit with Wells, the Company may elect that revolving loans bear interest at a rate per annum equal to the base rate plus the applicable margin or the LIBOR rate plus the applicable margin. The applicable margin is based on tier's relating to the quarterly average excess availability. The tiers range from 2.00% to 2.25%. The loan agreement calls for certain covenants including a timing of the financial statements threshold and a minimum excess availability threshold. On May 3, 2018, the Company elected a one-month revolving loan with a maturity date of June 4, 2018, that bears interest at the LIBOR rate plus the applicable margin for an all-in-rate of 3.1875%. The one-month revolving loan matured and was paid in full on June 4, 2018. |
Segment Information
Segment Information | 12 Months Ended |
Feb. 02, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 10 - SEGMENT INFORMATION The Company operates within a single reporting segment. The chief operating decision makers of the Company are the Chief Executive Officer and President. The Company's operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of total sales. The Company's sales by product which are considered one segment are as follows: Fiscal year ending February 2, February 3, Sactionals $ 188,436,976 $ 120,205,061 Sacs 39,640,676 41,174,831 Other 5,299,727 4,501,405 $ 233,377,379 $ 165,881,297 |
Barter Arrangements
Barter Arrangements | 12 Months Ended |
Feb. 02, 2020 | |
Barter Arrangements [Abstract] | |
BARTER ARRANGEMENTS | NOTE 11 - BARTER ARRANGEMENTS In fiscal 2018, the Company entered into a bartering arrangement with Icon International, Inc., a vendor, whereas the Company will provide inventory in exchange for media credits. During fiscal 2018, the Company exchanged $577,326 of inventory plus the cost of freight for certain media credits. To account for the exchange, the Company recorded the transfer of the inventory asset as a reduction of inventory and an increase to a prepaid media asset of $534,407 which is included in "Prepaid and other current assets" on the accompanying consolidated balance sheet. The Company had $307,417 of unused media credits remaining as of February 4, 2018 that were used in full during fiscal 2019. During fiscal 2020, the Company exchanged $1,097,488 of inventory plus the cost of freight for certain media credits. To account for the exchange, the Company recorded the transfer of the inventory asset as a reduction of inventory and an increase to a prepaid media asset of $1,055,185 which is included in "Prepaid and other current assets" on the accompanying consolidated balance sheet. The Company had $374,423 of unused media credits remaining as of February 2, 2020. The Company accounts for barter transactions under ASC Topic No. 845 "Nonmonetary Transactions." Barter transactions with commercial substance are recorded at the estimated fair value of the products exchanged, unless the products received have a more readily determinable estimated fair value. Revenue associated with barter transactions is recorded at the time of the exchange of the related assets. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Feb. 02, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 - SUBSEQUENT EVENTS The Company has evaluated events and transactions subsequent to February 2, 2020 through the date the consolidated financial statements were issued. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, and, in the following weeks, many U.S. states and localities issued lockdown orders impacting consumer demand and resulting in the closing of all of the Company's showrooms. Since then, the COVID-19 situation within the U.S. has rapidly escalated. On April 1, 2020, the Company announced that all showroom locations will remain closed until further notice. The Company will follow the guidance of local, state and federal governments, as well as health organizations, to determine when the Company can safely reopen its showrooms. Additionally, the Company implemented a reduction in workforce of approximately 445 part time employees (representing 57% of our total headcount) as well as a temporary reduction in executive cash compensation. Cash compensation was reduced by 20% for Shawn Nelson, Chief Executive Officer, Jack Krause, President and Chief Operating Officer, and Donna Dellomo, Executive Vice President and Chief Financial Officer. The base salaries of all other senior management and full-time headquarter team members has been temporarily reduced by graduated amounts. Our Board of Directors has also agreed to a temporary reduction of its retainer and monitoring fees and an extension of the associated payment timeline. The Company continues to monitor the situation closely and it is possible that the Company will implement further measures to provide additional financial flexibility as it works work to protect its cash position and liquidity. |
Operations and Significant Ac_2
Operations and Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. |
FISCAL YEAR | FISCAL YEAR The Company's fiscal year is determined on a 52/53 week basis ending on the Sunday closest to January 31st. Hereinafter, the periods from February 4, 2019 through February 2, 2020 and February 5, 2018, through February 3, 2019 are referred to as fiscal 2020 and fiscal 2019, respectively. Both fiscal 2020 and fiscal 2019 were a 52 week fiscal year. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of the revisions are reflected in the period the change is determined. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company implemented ASU 2015-04, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606, "ASC 606"), in the first quarter of fiscal 2020 using modified retrospective method, which required the company to apply the new guidance retrospectively to revenue transactions completed on or after the effective date. Adopting this new standard had no material financial impact on our condensed consolidated financial statements but did result in enhanced presentation and disclosures. Our revenue consists substantially of product sales. The Company reports product sales net of discounts and recognize them at the point in time when control transfers to the customer, which occurs when shipment is confirmed. Estimated refunds for returns and allowances are recorded using our historical return patterns, adjusting for any changes in returns policies. The Company records estimated refunds for net sales returns on a monthly basis as a reduction of net sales and cost of sales on the statement of operations and an increase in inventory and customers returns liability on the balance sheet. As of February 2, 2020, there was a returns allowance recorded on the balance sheet in the amount $2,177,715 which was in accrued expenses and $442,390 associated with sales returns in merchandise inventories. In some cases, deposits are received before the company transfers control, resulting in contract liabilities. These contract liabilities are reported as deposits on the Company's balance sheet. As of February 2, 2020, and February 3, 2019, the Company recorded under customer deposit liabilities the amount of $1,653,597 and $1,059,957 respectively. During fiscal year ended February 2, 2020, the Company recognized $1,059,957 related to its customer deposits from fiscal 2019. Upon adoption of ASC 606, the Company has elected the following accounting policies and practical expedients: The Company recognizes shipping and handling expense as fulfilment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, the Company records the expenses for shipping and handling activities at the same time the Company recognizes revenue. The Company excludes from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue- producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). The Company does not adjust revenue for the effects of any financing components if the contract has a duration of one year or less, as the Company receives payment from the customer within one year from when it transferred control of the related goods. The Company offers its products through an inventory lean omni-channel platform that provides a seamless and meaningful experience to its customers in showrooms and through the internet. The other channel predominantly represents sales through the use of pop-up shops that typically average ten days at a time and are staffed with associates trained to demonstrate and sell our product. The following represents sales disaggregated by channel: For the fiscal years ended February 2, February 3, Showrooms $ 148,003,995 $ 113,105,029 Internet 55,781,186 33,024,079 Other 29,592,198 19,752,189 Total net sales $ 233,377,379 $ 165,881,297 The Company has no foreign operations and its sales to foreign countries was less than .05% of total net sales in both fiscal 2020 and 2019. The Company had no customers in fiscal 2020 or 2019 that comprise more than 10% of total net sales. See Note 10 for sales disaggregated by product . |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity at purchase of three months or less to be cash equivalents. The Company has deposits with financial institutions that maintain Federal Deposit Insurance Corporation "FDIC" deposit insurance up to $250,000 per depositor. The portion of the deposit in excess of this limit represents a credit risk to the Company. Due to the high cash balance maintained by the Company, the Company does maintain depository balances in excess of the insured amounts. |
TRADE ACCOUNTS RECEIVABLE | TRADE ACCOUNTS RECEIVABLE Trade accounts receivable are carried at their estimated realizable amount and do not bear interest. Management determines the allowance for doubtful accounts by regularly evaluating individual customer accounts, considering the customer's financial condition, and credit history, and general and industry current economic conditions. Trade accounts receivable are reserved for when deemed uncollectible. Recoveries of amounts previously written off are recorded when received. Historically, collection losses have been immaterial as a significant portion of the Company's receivables are related to individual credit card transactions and one wholesale customer for which the Company has no history of collection losses. Management has concluded that an allowance was not necessary at February 2, 2020 and February 3, 2019, respectively. Breakdown of accounts receivable is as follows: As of As of Credit card receivables $ 1,073,855 $ 838,373 Wholesale receivables 4,724,154 2,850,000 Other receivables 1,390,916 266,751 $ 7,188,925 $ 3,955,124 The Company has one wholesale customer that comprised approximately 97% and 100% of wholesale receivables at February 2, 2020 and February 3, 2019, respectively. |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS The Company recognizes payments made for goods and services to be received in the near future as prepaid expenses and other current assets. Prepaid expenses and other current assets consist primarily of payments related to insurance premiums, catalogue costs, barter credits, deposits, prepaid rent, prepaid inventory, and other costs. |
MERCHANDISE INVENTORIES | MERCHANDISE INVENTORIES Merchandise inventories are comprised of finished goods which are carried at the lower of cost or net realizable value. Cost is determined on a weighted-average method basis. Merchandise inventories consist primarily of foam filled furniture, sectional couches, and related accessories. The Company adjusts its inventory for obsolescence based on historical trends, aging reports, specific identification and its estimates of future retail sales prices. In addition, the Company includes capitalized freight and warehousing costs in inventory relative to the finished goods in inventory. |
GIFT CERTIFICATES AND MERCHANDISE CREDITS | GIFT CERTIFICATES AND MERCHANDISE CREDITS The Company sells gift certificates and issues merchandise credits to its customers in the showrooms and through its website. Revenue associated with gift certificates and merchandise credits is deferred until redemption of the gift certificate and merchandise credits. The Company did not recognize any breakage revenue in fiscal 2020 or fiscal 2019 as the Company continues to honor all outstanding gift certificates. |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment are stated at cost less accumulated depreciation and amortization. Office and showroom furniture and equipment, software and vehicles are depreciated using the straight-line method over their estimated useful lives. Leasehold improvements are amortized using the straight-line method over their expected useful lives or lease term, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation or amortization is removed from the accounts, and any resulting gain or loss is reflected in operations for the period. Expenditures for major betterments that extend the useful lives of property and equipment are capitalized. |
GOODWILL | GOODWILL Goodwill represents the excess of the purchase price over the fair value of the identified net assets of each business acquired. Goodwill and other indefinite-lived intangible assets are tested annually for impairment in the fourth fiscal quarter and in interim periods if certain events occur indicating that the carrying amounts may be impaired. If a qualitative assessment is used and the Company determines that the fair value of a reporting unit or indefinite-lived intangible asset is more likely than not (i.e., a likelihood of more than 50%) less than its carrying amount, a quantitative impairment test will be performed. If goodwill is quantitatively assessed for impairment, a two-step approach is applied. In the first step, the Company compares the fair value of the reporting unit, generally defined as the same level as or one level below an operating segment, to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is considered not impaired and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the second step of the impairment test must be performed in order to determine the implied fair value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then an impairment loss equal to the difference would be recorded. There were no impairments during either fiscal 2020 or 2019. The fair value of the Company's reporting unit is determined by using a discounted cash flow analysis. The determination of fair value requires assumptions and estimates of many critical factors, including among others, the nature and history of the Company, financial and economic conditions affecting the Company, the industry and the general economy, past results, current operations and future prospects, sales of similar businesses or capital stock of publicly held similar businesses, as well as prices, terms and conditions affecting past sales of similar businesses. Forecasts of future operations are based, in part, on operating results and management's expectations as to future market conditions. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgments to estimate industry economic factors and the profitability of future business strategies. However, if actual results are not consistent with the Company's estimates and assumptions, there may be exposure to future impairment losses that could be material. |
PATENTS AND LICENSES | PATENTS AND LICENSES Patents and licenses are recorded at cost and amortized on a straight-line basis over the estimated remaining life of the patent or license. Ongoing maintenance costs are expensed as incurred. |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets with finite useful lives, including a vendor relationship, and patents and trade names, are being amortized on a straight-line basis over their estimated lives. Other intangible assets with finite useful lives are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the asset might not be recovered. If the estimates of the useful lives should change, the Company will amortize the remaining book value over the remaining useful life, or it is deemed to be impaired a write-down of the value of the asset may be required at such time. There were no impairments during either fiscal 2020 or 2019. |
DEFERRED FINANCING COSTS | DEFERRED FINANCING COSTS The Company's financing costs are capitalized and amortized over the life of the related financing. The financing costs are treated as debt discounts with the exception of revolving lines of credit. Previously acquired debt discounts were amortized over the life of the loans as interest expense. The debt discounts were fully amortized in fiscal 2019. In 2019, the Company paid $292,095 in connection with the renegotiated terms of its line of credit. The Company amortized to interest expense $73,024 in 2020 and $121,173 in 2019 of financing costs. |
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS The Company's long-lived assets consist of property and equipment, which includes leasehold improvements, and other intangible assets. Long-lived assets are reviewed for potential impairment at such time that events or changes in circumstances indicate that the carrying amount of an asset might not be recovered. The Company evaluates property and equipment for impairment at the individual showroom level, which is the lowest level at which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, the Company will first compare the carrying amount of the assets to the future undiscounted cash flows for the respective long-lived asset. If the estimated future cash flows are less than the carrying amounts of the assets, an impairment loss calculation is prepared. An impairment loss is measured based upon the excess of the carrying value of the asset over its estimated fair value which is generally based on an estimated future discounted cash flow. If required, an impairment loss is recorded for that portion of the asset's carrying value in excess of fair value. There were no impairments of long-lived assets during fiscal 2020 or 2019. |
ADVERTISING AND CATALOG COSTS | ADVERTISING AND CATALOG COSTS The Company capitalizes direct response advertising costs, which consist primarily of catalog production and mailing costs, and recognizes expense over the related revenue stream if the following conditions are met (1) the primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising, and (2) the direct-response advertising results in probable and estimable future benefits. For fiscal years 2020 and 2019 the Company did not have any capitalized deferred direct-response television, postcard and catalogue costs. Direct-response advertising costs, which are included in prepaid expenses and other current assets, are amortized commencing the date the catalogs and post cards are mailed and the television commercial airs through the estimated period of time for the Company has determined the related advertising impacts sales. There was no balance as of February 2, 2020 or February 3, 2019. Advertising costs not associated with direct-response advertising are expensed as incurred and were $29,194,289 in 2020 and $18,363,491 in 2019. |
SHOWROOM PREOPENING AND CLOSING COSTS | SHOWROOM PREOPENING AND CLOSING COSTS Non-capital expenditures incurred in preparation for opening new retail showrooms are expensed as incurred and included in selling, general and administrative expenses. The Company continually evaluates the profitability of its showrooms. When the Company closes or relocates a showroom, the Company incurs unrecoverable costs, including the net book value of abandoned fixtures and leasehold improvements, lease termination payments, costs to transfer inventory and usable fixtures and other costs of vacating the leased location. Such costs are expensed as incurred and are included in selling, general and administrative expenses. |
PRODUCT WARRANTY | PRODUCT WARRANTY Depending on the type of merchandise, the Company offers either a three year limited warranty or a lifetime warranty. The Company's warranties require it to repair or replace defective products at no cost to the customer. At the time product revenue is recognized, the Company reserves for estimated future costs that may be incurred under its warranties based on historical experience. The Company periodically reviews the adequacy of its recorded warranty liability. Product warranty expense was approximately $933,000 in fiscal 2020 and $414,000 in fiscal 2019. Warranty reserve was $1,180,000 in fiscal 2020 and $212,000 in fiscal 2019. |
OPERATING LEASES | OPERATING LEASES Minimum operating lease expenses are recognized on a straight-line basis over the terms of the leases. Tenant allowances are recorded as a receivable when lease is executed. The corresponding liability is recorded and amortized over the term of the lease. The amortization of the liability is a reduction of rent expense over the term of the lease. Our operating leases contain provisions for certain incentives. Incentives are deferred and are amortized over the underlying lease term on a straight-line basis as a reduction to rent expense. When the terms or the Company's leases provide for free rent, concessions and/or escalations, the Company establishes a deferred rent liability or asset for the difference of the scheduled rent payments and a straight line rent expense. This liability or asset increases or decreases depending on where the Company is at any given time in the life of the lease. Percentage rent is not subject to straight-line of expense and is expensed as incurred. |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The carrying amount of the Company's financial instruments classified as current assets and current liabilities approximate fair values based on the short term nature of the accounts. |
EQUITY BASED COMPENSATION | EQUITY BASED COMPENSATION The Company's 2017 Equity Incentive Plan provides for awards in the form of options, stock appreciation rights, restricted stock awards, restricted stock, performance shares, cash-based awards and other stock-based awards. The plan allows for the issuance of up to 1,414,889 shares at February 2, 2020 and 615,066 at February 3, 2019. All awards shall be granted within 10 years from the effective date of the plan. The unit vesting was based on both time and performance. See Note 7 for additional disclosure. |
SHIPPING AND HANDLING | SHIPPING AND HANDLING Shipping and handling charges billed to customers are included in revenue. Shipping and handling costs incurred are included in cost of merchandise sold. Shipping and handling costs were $47,148,918 in fiscal 2020 and $25,132,736 in fiscal 2019. |
INCOME TAXES | INCOME TAXES The Company accounts for uncertainty in income taxes using a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes. In connection with the 2017 reorganization, the intent was that the net operating losses (NOLs) of SAC Acquisition, LLC, a limited liability company that had been historically treated as a C-corporation for federal and state income tax purposes, were to be inherited by the Company. The Company filed a request for a private letter ruling requesting additional time to make a check the box election pursuant to Treas. Reg. 301.7701-3. In PLR-109713-19 dated October 22, 2019 the Company was granted an extension of time of 120 days to file form 8832 "Entity Classification Election." The completed Form 8832 was filed with The IRS on November 11, 2019. The Company has maintained the position that the NOLs were inherited from SAC Acquisition in the 2017 reorganization and consistently maintained a full valuation allowance against its NOLs as they were part of deferred income tax assets not likely to be realized. Accordingly, the resolution of the uncertain tax position regarding the Company's NOL carry forward during the year did not have an impact on the Company's financial position or results of operations. As of February 3, 2019 there are NOLs of approximately $10.8 million identified as an uncertain tax position. As of February 2, 2020, there were no uncertain tax positions. See Note 5 for additional disclosures. Deferred income taxes are provided on temporary differences between the income tax bases of assets and liabilities and the amounts reported in the financial statements and on net operating loss and tax credit carry forwards. A valuation allowance is provided for that portion of deferred income tax assets not likely to be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
BASIC AND DILUTED NET LOSS PER SHARE | BASIC AND DILUTED NET LOSS PER SHARE Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. As a result of the Company's net loss for both years presented, potentially dilutive securities were excluded from the computation of diluted loss per share, as their effect would be anti-dilutive. Potentially dilutive securities include unvested restricted stock units in the amounts of 183,053 and 377,286 for fiscal 2020 and 2019, respectively, common stock warrants outstanding of 1,039,120 and 1,067,475 for fiscal 2020 and 2019, respectively and stock options of 495,366 for fiscal 2020. For fiscal 2020, the warrants and the options have an exercise price that exceeds the market price. Basic and diluted net loss per common share is computed as follows: For the year ended For the year ended Numerator: Net loss - Basic and diluted $ (15,205,019 ) $ (6,704,356 ) Preferred dividends and deemed dividends - (27,832,998 ) Net loss attributable to common shares (15,205,019 ) (34,537,354 ) Denominator: Weighted average number of common shares for basic and diluted net loss per share 14,260,395 10,536,721 Basic and diluted net loss per share $ (1.07 ) $ (3.28 ) |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS Except as described below, the Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. The Company, as an emerging growth company, has elected to use the extended transition period for complying with new or revised financial accounting standards. The following new accounting pronouncements were adopted in fiscal 2020: In August 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2015-14, which defers the effective date of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) by one year. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. As a result, ASU 2015-14 is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, which for the Company is fiscal 2020. The Company reviewed substantially all of its contracts and other revenue streams and determined that while the application of the new standard did not have a material change in the amount of or timing for recognizing revenue, it did have a significant impact on our financial statement disclosures which are further discussed in Note 1 - Revenue Recognition. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments, which eliminates the diversity in practice related to classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company adopted the guidance retrospectively effective February 4, 2019, which did not have a material effect on the Company's condensed consolidated financial position and results of operations. The following new accounting pronouncements, and related impacts on adoption are being evaluated by the Company: In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) amending lease guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2019-10 extended the effective date to fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company will adopt this standard beginning with our fiscal 2022. Management has evaluated the impact ASU No. 2016-02 will have on these condensed consolidated financial statements. Based on the initial evaluation, the Company has determined that adopting this standard will have a material impact on our condensed consolidated balance sheet as the Company has a significant number of operating leases. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting |
Operations and Significant Ac_3
Operations and Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of net sales | For the fiscal years ended February 2, February 3, Showrooms $ 148,003,995 $ 113,105,029 Internet 55,781,186 33,024,079 Other 29,592,198 19,752,189 Total net sales $ 233,377,379 $ 165,881,297 |
Schedule of accounts receivable | As of As of Credit card receivables $ 1,073,855 $ 838,373 Wholesale receivables 4,724,154 2,850,000 Other receivables 1,390,916 266,751 $ 7,188,925 $ 3,955,124 |
Schedule of loss per share | For the year ended For the year ended Numerator: Net loss - Basic and diluted $ (15,205,019 ) $ (6,704,356 ) Preferred dividends and deemed dividends - (27,832,998 ) Net loss attributable to common shares (15,205,019 ) (34,537,354 ) Denominator: Weighted average number of common shares for basic and diluted net loss per share 14,260,395 10,536,721 Basic and diluted net loss per share $ (1.07 ) $ (3.28 ) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Estimated Life 2020 2019 Office and store furniture, and equipment 5 Years $ 6,674,950 $ 4,798,414 Software 3 Years 2,652,960 2,707,666 Leasehold improvements Shorter of estimated useful life or lease term 28,071,912 20,088,812 Tools, Dies, Molds 5 Years 97,876 - Construction in process NA 2,193,218 2,222,218 39,690,916 29,817,110 Accumulated depreciation and amortization (15,846,655 ) (11,222,031 ) $ 23,844,261 $ 18,595,079 |
Other Intangible Assets, Net (T
Other Intangible Assets, Net (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of other intangible assets | February 2, 2020 Estimated Life Gross Accumulated Net Patents 10 Years $ 1,965,794 $ (846,898 ) $ 1,118,896 Trademarks 3 Years 982,800 (749,535 ) 233,265 Other intangibles 5 Years 839,737 (839,737 ) - Total $ 3,788,331 $ (2,436,170 ) $ 1,352,161 February 3, 2019 Estimated Life Gross Accumulated Net Patents 10 Years $ 1,406,336 $ (744,715 ) $ 661,621 Trademarks 3 Years 868,586 (589,248 ) 279,338 Other intangibles 5 Years 839,737 (838,365 ) 1,372 Total $ 3,114,659 $ (2,172,328 ) $ 942,331 |
Schedule of estimated future amortization expense associated with intangible assets | 2021 $ 282,716 2022 242,086 2023 136,870 2024 132,973 2025 132,917 Thereafter 424,599 $ 1,352,161 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of other prepaid and other current assets | 2020 2019 Prepaid insurance $ 1,174,920 $ 760,974 Prepaid catalogue costs and related 3,067,302 1,633,960 Barter credits 374,423 - Deposits 892,611 732,938 Prepaid rent 1,297,511 1,036,647 Prepaid inventory 511,100 575,397 Other 732,255 1,193,956 $ 8,050,122 $ 5,933,872 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred income taxes | 2020 2019 Deferred Income Tax Assets Federal net operating loss carry forward $ 12,455,237 $ 708,865 State net operating loss carry forward 2,485,074 130,924 Intangible assets 244,053 248,731 Accrued liabilities 1,833,549 1,139,686 Equity based compensation 503,201 171,120 Property and equipment 1,748,593 1,165,359 Merchandise inventories 254,034 154,599 Total Deferred Income Tax Assets 19,523,741 3,719,284 Valuation Allowance (19,523,741 ) (3,719,284 ) Net Deferred Income Tax Asset $ - $ - |
Schedule of statutory federal income tax rate | 2020 2019 Benefit at Federal Statutory rates $ (3,183,958 ) $ (1,397,881 ) Permanent adjustments (847,531 ) 406,674 State tax, net of Federal benefit (582,572 ) (15,086 ) Change in Federal rate from 34% to 21% - - Federal and deferred true-ups (393,702 ) (175,845 ) Uncertain tax positions - NOLS (10,753,384 ) 10,753,384 Change in valuation allowance 15,804,459 (9,554,839 ) Income tax provision $ 43,312 $ 16,407 2020 2019 Benefit at Federal Statutory rates -21.0 % -21.0 % Permanent adjustments -5.6 % 6.1 % State tax, net of Federal benefit -3.8 % -0.2 % Change in Federal rate from 34% to 21% 0.0 % 0.0 % Federal True-ups -2.6 % -2.6 % Uncertain tax positions- NOLS -70.9 % 161.5 % Change in valuation allowance 104.2 % -143.5 % Income tax provision 0.3 % 0.3 % |
Schedule of federal, state and local corporate income taxes | 2020 2019 Current taxes: U.S. federal $ - $ - State and local 43,312 16,407 Total current tax expense $ 43,312 $ 16,407 Deferred taxes: U.S. federal $ - $ - State and local - - Total deferred tax expense (benefit) $ - $ - Total tax provision $ 43,312 $ 16,407 |
Schedule of unrecognized tax benefits | 2020 2019 Beginning balance $ 10,753,384 $ - Additions for tax positions acquired - - Additions for tax positions related to current year - 10,753,284 Tax positions of prior years: Payments - - Settlements - - Release (10,753,384 ) - Ending balance $ - $ 10,753,284 |
Commitments, Contingencies an_2
Commitments, Contingencies and Related Parties (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future annual minimum rental payments under these leases | 2021 $ 11,169,268 2022 10,197,116 2023 9,653,986 2024 9,350,604 2025 8,332,926 Thereafter 19,932,967 $ 68,636,867 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Equity [Abstract] | |
Schedule of Black-Scholes model assumptions | April June June September May Warrants 798,795 798,795 281,750 56,077 18,166 Expected volatility 41.4% - 43.7 % 42.0 % 41 % 44 % 44 % Expected dividend yield 0 % 0 % 0 % 0 % 0 % Expected term (in years) 3.10 3.00 5.00 3.00 3.00 Risk-free interest rate 1.7% - 2.0 % 2.6 % 2.7 % 2.69 % 2.69 % Exercise price $ 14.80 $ 16.00 $ 19.20 $ 9.13 $ 16.00 Calculated fair value of warrant $ 3.12 $ 5.00 $ 8.84 $ 12.87 $ 7.16 |
Schedule of warrant activity | Average Number of Weighted Warrants outstanding at February 4, 2018 $ 17.18 930,054 3.24 Warrants issued 18.56 1,136,802 3.65 Expired and canceled 17.18 (930,054 ) (3.20 ) Exercised 10.44 (69,327 ) (2.68 ) Warrants Outstanding at February 3, 2019 16.83 1,067,475 2.93 Warrants issued 16.00 18,166 2.40 Expired and canceled - - - Exercised 16.00 (46,521 ) (2.15 ) Outstanding at February 2, 2020 $ 16.83 1,039,120 $ 1.93 |
Schedule of stock option activity | For the year ended February 2, 2020 Number of Weighted Weighted Average Outstanding at February 3, 2019 - $ - Granted 495,366 38.10 Exercised - - Canceled and forfeited - - Expired and canceled - - Vested - - Outstanding at February 2, 2020 495,366 $ 38.10 2.34 - Exercisable at the end of the period - - - - |
Schedule of unvested restricted stock | Number of Weighted Unvested at February 4, 2018 193,500 $ 10.83 Granted 330,799 14.76 Forfeited (4,629 ) 14.83 Vested (142,384 ) 13.62 Unvested at February 3, 2019 377,286 11.16 Granted 130,898 23.63 Forfeited (20,470 ) 16.21 Vested (304,661 ) 12.75 Unvested at February 2, 2020 183,053 $ 21.34 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
Segment Reporting [Abstract] | |
Schedule of operating segments | Fiscal year ending February 2, February 3, Sactionals $ 188,436,976 $ 120,205,061 Sacs 39,640,676 41,174,831 Other 5,299,727 4,501,405 $ 233,377,379 $ 165,881,297 |
Operations and Significant Ac_4
Operations and Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Total net sales | $ 233,377,379 | $ 165,881,297 |
Showrooms [Member] | ||
Total net sales | 148,003,995 | 113,105,029 |
Internet [Member] | ||
Total net sales | 55,781,186 | 33,024,079 |
Other [Member] | ||
Total net sales | $ 29,592,198 | $ 19,752,189 |
Operations and Significant Ac_5
Operations and Significant Accounting Policies (Details 1) - USD ($) | Feb. 02, 2020 | Feb. 03, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Credit card receivables | $ 1,073,855 | $ 838,373 |
Wholesale receivables | 4,724,154 | 2,850,000 |
Other receivables | 1,390,916 | 266,751 |
Trade accounts receivable | $ 7,188,925 | $ 3,955,124 |
Operations and Significant Ac_6
Operations and Significant Accounting Policies (Details 2) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Numerator: | ||
Net loss - Basic and diluted | $ (15,205,019) | $ (6,704,356) |
Preferred dividends and deemed dividends | (27,832,998) | |
Net loss attributable to common shares | $ (15,205,019) | $ (34,537,354) |
Denominator: | ||
Weighted average number of common shares for basic and diluted net loss per share | 14,260,395 | 10,536,721 |
Basic and diluted net loss per share | $ (1.07) | $ (3.28) |
Operations and Significant Ac_7
Operations and Significant Accounting Policies (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
May 31, 2019 | May 29, 2019 | May 21, 2019 | Oct. 31, 2018 | Oct. 29, 2018 | Jun. 27, 2018 | Jun. 22, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Dec. 31, 2019 | |
Operations and Significant Accounting Policies (Textual) | ||||||||||
Retail showrooms, description | The Company operated 91 leased retail showrooms located throughout the United States. In addition, the Company operates a retail internet website and does business to business transactions through its wholesale operations. | |||||||||
Additional shares | 375,000 | |||||||||
Immediately prior to offering, percentage | 41.00% | 56.00% | ||||||||
Immediately after completion of offering, percentage | 29.00% | 41.00% | ||||||||
Ownership percentage | 19.00% | |||||||||
Fiscal year, description | The Company’s fiscal year is determined on a 52/53 week basis ending on the Sunday closest to January 31st. Hereinafter, the periods from February 4, 2019 through February 2, 2020 and February 5, 2018, through February 3, 2019 are referred to as fiscal 2020 and fiscal 2019, respectively. Both fiscal 2020 and fiscal 2019 were a 52 week fiscal year. | |||||||||
Accrued expenses | $ 2,177,715 | |||||||||
Sales returns in merchandise inventories | 442,390 | |||||||||
Customer deposit liabilities | 1,653,597 | $ 1,059,957 | ||||||||
Customer deposits | $ 1,059,957 | |||||||||
Deposit insurance | $ 250,000 | |||||||||
Wholesale customer, percentage | 97.00% | 100.00% | ||||||||
Foreign countries percentage | 0.05% | 0.05% | ||||||||
Sales percentage | 10.00% | |||||||||
Impairment percentage | 50.00% | |||||||||
Warranty expense | $ 933,000 | $ 414,000 | ||||||||
Warranty reserve | 1,180,000 | 212,000 | ||||||||
Shipping and handling costs | $ 47,148,918 | $ 25,132,736 | ||||||||
Effective date of the plan | 10 years | |||||||||
Plan allows for issuance shares | 1,414,889 | 615,066 | ||||||||
Tax benefit, percentage | 0.30% | 0.30% | ||||||||
Warrants outstanding | 1,039,120 | 1,067,475 | ||||||||
Operating loss net | $ 10,800,000 | |||||||||
Stock options | 495,366 | |||||||||
Payment of renegotiated line of credits | 292,095 | |||||||||
Amortized to interest expense | 73,024 | 121,173 | ||||||||
Advertising expenses | $ 29,194,289 | $ 18,363,491 | ||||||||
Restricted Stock [Member] | ||||||||||
Operations and Significant Accounting Policies (Textual) | ||||||||||
Unvested restricted stock | 183,053 | 377,286 | ||||||||
IPO [Member] | ||||||||||
Operations and Significant Accounting Policies (Textual) | ||||||||||
Net proceeds from offering | 58,900,000 | |||||||||
Initial public offering, shares | 4,025,000 | |||||||||
Sale of price per share | $ 16 | |||||||||
Reverse stock split, description | The board of directors of the Company approved a 1-for-2.5 reverse stock split of the Company’s shares of common stock | |||||||||
Public offering, description | The Company and certain of the Company’s stockholders completed a primary and secondary public offering of an aggregate of 2,500,000 shares of common stock, which included 750,000 shares offered by the Company and 1,750,000 shares offered by certain selling stockholders of the Company, at a public offering price of $36.00 per share. Net proceeds to the Company from the offering were approximately $25.6 million after legal and underwriting expenses. | |||||||||
Secondary Offering [Member] | ||||||||||
Operations and Significant Accounting Policies (Textual) | ||||||||||
Initial public offering, shares | 2,220,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Total property and equipment, gross | $ 39,690,916 | $ 29,817,110 |
Accumulated depreciation and amortization | (15,846,655) | (11,222,031) |
Total property and equipment, net | 23,844,261 | 18,595,079 |
Office and store furniture, and equipment [Member] | ||
Total property and equipment, gross | $ 6,674,950 | $ 4,798,414 |
Estimated Life | 5 years | 5 years |
Software [Member] | ||
Total property and equipment, gross | $ 2,652,960 | $ 2,707,666 |
Estimated Life | 3 years | 3 years |
Leasehold improvements [Member] | ||
Total property and equipment, gross | $ 28,071,912 | $ 20,088,812 |
Estimated Life, description | Shorter of estimated useful life or lease term | Shorter of estimated useful life or lease term |
Tools, Dies, Molds [Member] | ||
Total property and equipment, gross | $ 97,876 | |
Estimated Life | 5 years | 5 years |
Construction in process [Member] | ||
Total property and equipment, gross | $ 2,193,218 | $ 2,222,218 |
Estimated Life, description | NA | NA |
Property and Equipment, Net (_2
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 4,894,220 | $ 2,935,202 |
Other Intangible Assets, Net (D
Other Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Gross Carrying Amount | $ 3,788,331 | $ 3,114,659 |
Accumulated Amortization | (2,436,170) | (2,172,328) |
Net carrying amount | $ 1,352,161 | $ 942,331 |
Patents [Member] | ||
Estimated Life | 10 years | 10 years |
Gross Carrying Amount | $ 1,965,794 | $ 1,406,336 |
Accumulated Amortization | (846,898) | (744,715) |
Net carrying amount | $ 1,118,896 | $ 661,621 |
Trademarks [Member] | ||
Estimated Life | 3 years | 3 years |
Gross Carrying Amount | $ 982,800 | $ 868,586 |
Accumulated Amortization | (749,535) | (589,248) |
Net carrying amount | $ 233,265 | $ 279,338 |
Other intangibles [Member] | ||
Estimated Life | 5 years | 5 years |
Gross Carrying Amount | $ 839,737 | $ 839,737 |
Accumulated Amortization | (839,737) | (838,365) |
Net carrying amount | $ 1,372 |
Other Intangible Assets, Net _2
Other Intangible Assets, Net (Details 1) - USD ($) | Feb. 02, 2020 | Feb. 03, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 282,716 | |
2022 | 242,086 | |
2023 | 136,870 | |
2024 | 132,973 | |
2025 | 132,917 | |
Thereafter | 424,599 | |
Total | $ 1,352,161 | $ 942,331 |
Other Intangible Assets, Net _3
Other Intangible Assets, Net (Details Textual) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Other Intangible Assets, Net (Textual) | ||
Amortization expense on other intangible assets | $ 263,842 | $ 198,549 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Feb. 02, 2020 | Feb. 03, 2019 |
Deposits | $ 1,653,597 | $ 1,059,957 |
Other | 8,050,122 | 5,933,872 |
Prepaid Expenses and Other Current Assets [Member] | ||
Prepaid insurance | 1,174,920 | 760,974 |
Prepaid catalogue costs and related | 3,067,302 | 1,633,960 |
Barter credits | 374,423 | |
Deposits | 892,611 | 732,938 |
Prepaid rent | 1,297,511 | 1,036,647 |
Prepaid inventory | 511,100 | 575,397 |
Other | 732,255 | 1,193,956 |
Total prepaid expenses and other current assets | $ 8,050,122 | $ 5,933,872 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Feb. 02, 2020 | Feb. 03, 2019 |
Deferred Income Tax Assets | ||
Federal net operating loss carry forward | $ 12,455,237 | $ 708,865 |
State net operating loss carry forward | 2,485,074 | 130,924 |
Intangible assets | 244,053 | 248,731 |
Accrued liabilities | 1,833,549 | 1,139,686 |
Equity based compensation | 503,201 | 171,120 |
Property and equipment | 1,748,593 | 1,165,359 |
Merchandise inventories | 254,034 | 154,599 |
Total Deferred Income Tax Assets | 19,523,741 | 3,719,284 |
Valuation Allowance | (19,523,741) | (3,719,284) |
Net Deferred Income Tax Asset |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Income Tax Disclosure [Abstract] | ||
Benefit at Federal Statutory rates | $ (3,183,958) | $ (1,397,881) |
Permanent adjustments | (847,531) | 406,674 |
State tax, net of Federal benefit | (582,572) | (15,086) |
Change in Federal rate from 34% to 21% | ||
Federal and deferred true-ups | (393,702) | (175,845) |
Uncertain tax positions - NOLS | (10,753,384) | 10,753,384 |
Change in valuation allowance | 15,804,459 | (9,554,839) |
Income tax provision | $ 43,312 | $ 16,407 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Current taxes: | ||
U.S. federal | ||
State and local | 43,312 | 16,407 |
Total current tax expense | 43,312 | 16,407 |
Deferred taxes: | ||
U.S. federal | ||
State and local | ||
Total deferred tax expense (benefit) | ||
Total tax provision | $ 43,312 | $ 16,407 |
Income Taxes (Details 3)
Income Taxes (Details 3) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Income Tax Disclosure [Abstract] | ||
Benefit at Federal Statutory rates | (21.00%) | (21.00%) |
Permanent adjustments | (5.60%) | 6.10% |
State tax, net of Federal benefit | (3.80%) | (0.20%) |
Change in Federal rate from 34% to 21% | 0.00% | 0.00% |
Federal True-ups | (2.60%) | (2.60%) |
Uncertain tax positions- NOLS | (70.90%) | 161.50% |
Change in valuation allowance | 104.20% | (143.50%) |
Income tax provision | 0.30% | 0.30% |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance | $ 10,753,384 | |
Additions for tax positions acquired | ||
Additions for tax positions related to current year | 10,753,384 | |
Tax positions of prior years: | ||
Payments | ||
Settlements | ||
Release | (10,753,384) | |
Ending balance | $ 10,753,384 | $ 10,753,384 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |
Mar. 27, 2020 | Feb. 02, 2020 | Feb. 03, 2019 | |
Income Taxes (Textual) | |||
Net operating loss carryforwards available for federal income tax | $ 59,311,000 | $ 45,190,000 | |
State net operating loss carryforwards | $ 42,618,000 | 35,674,000 | |
Operating loss carryforwards expiration, description | Expire in varying amounts from fiscal 2027 to fiscal 2037. | ||
Increased/(decreased) valuation allowance | $ 15,804,000 | $ (9,555,000) | |
Uncertain tax position | $ 10,753,384 | ||
Change in federal rate | 21.00% | 21.00% | |
Maximum [Member] | |||
Income Taxes (Textual) | |||
Annual limitation value | $ 5,888,000 | ||
Change in federal rate | 34.00% | ||
Minimum [Member] | |||
Income Taxes (Textual) | |||
Annual limitation value | $ 302,000 | ||
Change in federal rate | 21.00% | ||
Subsequent Event [Member] | |||
Income Taxes (Textual) | |||
Federal income tax rate description | The Federal government of the United States enacted the Coronavirus Aid Relief and Economic Security Act ("CARES Act") which includes a number of significant changes to the existing U.S. tax laws including postponing the filing date of specific federal income tax returns and payments from April 15, 2020 to July 15, 2020, temporarily increasing the 30% limitation on the interest deduction to 50%, introduction of a capital investment deduction for Qualified Improvement Property ("QIP"), and change in the use of net operating losses. The Company's federal net operating losses that have been incurred in tax years beginning on or before December 31, 2017 will have a 20-year carryforward limitation, a two-year carryback period and can offset 100% of future taxable income. Net operating losses incurred in tax years beginning after December 31, 2017 and before January 1, 2021 will have an indefinite life, a five-year carryback period and can offset 100% of future taxable income prior to 2021 and 80% of future taxable income after 2020. Net operating losses incurred in tax years beginning on or after January 1, 2021 will have an indefinite life, generally no carryback period and can offset 80% of future taxable income. |
Commitments, Contingencies an_3
Commitments, Contingencies and Related Parties (Details) | Feb. 02, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 11,169,268 |
2022 | 10,197,116 |
2023 | 9,653,986 |
2024 | 9,350,604 |
2025 | 8,332,926 |
Thereafter | 19,932,967 |
Total | $ 68,636,867 |
Commitments, Contingencies an_4
Commitments, Contingencies and Related Parties (Details Textual) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Commitments, Contingencies and Related Parties (Textual) | ||
Selling, general and administrative expenses | $ 98,146,524 | $ 76,426,892 |
Total rent expense | $ 19,676,958 | 16,245,590 |
Operating lease expiration date | Nov. 30, 2027 | |
Severance contingency, description | A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $3,670,533 at February 2, 2020 if all executives with employment agreements were terminated without cause and the full amount of severance was payable. | |
Maximum [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Monthly payments | $ 45,600 | |
Minimum [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Monthly payments | 2,500 | |
Mistral Capital Managements, LLC [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Management fees and expenses | 400,000 | 400,000 |
Amounts payable to related parties | 2,000 | |
Expenses incurred amount | 44,140 | 55,015 |
Mistral Capital Managements, LLC [Member] | IPO [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Selling, general and administrative expenses | 500,000 | |
Satori Capital, LLC [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Management fees and expenses | 100,000 | 100,000 |
Management fees | 25,000 | |
Amounts payable to related parties | $ 95,000 | |
Description of stock bonus | A one-time stock bonus of 50,000 shares of common stock at $14.83 per share, or $741,500, is included in equity-based compensation on the accompanying consolidated statement of changes in stockholders' equity and issued on June 22, 2018. The bonus was issued to Satori in three installments; two equal installments of 5,000 shares of common stock in August 2018 and September 2018 and the remainder of the shares were issued in October 2018. All fees and the stock bonus are included in selling, general and administrative expenses in the accompanying condensed statements of operations. There were no amounts payable to Satori as of February 3, 2019.. In addition, the Company reimbursed Satori for expenses incurred in the amount of $70,000 and $0 for out of pocket expenses for fiscal 2020 and fiscal 2019, respectively. | |
Expenses incurred amount | $ 70,000 | |
Satori Capital, LLC [Member] | IPO [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Selling, general and administrative expenses | 125,000 | |
Blueport Commerce [Member] | ||
Commitments, Contingencies and Related Parties (Textual) | ||
Amounts payable to related parties | 150,508 | 93,211 |
Expenses incurred amount | $ 1,833,154 | $ 1,153,844 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Warrants | 1,039,120 | 1,067,475 |
Warrant [Member] | April 2018 [Member] | ||
Warrants | 798,795 | |
Expected dividend yield | 0.00% | |
Expected term (in years) | 3 years 1 month 6 days | |
Exercise price | $ 14.80 | |
Calculated fair value of warrant | $ 3.12 | |
Warrant [Member] | April 2018 [Member] | Maximum [Member] | ||
Expected volatility | 43.70% | |
Risk-free interest rate | 2.00% | |
Warrant [Member] | April 2018 [Member] | Minimum [Member] | ||
Expected volatility | 41.40% | |
Risk-free interest rate | 1.70% | |
Warrant [Member] | June 2018 [Member] | ||
Warrants | 798,795 | |
Expected volatility | 42.00% | |
Expected dividend yield | 0.00% | |
Expected term (in years) | 3 years | |
Risk-free interest rate | 2.60% | |
Exercise price | $ 16 | |
Calculated fair value of warrant | $ 5 | |
Warrant [Member] | June 2018 [Member] | ||
Warrants | 281,750 | |
Expected volatility | 41.00% | |
Expected dividend yield | 0.00% | |
Expected term (in years) | 5 years | |
Risk-free interest rate | 2.70% | |
Exercise price | $ 19.20 | |
Calculated fair value of warrant | $ 8.84 | |
Warrant [Member] | September 2018 [Member] | ||
Warrants | 56,077 | |
Expected volatility | 44.00% | |
Expected dividend yield | 0.00% | |
Expected term (in years) | 3 years | |
Risk-free interest rate | 2.69% | |
Exercise price | $ 9.13 | |
Calculated fair value of warrant | $ 12.87 | |
Warrant [Member] | May 2019 [Member] | ||
Warrants | 18,166 | |
Expected volatility | 44.00% | |
Expected dividend yield | 0.00% | |
Expected term (in years) | 3 years | |
Risk-free interest rate | 2.69% | |
Exercise price | $ 16 | |
Calculated fair value of warrant | $ 7.16 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - Warrants [Member] - $ / shares | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Average exercise price, Warrants Outstanding, Beginning balance | $ 16.83 | $ 17.18 |
Average exercise price, Warrants issued | 16 | 18.56 |
Average exercise price, Expired and canceled | $ 17.18 | |
Average exercise price, Exercised | 16 | 10.44 |
Average exercise price, Warrants Outstanding, Ending balance | $ 16.83 | $ 16.83 |
Number of warrants, Outstanding, Beginning balance | 1,067,475 | 930,054 |
Number of warrants, Warrants issued | 18,166 | 1,136,802 |
Number of warrants, Expired and canceled | (930,054) | |
Number of warrants, Exercised | (46,521) | (69,327) |
Number of warrants, Warrants Outstanding, Ending balance | 1,039,120 | 1,067,475 |
Weighted average remaining contractual life (in years), Warrants Outstanding, Beginning balance | 2 years 11 months 4 days | 3 years 2 months 27 days |
Weighted average remaining contractual life (in years), Warrants issued | 2 years 4 months 24 days | 3 years 7 months 24 days |
Weighted average remaining contractual life (in years), Expired and canceled | 3 years 2 months 12 days | |
Weighted average remaining contractual life (in years), Exercised | 2 years 1 month 24 days | 2 years 8 months 5 days |
Weighted average remaining contractual life (in years), Warrants Outstanding, Ending balance | 1 year 11 months 4 days | 2 years 11 months 4 days |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - Stock Options [Member] | 12 Months Ended |
Feb. 02, 2020USD ($)$ / sharesshares | |
Number of options, Outstanding Balance | shares | |
Number of options, Granted | shares | 495,366 |
Number of options, Exercised | shares | |
Number of options, Canceled and forfeited | shares | |
Number of options, Expired and canceled | shares | |
Number of options, Vested | shares | |
Number of options, Outstanding Balance | shares | 495,366 |
Number of options, Exercisable at the end of the period | shares | |
Weighted average exercise price, Outstanding | $ / shares | |
Weighted average exercise price, Granted | $ / shares | 38.10 |
Weighted average exercise price, Exercised | $ / shares | |
Weighted average exercise price, Canceled and forfeited | $ / shares | |
Weighted average exercise price, Expired and canceled | $ / shares | |
Weighted average exercise price, Vested | $ / shares | |
Weighted average exercise price, Outstanding | $ / shares | 38.10 |
Weighted average exercise price, Exercisable at the end of the period | $ / shares | |
Weighted average remaining contractual life (in years), Outstanding | 2 years 4 months 2 days |
Weighted average remaining contractual life (in years), Exercisable at the end of the period | 0 years |
Aggregate intrinsic value, Outstanding | $ | |
Aggregate intrinsic value, Exercisable at the end of the period | $ |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - Restricted stock [Member] - $ / shares | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Number of shares, Unvested, Beginning balance | 377,286 | 193,500 |
Number of shares, Granted | 130,898 | 330,799 |
Number of shares, Forfeited | (20,470) | (4,629) |
Number of shares, Vested | (304,661) | (142,384) |
Number of shares, Unvested, Ending balance | 183,053 | 377,286 |
Weighted average grant date fair value, Unvested, Beginning balance | $ 11.16 | $ 10.83 |
Weighted average grant date fair value, Granted | 23.63 | 14.76 |
Weighted average grant date fair value, Forfeited | 16.21 | 14.83 |
Weighted average grant date fair value, Vested | 12.75 | 13.62 |
Weighted average grant date fair value, Unvested, Ending balance | $ 21.34 | $ 11.16 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | Oct. 29, 2018 | Jun. 29, 2018 | Dec. 31, 2019 | Jun. 30, 2019 | May 21, 2019 | Jun. 27, 2018 | Jun. 22, 2018 | Apr. 19, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Feb. 04, 2018 | Jun. 05, 2019 | May 10, 2018 | Apr. 30, 2018 |
Stockholders' Equity (Textual) | ||||||||||||||
Sale shares of common stock | 2,220,000 | |||||||||||||
Warrants to purchase | 798,975 | |||||||||||||
Percentage of dividend | 8.00% | |||||||||||||
Preferred stock value | ||||||||||||||
Percentage of offering price | 70.00% | |||||||||||||
Board of directors [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Reverse stock split, description | The board of directors of the Company approved a 1-for-2.5 reverse stock split of the Company's shares of common stock. | |||||||||||||
Unvested restricted stock units [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Sale of stock, description | All the unvested restricted stock units for certain senior executives of the Company vested according to the accelerated vesting trigger in their restricted stock unit agreements. The triggering event was the market capitalization of the Company post IPO, exceeding $300 million for 60 consecutive trading days and the expiration of the lockup- period. This accelerated vesting resulted in equity-based compensation in the amount of $2.9 million. | |||||||||||||
IPO [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Reverse stock split, description | The board of directors of the Company approved a 1-for-2.5 reverse stock split of the Company’s shares of common stock | |||||||||||||
Sale shares of common stock | 4,025,000 | |||||||||||||
Sale of stock price per share | $ 16 | |||||||||||||
Net proceeds offering | $ 59,200,000 | |||||||||||||
Sale of stock, description | The Company and certain of the Company’s stockholders completed a primary and secondary public offering of an aggregate of 2,500,000 shares of common stock, which included 750,000 shares offered by the Company and 1,750,000 shares offered by certain selling stockholders of the Company, at a public offering price of $36.00 per share. Net proceeds to the Company from the offering were approximately $25.6 million after legal and underwriting expenses. | |||||||||||||
2017 Equity Incentive Plan [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Description of equity incentive plan | Pursuant to the exchange SAC LLC transferred 175,478 shares of common stock to the Company and the Company immediately cancelled these shares. The Company then issued to the former option holders the number of those shares pursuant to the Plan and withheld 73,507 shares to satisfy taxes associated with the issuance. | |||||||||||||
Vesting date, description | The Company granted 495,366 Non statutory Stock options to certain officers of the Company with an option price of $38.10 per share. 100% of the stock options are subject to vesting on the first trading day after the date on which the closing price of the Company's stock price has been at least $75 for 60 consecutive trading days so long as this goal has been attained by June 5, 2022 or the options will terminate. | |||||||||||||
Exchange and modification of options that were held | $ 313,000 | |||||||||||||
2017 Equity Incentive Plan [Member] | Minimum [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Shares of common stock reserved for issuance | 615,066 | 615,066 | 420,000 | |||||||||||
2017 Equity Incentive Plan [Member] | Maximum [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Shares of common stock reserved for issuance | 1,414,889 | 604,612 | 604,612 | |||||||||||
2017 Equity Incentive Plan [Member] | Restricted Stock [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Stock compensation expense related to restricted stock units | $ 4,900,000 | $ 3,300,000 | ||||||||||||
Unrecognized restricted stock unit compensation cost related to non-vested awards | $ 4,393,453 | |||||||||||||
Restricted stock recognized in operations over weighted average period | 2 years 3 months 19 days | |||||||||||||
Fiscal 2019 [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Restated warrants total | 56,077 | |||||||||||||
Fair value term | 3 years | |||||||||||||
Warrants as deemed dividend | $ 408,919 | |||||||||||||
Fiscal 2020 [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Warrants issued | 18,166 | |||||||||||||
Warrants, description | The Company issued 18,166 warrants to a third party in connection with previous equity raise. These warrants were valued using the Black-Scholes model, with similar assumptions to the June 2018 warrants. The warrants had a fair value of approximately $130,000. Of these warrants, 17,396 were exercised on May 14, 2019. | |||||||||||||
Warrant [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Exercise of warrant | $ 27,246 | |||||||||||||
Warrants term | 5 years | |||||||||||||
Total warrants outstanding | 1,039,120 | 1,067,475 | 930,054 | |||||||||||
Warrants canceled | 930,054 | |||||||||||||
Warrants issued | 798,975 | 281,750 | ||||||||||||
Deemed dividend | $ 1,498,079 | |||||||||||||
Purchase price per share of common stock | $ 16 | |||||||||||||
Warrants exercised | (46,521) | (69,327) | ||||||||||||
Preferred Stock [Member] | ||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||
Preferred stock equivalent | 898,600 | |||||||||||||
Exchange for total shares | 899 | |||||||||||||
Percentage of dividend | 8.00% | |||||||||||||
Net of issuance costs | $ 1,325,156 | |||||||||||||
Preferred stock value | $ 25,645,000 | $ 21,139,845 | ||||||||||||
Preferred stock dividends | 2,037,200 | |||||||||||||
Preferred stock converted value | $ 2,495,704 | |||||||||||||
Preferred stock converted to common stock per share | $ 9.13 | |||||||||||||
Deemed dividend | $ 22,601,161 | |||||||||||||
Purchase price per share of common stock | $ 3,287,441 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Employee Benefit Plan (Textual) | ||
Contributions plan, percentage | 100.00% | |
Contributions plan | $ 406,000 | $ 303,000 |
Financing Arrangements (Details
Financing Arrangements (Details) - USD ($) | May 03, 2018 | Feb. 28, 2018 | Feb. 06, 2018 | Feb. 02, 2020 | Feb. 03, 2019 |
Financing Arrangements (Textual) | |||||
Deferred financing fees | $ 146,047 | $ 219,071 | |||
Revolving Loan [Member] | |||||
Financing Arrangements (Textual) | |||||
Note payable term | 1 month | ||||
Maturity date | Jun. 4, 2018 | ||||
Line of credit, borrowing availability | $ 12,500,000 | ||||
LIBOR rate margin, description | Bears interest at the LIBOR rate plus the applicable margin for an all-in-rate of 3.1875%. | ||||
Revolving Loan [Member] | Maximum [Member] | |||||
Financing Arrangements (Textual) | |||||
LIBOR rate | 2.25% | ||||
Revolving Loan [Member] | Minimum [Member] | |||||
Financing Arrangements (Textual) | |||||
LIBOR rate | 2.00% | ||||
Wells Fargo Bank, National Association [Member] | |||||
Financing Arrangements (Textual) | |||||
Line of credit with Siena Lending Group, LLC | $ 25,000,000 | ||||
Maturity date | Feb. 28, 2023 | ||||
Line of credit, description | The line of credit with Wells allows the Company to borrow up to $25.0 million and will mature in February 2023. Borrowings are limited to 90% of eligible credit card receivables plus 85% of eligible wholesale receivables plus 85% of the net recovery percentage for the eligible inventory multiplied by the value of such eligible inventory of the Company for the period from December 16 of each year until October 14 of the immediately following year, with a seasonal increase to 90% of the net recovery percentage for the period from October 15 of each year until December 15 of such year, seasonal advance rate, minus applicable reserves established by Wells. | ||||
Siena Lending Group, LLC [Member] | |||||
Financing Arrangements (Textual) | |||||
Line of credit with Siena Lending Group, LLC | $ 7,000,000 | ||||
Maturity date | May 14, 2018 | ||||
Line of credit, description | Borrowings were limited to the lesser of 75% of inventory or 85% of the net orderly liquidation value of inventory and may be reduced by certain liabilities of the Company. All amounts outstanding bore interest at the base rate, defined as the greatest of (i) Prime Rate published by The Wall Street Journal, (ii) Federal Funds Rate plus 0.5% or (iii) 3.25%, plus 3% (7.00% at February 4, 2018). The line was subject to a monthly unused line fee of .75%. The agreement was secured by the first lien on substantially all assets of the Company. | ||||
Outstanding loan balance paid | $ 405 | ||||
Termination fee | 70,000 | ||||
Deferred financing fees | $ 48,149 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Net sales | $ 233,377,379 | $ 165,881,297 |
Sactionals [Member] | ||
Net sales | 188,436,976 | 120,205,061 |
Sacs [Member] | ||
Net sales | 39,640,676 | 41,174,831 |
Other [Member] | ||
Net sales | $ 5,299,727 | $ 4,501,405 |
Segment Information (Details Te
Segment Information (Details Textual) | 12 Months Ended |
Feb. 02, 2020Segment | |
Segment Information (Textual) | |
Operating segments, description | Operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas including economic characteristics, class of consumer, nature of products and distribution method and products are a singular group of products which make up over 95% of total sales. |
Number of reporting segment | 1 |
Barter Arrangements (Details)
Barter Arrangements (Details) - Barter Arrangements [Member] - USD ($) | Feb. 02, 2020 | Feb. 04, 2018 |
Barter Arrangements (Textual) | ||
Inventory | $ 1,097,488 | $ 577,326 |
Prepaid media asset | 1,055,185 | 534,407 |
Unused media credits | $ 374,423 | $ 307,417 |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 01, 2020 |
Subsequent Event [Member] | |
Subsequent Events (Textual) | |
Business acquisition, description | The Company announced that all showroom locations will remain closed until further notice. The Company will follow the guidance of local, state and federal governments, as well as health organizations, to determine when the Company can safely reopen its showrooms. Additionally, the Company implemented a reduction in workforce of approximately 445 part time employees (representing 57% of our total headcount) as well as a temporary reduction in executive cash compensation. Cash compensation was reduced by 20% for Shawn Nelson, Chief Executive Officer, Jack Krause, President and Chief Operating Officer, and Donna Dellomo, Executive Vice President and Chief Financial Officer. |