You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and related notes included elsewhere in this Annual Report on Form 10-K. This
discussion contains forward-looking statements based upon current plans,
expectations and beliefs involving risks and uncertainties. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of various factors, including those set forth in Part I, "Item 1A.
Risk Factors" and other factors set forth in other parts of this Annual Report
on Form 10-K. Discussion of the year-to-year comparisons between 2021 and 2020
can be found in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form
10-K for the fiscal year ended January 2, 2022.

Przegląd

Lulus is a customer-driven, digitally-native fashion brand primarily serving a
large, diverse community of Millennial and Gen Z women, who typically meet us in
their 20s and stay with us through their 30s and beyond. We focus relentlessly
on giving our customers what they want. We do this by using data coupled with
human insight to deliver a curated and continuously evolving broad assortment of
on-trend, affordable luxury fashion for many of life's moments. Our customer
obsession sets the tone for everything we do, from our personalized online
shopping experience to our exceptional customer service.

Pierwsza oferta publiczna

On November 10, 2021, our registration statement on Form S-1 relating to its IPO
was declared effective by the SEC and the shares of its common stock began
trading on the Nasdaq Global Market on November 11, 2021. The IPO closed on
November 15, 2021, pursuant to which we issued and sold 5,750,000 shares of our
common stock at a public offering price of $16.00 per share. On November 15,
2021, we received net proceeds of approximately $82.0 million from the IPO,
after deducting underwriting discounts and commissions of approximately $6.1
million and other issuance costs of approximately $3.9 million. Immediately
prior to the completion of the IPO, we filed an amended and restated certificate
of incorporation, which authorized a total of 250,000,000 shares of common stock
at $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001
par value per share. Immediately prior to the completion of the IPO, all shares
of the Series A Preferred Stock then outstanding were converted into 15,000,000
shares of common stock. Additionally, 215,702 shares of common stock were issued
to the LP immediately prior to the completion of the IPO. All shares of the
Series B Preferred Stock and the Series B-1 Preferred Stock were redeemed and
extinguished for a total payment of approximately $17.9 million on November 15,
2021.

Wpływ pandemii COVID-19

While there continues to be uncertainty related to the COVID-19 pandemic, we
believe the significant impact of the pandemic on the demand for our product
related to social distancing mandates, lockdowns, cancelled social events and
travel has largely subsided.  However, we are still susceptible to broader
COVID-19 risks globally, especially in relation to our supply chain. We continue
to take actions to anticipate changes in the business environment and supply
chain pressures, including placing orders earlier than pre-pandemic times,
leveraging our "test, learn and reorder" approach to test small order quantities
and then graduate successful styles to our re-order algorithms and diversifying
our supply chain network to mitigate rising costs and service delays. We have
modified our business practices in response to the COVID-19 pandemic and plan to
continue to take proactive measures.

We expect ongoing volatility in these trends as the continued impact
from COVID-19 remains uncertain. We may take further actions that impact our
business operations as may be required by federal, state, or local authorities
or that we determine to be in the best interests of our employees and our
customers. For additional discussion of risks related to the COVID-19 pandemic
and the impact of the COVID-19 pandemic on our Company, see "Risk Factors-Risks
Related to our Business-The COVID-19 pandemic has had and may in the future have
an adverse effect on our labor workforce availability, supply chain, business,
financial condition, cash flows, and results of operations in ways that remain
unpredictable."

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Wpływ trendów makroekonomicznych na biznes

Changing macroeconomic factors, including inflation, interest rates, fuel
prices, and overall consumer confidence with respect to current and future
economic conditions have directly impacted our sales in fiscal 2022 as
discretionary consumer spending levels and shopping behavior fluctuate with
these factors. During fiscal 2022, we have responded to these factors by taking
appropriate pricing, promotional and other actions to stimulate customer demand.
These factors are expected to continue to have an impact on our business,
results of operations, our growth and financial condition.

Historically, our business model has resulted in strong growth. Between fiscal
years 2016 and 2019, we grew our net revenue by 179% to $370 million, or an
annual compounded growth rate of 41%. In fiscal year 2020, our net revenue
declined by 33% to $249 million as a result of the COVID-19 pandemic. In fiscal
year 2021, our business rebounded from the initial impact of the pandemic on
consumer behavior, and we grew our net revenue by 51% compared to 2020. Our
sales growth slowed in fiscal year 2022 due to heightened macro-economic
pressures, resulting in a 17% growth in net revenue compared to 2021.

Kluczowe wskaźniki operacyjne i finansowe

We collect and analyze operating and financial data to assess the performance of
our business and optimize resource allocation. The following table sets forth
our key performance indicators for the periods presented (in thousands, except
for percentages and Average Order Value).

                                2022        2021         2020

Gross Margin                     43.5 %      47.1 %        44.4 %
Net income (loss)            $  3,725    $  2,045    $ (19,304)

Skorygowana EBITDA (1) 29 096 USD 41 406 USD 18 911 Skorygowana marża EBITDA (1) 6,6 % 11,0 % 7,6 % Aktywni klienci (2)

            3,223       2,760         2,000

Średnia wartość zamówienia 131 $ 120 $ 106

Do uzgodnienia środków finansowych innych niż GAAP do najbardziej bezpośrednio

(1) porównywalna miara finansowa GAAP i dlaczego uważamy ją za przydatną, zob

„Dyskusja kierownictwa i analiza sytuacji finansowej i wyników

Operacje — środki finansowe niezgodne ze standardami GAAP”.

Liczba aktywnych klientów jest oparta na logice deduplikacji przy użyciu klienta

(2) imię i nazwisko, adres i adres e-mail konta i płatności gościa. Aktywny

Liczba klientów jest na ostatni dzień odpowiedniego okresu.

Aktywni Klienci

We define Active Customers as the number of customers who have made at least one
purchase across our platform in the prior 12-month period. We consider the
number of Active Customers to be a key performance metric on the basis that it
is directly related to consumer awareness of our brand, our ability to attract
visitors to our digital platform, and our ability to convert visitors to paying
customers. Active Customers counts are based on de-duplication logic using
customer account and guest checkout name, address, and email information.

Średnia wartość zamówienia

We define Average Order Value ("AOV") as the sum of the total gross sales before
returns across our platform in a given period, plus shipping revenue, less
discounts and markdowns, divided by the Total Orders Placed in that period. AOV
reflects average basket size of our customers. AOV may fluctuate as we continue
investing in the development and introduction of new Lulus merchandise and as a
result of our promotional discount activity.

Całkowita liczba złożonych zamówień

We define Total Orders Placed as the number of customer orders placed across our
platform during a particular period. An order is counted on the day the customer
places the order. We do not adjust the number of Total Orders Placed for any
cancellation or return that may have occurred subsequent to a customer placing
an order. We consider Total Orders Placed as a key performance metric on the

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basis that it is directly related to our ability to attract and retain customers
as well as drive purchase frequency. Total Orders Placed, together with Average
Order Value, is an indicator of the net revenue we expect to generate in a
particular period.

Marża brutto

We define Gross Margin as gross profit as a percentage of our net revenue. Gross
profit is equal to our net revenue less cost of revenue.  Certain of our
competitors and other retailers report cost of revenue differently than we do.
As a result, the reporting of our gross profit and Gross Margin may not be
comparable to other companies.

Środki finansowe niezgodne ze standardami GAAP

We report our financial results in accordance with accounting principles
generally accepted in the United States of America ("GAAP"). However, management
believes that certain non-GAAP financial measures provide investors of our
financial information with additional useful information in evaluating our
performance and that excluding certain items that may vary substantially in
frequency and magnitude period-to-period from net income (loss) provides useful
supplemental measures that assist in evaluating our ability to generate earnings
and to more readily compare these metrics between past and future periods. These
non-GAAP financial measures may be different than similarly titled measures

used
by other companies.



To supplement our audited consolidated financial statements which are prepared
in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted EBITDA Margin" and
"Net Debt" which are non-GAAP financial measures (collectively referred to as
"Adjusted EBITDA"). Our non-GAAP financial measures should not be considered in
isolation from, or as substitutes for, financial information prepared in
accordance with GAAP. There are several limitations related to the use of our
non-GAAP financial measures as compared to the closest comparable GAAP measures.
Some of these limitations include:

? Skorygowana EBITDA nie odzwierciedla naszych wydatków gotówkowych ani przyszłych potrzeb

w przypadku nakładów inwestycyjnych lub zobowiązań umownych;

? Skorygowana EBITDA nie odzwierciedla zmian ani zapotrzebowania na środki pieniężne dla naszej firmy

zapotrzebowanie na kapitał obrotowy;

? Skorygowana EBITDA nie odzwierciedla kosztów odsetek ani zapotrzebowania na środki pieniężne

niezbędne do obsługi płatności odsetek lub kwoty głównej naszego zadłużenia;

? Skorygowana EBITDA nie odzwierciedla naszych wydatków podatkowych ani zapotrzebowania na środki pieniężne

płacić nasze podatki;

chociaż amortyzacja i amortyzacja są kosztami niegotówkowymi, a aktywa są

? amortyzowane i amortyzowane często będą musiały zostać wymienione w przyszłości i tak dalej

   measures do not reflect any cash requirements for such replacements;

? Zadłużenie netto odejmuje środki pieniężne i ekwiwalenty środków pieniężnych, a zatem może sugerować, że istnieje

jest mniejsze zadłużenie Spółki niż wskazuje najbardziej porównywalna miara GAAP; I

? inne firmy z naszej branży mogą obliczać takie miary inaczej niż my

zrobić, ograniczając ich użyteczność jako mierników porównawczych.

Due to these limitations, Adjusted EBITDA, Adjusted EBITDA margin, and Net Debt
should not be considered as measures of discretionary cash available to us to
invest in the growth of our business. We compensate for these limitations by
relying primarily on our GAAP results and using these non-GAAP measures only
supplementally. As noted in the table below, Adjusted EBITDA includes
adjustments to exclude the impact of depreciation and amortization, interest
expense, income taxes, management fees, transaction fees, which represent the
write-off of offering costs deferred during 2019 upon abandonment of a prior
offering in 2020, and equity-based compensation. It is reasonable to expect that
some of these items will occur in future periods. However, we believe these
adjustments are appropriate because the amounts recognized can vary
significantly from period to period, do not directly relate to the ongoing
operations of our business and may complicate comparisons of our internal
results of operations and results of operations of other companies over time. In
addition, Adjusted EBITDA includes adjustments for other items that we do not
expect to regularly record. Each of the normal recurring adjustments and other
adjustments described in this paragraph and in the following reconciliation

table

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help management with a measure of our core operating performance over time by
removing items that are not related to day-to-day operations. Adjusted EBITDA
Margin is a non-GAAP financial measure that we calculate as Adjusted EBITDA (as
defined above) as a percentage of our net revenue.

The following table provides a reconciliation for Adjusted EBITDA and Adjusted
EBITDA margin:

                                                2022            2021           2020

                                                          (in thousands)
Net income (loss)                           $    3,725      $    2,045      $ (19,304)

Depreciation and amortization                    4,134           2,828     

3216

Interest expense                                 1,103          12,774     

16037

Loss on extinguishment of debt                       -           1,392     

–

Income tax provision (benefit)                   4,047           6,212     

(1271)

Management fees (1)                                  -             534     

626

Write-off of previously capitalized
transaction fees (2)                                 -               -     

1950

Transaction fees (3)                                 -             476     

–

Equity-based compensation expense (4)           16,087          13,664     

9086

Equity-based compensation expense related
to redeemable preferred stock issuance
(5)                                                  -           1,481           8,571
Adjusted EBITDA                             $   29,096      $   41,406      $   18,911
Adjusted EBITDA Margin                             6.6 %          11.0 %           7.6 %

Reprezentuje opłaty za zarządzanie i wydatki poniesione zgodnie z profesjonalną (1) umową o świadczenie usług z HIG i IVP dotyczącą doradztwa i innych usług. Wszystko

zaległe opłaty za zarządzanie zostały uregulowane, a umowa o zarządzanie zawarta

rozwiązana w momencie debiutu giełdowego Spółki w 2021 roku.

(2) Stanowi odpis kosztów oferty odroczonych w ciągu 2019 r. po

rezygnacja z wcześniejszej oferty w 2020 r.

Reprezentuje koszty związane głównie z marketingiem i prezentacjami dla (3) społeczności inwestorów, a także koszty podróży i inne koszty różne

poniesionych w wyniku IPO Spółki.

2022 obejmuje koszty wynagrodzeń oparte na kapitale własnym dla jednostek akcyjnych o ograniczonym dostępie

(„RSU”) przyznane w ciągu okresu, jak również nagrody w formie akcji przyznane w

poprzednie okresy. 2021 r. obejmuje koszty wynagrodzeń w formie instrumentów kapitałowych związane z (4) modyfikacjami i nabyciem uprawnień do nagród jednostek klasy P, a także opcji na akcje

oraz specjalne nagrody kompensacyjne przyznane w danym okresie. 2020 obejmuje

    equity-based compensation expense related to modifications and vesting of
    Class P unit awards.

Reprezentuje nadwyżkę wartości godziwej nad wynagrodzeniem zapłaconym za Serii B

Akcje uprzywilejowane wyemitowane na rzecz pracownika, HIG i IVP w czerwcu 2020 r. (5) Ponadto reprezentuje nadwyżkę wartości godziwej nad zapłaconą zapłatą

    for Series B-1 Preferred Stock that was issued to certain employees in March
    2021.


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Net Debt

We define Net Debt as total debt, which includes short-term borrowings and
long-term obligations, less cash and cash equivalents.  We consider net debt to
be an important supplemental measure of our financial position, which allows us
to analyze our leverage.

A reconciliation of non-GAAP Net Debt as of January 1, 2023 and January 2, 2022
is as follows:

                                                      As of
                                        January 1, 2023     January 2, 2022

                                                  (in thousands)

Odnawialna linia kredytowa, długoterminowa $ (25 000) $ (25 000) Środki pieniężne i ekwiwalenty środków pieniężnych

                         10,219             11,402
Net Debt                               $        (14,781)  $        (13,598)

Czynniki wpływające na nasze wyniki

Our financial condition and results of operations have been, and will continue
to be, affected by a number of factors that present significant opportunities
for us but also pose risks and challenges, including what is discussed below.
See "Risk Factors."

Customer Acquisition

Our business performance depends in part on our continued ability to
cost-effectively acquire new customers. We define customer acquisition cost
("CAC") as our brand and performance marketing expenses attributable to
acquiring new customers, including, but not limited to, agency costs and
marketing team costs but excluding any applicable equity-based compensation,
divided by the number of customers who placed their first order with us in a
given period. As a digital brand, our marketing strategy is primarily focused on
brand awareness marketing and digital advertising in channels like search,
social, and programmatic - platforms that enable us to engage our customer where
she spends her time, and in many cases also quickly track the success of our
marketing, which allows us to adjust and optimize our marketing spend.

Utrzymanie klienta

Our continued success depends in part on our ability to retain and drive repeat
purchases from our existing customers. We monitor retention across our entire
customer base. Our goal is to attract and convert visitors into active customers
and foster relationships that drive repeat purchases. During the trailing twelve
months ended January 1, 2023, we served 3.2 million Active Customers compared to
2.8 million for the trailing 12 months ended January 2, 2022.

Zarządzanie zapasami

We utilize a data-driven strategy that leverages our proprietary reorder
algorithm to manage inventory as efficiently as possible. Our "test, learn, and
reorder" approach consists of limited inventory purchases followed by the
analysis of proprietary data including real-time transaction data and customer
feedback, which then informs our selection and customization of popular
merchandise prior to reordering in larger quantities. While our initial orders
are limited in size and financial risk and our supplier partners are highly
responsive, we nonetheless purchase inventory in anticipation of future demand
and therefore are exposed to potential shifts in customer preferences and price
sensitivity over time. As we continue to grow, we will adjust our inventory
purchases to align with the current needs of the business.

Inwestycje w nasze operacje i infrastrukturę

We will continue to invest in our operations and infrastructure to facilitate
further growth of our business. While we expect our expenses to increase
accordingly, we will harness the strength of our existing platform and
our on-trend fashion expertise to make informed investment decisions. We intend
to invest in headcount, inventory, fulfillment, logistics, and our software and
data capabilities in order to improve our platform, expand into international
markets, and drive operational efficiencies. We cannot guarantee that increased
spending on these investments will be cost effective or result in future growth
in our customer base. However, we set a high

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Spis treści

zakaz zatwierdzania wszelkich inicjatyw związanych z wydatkami kapitałowymi. Wierzymy, że nasze zdyscyplinowane podejście do nakładów kapitałowych pozwoli nam generować dodatnie zwroty z inwestycji w długim okresie.

Składniki naszych wyników operacyjnych

Przychód netto

Net revenue consists primarily of gross sales, net of merchandise returns and
promotional discounts and markdowns, generated from the sale of apparel,
footwear, and accessories. Net revenue excludes sales taxes assessed by
governmental authorities. We recognize net revenue at the point in time when
control of the ordered product is transferred to the customer, which we
determine to have occurred upon shipment.

Net revenue is impacted by our number of customers and their spending habits,
AOV, product assortment and availability, and marketing and promotional
activities. During any given period, we may seek to increase sales by increasing
promotional discounts, and in other periods we may instead seek to increase
sales by increasing our selling and marketing expenses. We consider both actions
together, so increased promotional discounts in a period, which would reduce net
revenue accordingly in such period, might also result in lower selling and
marketing expenses in such period. Similarly, if we increase selling and
marketing expenses in a given period, promotional discounts may be
correspondingly reduced, thereby improving net revenue.

Koszt uzyskania przychodów i marża brutto

Cost of revenue consists of the product costs of merchandise sold to customers;
shipping and handling costs, including all inbound, outbound, and return
shipping expenses; rent, insurance, business property tax, utilities,
depreciation and amortization, and repairs and maintenance related to our
distribution facilities; and charges related to inventory shrinkage, damages,
and our allowance for excess or obsolete inventory. Cost of revenue is primarily
driven by growth in orders placed by customers, the mix of the product available
for sale on our site, and transportation costs related to inventory receipts
from our suppliers. We expect our cost of revenue to fluctuate as a percentage
of net revenue primarily due to how we manage our inventory and merchandise mix.

Gross profit is equal to our net revenue less cost of revenue. We calculate
Gross Margin as gross profit as a percentage of our net revenue. Our Gross
Margin varies across Lulus, exclusive to Lulus, and third-party branded
products. Exclusive to Lulus consists of products that we develop with design
partners and have exclusive rights to sell across our platform, but that do not
bear the Lulus brand. Gross Margin on sales of Lulus and exclusive to Lulus
merchandise is generally higher than Gross Margin on sales of third-party
branded products, which we offer for customers to "round out" the shopping
basket. As we continue to optimize our distribution capabilities and gain more
negotiation leverage with suppliers as we scale, our Gross Margin may fluctuate
from period to period depending on the interplay of these factors.

Koszty sprzedaży i marketingu

Our selling and marketing expenses consist primarily of payment processing fees,
advertising, targeted online performance marketing and customer order courtesy
adjustments. Selling and marketing expenses also include our spend on brand
marketing channels, including compensation and free clothing to social media
influencers, events, and other forms of online and offline marketing related to
growing and retaining the customer base. As discussed in "Net Revenue" above, in
any given period, the amount of our selling and marketing expense can be
affected by the use of promotional discounts in such period.

Koszty ogólnoadministracyjne

General and administrative expenses consist primarily of payroll and benefits
costs, including equity-based compensation for our employees involved in general
corporate functions including finance, merchandising, marketing, and technology,
as well as costs associated with the use by these functions of facilities and
equipment, including depreciation, rent, and other occupancy expenses. General
and administrative expenses are primarily driven by increases in headcount
required to support business growth and meeting our obligations as a public
company.

Since our IPO, we have incurred significant legal, accounting, and other
expenses that we did not incur as a private company. We expect that compliance
with the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer
Protection Act, as well as

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rules and regulations subsequently implemented by the SEC, will increase our
legal and financial compliance costs and will make some activities more time
consuming and costly.

Other Income (Expense), Net

Pozostałe przychody (koszty) netto składają się głównie z kosztów odsetek i innych dochodów różnych.

(Rezerwa) Zasiłek na podatek dochodowy

The (provision) benefit for income taxes represents federal, state, and local
income taxes. The effective rate differs from the statutory rate primarily due
to non-deductible equity-based compensation expenses and state taxes. Our
effective tax rate will change from quarter to quarter based on recurring and
nonrecurring factors including, but not limited to, the geographical mix of
earnings, enacted tax legislation, state and local income taxes, the impact of
permanent tax adjustments, and the interaction of various tax strategies.

Nasze wyniki operacji

Poniższe tabele przedstawiają nasze skonsolidowane wyniki operacyjne za prezentowane lata oraz jako procent przychodów netto:

                                                                         Percentage Change
                                                2022         2021          2022 VS 2021          2020

                                                                    (in thousands)
Net revenue                                   $ 439,652   $  375,625                 17 %     $  248,656
Cost of revenue                                 248,206      198,893                 25          138,364
Gross profit                                    191,446      176,732                  8          110,292

Selling and marketing expenses                   83,559       66,684                 25           47,812
General and administrative expenses              99,148       87,710                 13           67,155
Income (loss) from operations                     8,739       22,338       

(61) (4675)

Other income (expense), net:
Interest expense                                (1,103)     (12,774)               (91)         (16,037)
Loss on extinguishment of debt                        -      (1,392)       

      (100)                -
Other income, net                                   136           85                 60              137

Total other expense, net                          (967)     (14,081)               (93)         (15,900)

Income (loss) before income taxes                 7,772        8,257                (6)         (20,575)
Income tax (provision) benefit                  (4,047)      (6,212)       

       (35)            1,271
Net income (loss)                             $   3,725   $    2,045                 82 %     $ (19,304)


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                                       2022    2021    2020
Net revenue                              100 %   100 %   100 %
Cost of revenue                           56      53      56

Gross profit                              44      47      44

Selling and marketing expenses            19      18      19

Koszty ogólnego zarządu 23 23 27

Income (loss) from operations              2       6     (2)

Other income (expense), net:
Interest expense                           -     (3)     (6)
Loss on extinguishment of debt             -       -       -
Other income, net                          -       -       -

Total other expense, net                   -     (3)     (6)

Dochód (strata) przed opodatkowaniem 2 3 (8) Świadczenie (rezerwa) z tytułu podatku dochodowego

           (1)     (2)       -

Net income (loss)                          1 %     1 %   (8) %


Comparisons for the Fiscal Years Ended January 1, 2023 and January 2, 2022

Przychód netto

Net revenue increased in 2022 by $64.0 million, or 17%, compared to 2021. The
increase in revenue was primarily due to 17% increase in Active Customers, 16%
increase in Total Orders Placed and 9% increase in Average Order Value. The
higher revenue was partially offset by higher sales returns, markdowns and
promotional discounts compared to 2021.

Koszt uzyskania przychodów

Cost of revenue increased in 2022 by $49.3 million, or 25%, compared to 2021,
primarily due to the increase in our net revenue.  Additionally, there were
sales mix shifts into higher product cost categories, higher outbound and
returned product shipping costs, as well as the impact of higher depreciation
and allocated facility costs related to our Southern California distribution
facility that was not in place until late 2021.

Koszty sprzedaży i marketingu

Selling and marketing expenses increased in 2022 by $16.9 million, or 25%
compared to 2021. There was a $14.2 million increase in online marketing
expenses to acquire new customers and retain existing customers compared to
2021. In addition, merchant processing fees increased by $2.7 million in 2022
compared to the same period of the prior year largely due to the increase in net
revenue coupled with higher merchant fee rates.

Koszty ogólnoadministracyjne

General and administrative expenses increased by $11.4 million in 2022, or 13%,
compared to 2021. The increase was primarily due to a $3.3 million increase in
variable labor costs, which increased by 15% from 2021 to 2022 and was in line
with our increase in net revenue. Additionally, fixed labor costs increased by
$2.0 million primarily due to higher base wages and health insurance which were
partially offset by lower bonus expenses. There was higher equity-based
compensation expense of $0.9 million related to equity-based awards during 2022
due to an increase of $2.9 million in equity-based compensation expense and an
additional $0.5 million of expense related to Executive Chairman
liability-classified awards, offset by a decrease of $1.5 million in
equity-based compensation expense related to redeemable preferred stock issuance
and a decrease of $1.0 million in CEO special compensation awards expense.

In

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addition, there was a $4.5 million increase in insurance costs and professional
services, which was primarily driven by a $3.2 million increase in director and
officer insurance costs associated with being a public company. There was also
an increase of $1.1 million in hardware, software and supplies.  These increases
were partially offset by a $0.4 million reduction in other expenses, primarily
comprised of management fees that were eliminated at the time of our IPO in
November 2021.

Koszt odsetek

Interest expense decreased significantly in 2022 by $11.7 million, or 91%,
compared to 2021. The decrease is attributable to the repayment of our Term Loan
with the proceeds from our IPO in November 2021, which was partially offset by
interest expense and unused fees related to the New Revolving Facility, under
which $25.0 million of borrowings remained outstanding as of January 1, 2023.

Rezerwa na podatek dochodowy

Nasza rezerwa na podatek dochodowy w 2022 r. spadła o 2,2 mln USD, czyli 35%, do 4,0 mln USD, z 6,2 mln USD w 2021 r. Spadek rezerwy na podatek dochodowy wynikał przede wszystkim ze wzrostu niepodlegających odliczeniu kosztów wynagrodzeń opartych na akcjach oraz podlegające odliczeniu odszkodowanie funkcjonariusza.

Trendy kwartalne i sezonowość

We experience moderate seasonal fluctuations in aggregate sales volume during
the year. Seasonality in our business does not follow that of traditional
retailers, such as a typical concentration of revenue in the holiday quarter.
Our quarterly net revenue in 2021 was most highly concentrated outside of the
fourth fiscal quarter.  In 2021, we saw our highest net revenue in the second
and third fiscal quarters compared to the rest of the year as customers
purchased dresses and event wear for special occasions that had been postponed
during the height of the COVID-19 pandemic. Our quarterly net revenue in 2022
reflected the highest concentrations in the first and second fiscal quarters
compared to the rest of the year, as customer demand remained strong for dresses
and event wear, carrying forward the trend seen in 2021 with the resurgence of
events and special occasions. The third and fourth fiscal quarters of 2022 were
impacted by a worse macroeconomic environment where consumers generally lowered
their spending levels and sought higher levels of promotions and discounts.

Our quarterly gross profit fluctuates primarily based on how we manage our
inventory and merchandise mix and has typically been in line with fluctuations
in net revenue. When quarterly gross profit fluctuations have been unfavorable
relative to the fluctuations in sales, these situations have been driven by
non-recurring, external factors, such as the COVID-19 pandemic and the ensuing
macroeconomic slowdown that began in mid-2022. We saw strong demand and
favorable gross profits, with very limited promotions and discounts, during 2021
and the first half of 2022, largely due to the increase in demand for event and
occasion wear. During the second half of 2022, we successfully utilized
increased promotional discounts and markdowns to optimize our inventory mix and
quantities and stimulate customer demand, which was negatively impacted by
macroeconomic conditions, such as inflation and higher fuel prices.

Selling and marketing expenses generally fluctuate with net revenue. Further, in
any given period, the amount of our selling and marketing expense can be
affected by the use of promotional discounts in such period. In addition, we may
increase or decrease marketing spend to assist with optimizing inventory mix and
quantities.

Koszty ogólne i administracyjne składają się głównie z kosztów wynagrodzeń i świadczeń i zmieniają się z kwartału na kwartał ze względu na zmiany liczby pracowników sezonowych w celu zaspokojenia popytu w oparciu o naszą sezonowość.

Płynność i zasoby kapitałowe

Our primary sources of liquidity and capital resources are cash generated from
operating activities and borrowings under our New Revolving Facility. Our
primary requirements for liquidity and capital are inventory purchases, payroll
and general operating expenses, capital expenditures associated with
distribution, network expansion and capitalized software and debt service
requirements.  Our corporate banking relationship is with Bank of America.

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Credit Facilities

During November 2021, we entered into a Credit Agreement with Bank of America to
provide a revolving facility that provides for borrowings up to $50.0 million.
During the term of the Credit Agreement, we may increase the aggregate amount of
the New Revolving Facility up to an additional $25.0 million (for maximum
aggregate lender commitments of up to $75.0 million), subject to the
satisfaction of certain conditions under the Credit Agreement, including
obtaining the consent of the administrative agent and an increased commitment
from existing or new lenders. In addition, the Credit Agreement may be used to
issue letters of credit up to $7.5 million (the "Letter of Credit"). During
2022, we borrowed $30.0 million under the New Revolving Facility and repaid
$30.0 million of the outstanding balance. As of January 1, 2023, we had $25.0
million outstanding under the New Revolving Facility and had utilized $0.3
million under the Letter of Credit. As of January 1, 2023, we had $24.7 million
available for borrowing under the New Revolving Facility and $7.2 million
available to issue letters of credit.

The New Revolving Facility matures three years after November 15, 2021, and
borrowings thereunder will accrue interest at a rate equal to, at our option,
either (x) the term SOFR rate, plus the applicable SOFR adjustment plus a margin
of 1.75% per annum or (y) the base rate plus a margin of 0.75% (with the base
rate being the highest of the federal funds rate plus 0.50%, the prime rate and
term SOFR for a period of one month plus 1.00%). The New Revolving Facility
contains a financial maintenance covenant requiring a maximum total leverage
ratio of no more than 2.50:1.00, stepping down to 2.00:1.00 after 18 months. A
commitment fee of 37.5 basis points will be assessed on unused commitments under
the New Revolving Facility.

Dostępność i wykorzystanie gotówki

As of January 1, 2023, we had cash and cash equivalents of $10.2 million and no
restricted cash. We believe that our cash and cash equivalents, cash flows from
operating activities and the available borrowings under our New Revolving
Facility, will be sufficient to meet our capital expenditures, working capital
needs and debt repayments for at least the next 12 months from the date of this
Annual Report on Form 10-K. However, we cannot ensure that our business will
generate sufficient cash flow from operating activities or that future
borrowings will be available under our borrowing agreements in amounts
sufficient to pay indebtedness or fund other working capital needs. Actual
results of operations will depend on numerous factors, many of which are beyond
our control as further discussed in Part I, "Item 1A. Risk Factors" included
elsewhere in this Annual Report on Form 10-K.

Analiza przepływów pieniężnych

Poniższa tabela podsumowuje nasze przepływy pieniężne we wskazanych okresach:

                                                    2022          2021         2020

                                                                   (in thousands)
Net cash provided by (used in):
Operating activities                              $   6,199    $   26,896    $   4,856
Investing activities                                (5,123)       (3,394)      (1,913)
Financing activities                                (2,765)      (27,653)        6,755
Net (decrease) increase in cash, cash
equivalents and restricted cash                   $ (1,689)    $  (4,151)  

 $   9,698


Operating Activities

During 2022, net cash provided by operating activities was $6.2 million after
net income of $3.7 million was adjusted for certain non-cash items, including
depreciation and amortization, non-cash lease expense, amortization of debt
discount and debt issuance costs, equity-based compensation, deferred taxes and
the effect of changes in working capital and other activities.

In 2022, net cash provided by operating activities decreased $20.7 million from
$26.9 million in 2021 to $6.2 million in 2022. The changes in cash provided was
primarily driven by an increase of $1.7 million due to an increase in net income
from $2.0 million in 2021 to net income of $3.7 million in 2022, a decrease of
$29.5 million related to changes in our operating assets and liabilities and an
increase of $7.1 million of non-cash items. The decrease of $29.5 million was
due to changes in our operating assets and liabilities from a net increase of
$6.6 million in 2021 to net decrease of $22.9 million in 2022. This was
primarily driven by a $19.6 million decrease in accrued expenses and other
current liabilities, $15.7 million increase in inventory balances, $6.5 million
increase in income tax receivable and a $2.6 million decrease in operating lease
liabilities; these were partially offset by $4.0 million increase in accounts

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payable, $3.4 million increase in prepaid and other current assets, $3.5 million
decrease in accounts receivable, $2.6 million decrease in assets for recovery,
and a $1.4 million decrease in other non-current liabilities. In addition, the
increase of $7.1 million of non-cash items was from a net increase of $18.3
million in 2021 to a net increase of $25.4 million in 2022. This was primarily
driven by $3.8 million less payments in interest capitalized to principal of
long term debt and revolving line of credit, $3.4 million increase in deferred
income taxes, $3.3 million increase in non-cash lease expense as a result of the
adoption of Financial Accounting Standards Board Accounting Standards
Codification 842, Leases ("ASC 842") in 2022, $1.3 million increase in
depreciation and amortization and an increase of $0.9 million in non-cash
equity-based compensation expenses due to increase in non-cash equity-based
compensation expense including employee and Executive Chairman equity-based
compensation grants, which were partially offset by reductions in equity-based
compensation expense related to CEO special compensation awards and redeemable
preferred stock issuance. These increases in non-cash expenses were offset by
reductions associated with the payoff of our long-term debt in 2021, including
decreases of $2.1 million of amortization of debt discount and debt issuance
costs, $2.1 million of interest capitalized to principal of long-term debt and
revolving line of credit, and $1.4 million of loss on debt extinguishment.

Działalność inwestycyjna

Our primary investing activities have consisted of purchases of equipment to
support our overall business growth and internally developed software for the
continued development of our proprietary technology infrastructure. Purchases of
property and equipment may vary from period-to-period due to timing of the
expansion of our operations. We have no material commitments for capital
expenditures.

In 2022, net cash used in investing activities was $5.1 million, which was a
$1.7 million increase from $3.4 million in 2021. This was attributable to
capital expenditures related to the opening of our new distribution facility in
Ontario, California, the relocation and opening of our new studio facility in
Los Angeles, California, as well as equipment for our general operations,
software and hardware purchases, and internally developed software.

Działania finansowe

Działalność finansowa polega głównie na zaciąganiu i spłacaniu pożyczek związanych z naszym nowym kredytem odnawialnym i kredytowym oraz emisjami akcji zwykłych i uprzywilejowanych.

In 2022, net cash used in financing activities was $2.8 million, which was a
decrease of $24.9 million from $27.7 million of net cash used in financing
activities in 2021. This decrease was attributable primarily to a reduction of
$110.1 million in repayments of long-term debt and debt issuance cost and a
reduction of $16.5 million related to the net of redemption and issuance of
redeemable preferred stock. This was offset by a reduction of $83.4 million of
net proceeds from the IPO in 2021 and related offering costs, a $16.5 million
decreases in proceeds (net of repayments) from our revolving line of credit
facilities, $1.1 million of withholding tax payments related to vesting of RSUs,
and a $0.8 million increase of finance lease payments primarily attributed to
the robotics system at the Pennsylvania distribution center.

Zobowiązania umowne i inne zobowiązania

Our most significant contractual obligations relate to our New Revolving
Facility and operating lease obligations on our distribution facilities and
corporate offices.  For information on our New Revolving Facility, see Note 5,
Debt, and for information on our contractual obligations for operating leases,
see Note 6, Leases, of the accompanying notes to our consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.

                   Critical Accounting Policies and Estimates

Our consolidated financial statements and the related notes thereto included
elsewhere in this Annual Report on Form 10-K are prepared in accordance with
GAAP. The preparation of consolidated financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, costs and expenses and related disclosures. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results could differ
significantly from our estimates. To the extent that there are differences
between our estimates and actual results, our future financial statement
presentation, financial condition, results of operations and cash flows will be
affected.

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We believe that the assumptions and estimates associated with revenue
recognition, equity-based compensation, and income taxes have the greatest
potential impact on our consolidated financial statements. Therefore, we
consider these to be our critical accounting policies and estimates. For further
information on all of our significant accounting policies, please see Note 2,
Significant Accounting Policies, of the accompanying notes to our consolidated
financial statements included elsewhere in this Annual Report on Form 10-K.

Rozpoznawanie przychodów

While our revenue recognition does not involve significant judgment, it
represents an important accounting policy. We generate revenue from the sale of
merchandise products sold directly to end customers. We recognize revenue when
the product is transferred to the customer, which is generally upon shipment. We
estimate a reserve of future returns based on historical return rates. There is
judgment in utilizing historical trends for estimating future returns. Our
refund liability for sales returns is included in returns reserve on the
consolidated balance sheets and represents the expected value of the refund that
will be due to our customers.

Leasing

On January 3, 2022, we adopted ASC 842. We elected the practical expedient
package, which among other practical expedients, includes the option to retain
the historical classification of leases entered into prior to January 3, 2022,
and allows entities to recognize lease payments on a straight-line basis over
the lease term for leases with a term of 12 months or less. We also elected the
practical expedient to combine lease and non-lease components. We determine if
an arrangement contains a lease at inception based on whether the Company has
the right to control the asset during the contract period and other facts and
circumstances.

We are the lessee in a lease contract when we obtain the right to control the
asset. Operating leases are included in lease right-of-use ("ROU") assets, lease
liabilities, current and lease liabilities, noncurrent in our consolidated
balance sheets. ROU assets represent our right to use an underlying asset for
the lease term, and lease liabilities represent our obligation to make lease
payments arising from the lease. Lease liabilities are recognized based on the
present value of the future minimum lease payments over the lease term at lease
inception or modification, with ROU assets recorded based on the corresponding
lease liability at lease inception or modification adjusted for payments made to
the lessor at or before the lease commencement date, initial direct costs
incurred and any tenant incentives allowed for under the lease. We determine the
lease term by assuming the exercise of renewal options that are reasonably
certain. As most of our leases do not provide an implicit interest rate, we use
our incremental borrowing rate ("IBR") to determine the present value of lease
payments. The determination of the IBR requires judgment and is primarily based
on publicly-available information for companies within similar industries and
with similar credit profiles. We adjust the rate for the impact of
collateralization, the lease term and other specific terms included in each
lease arrangement. The IBR is determined at the lease commencement and is
subsequently reassessed upon a modification to the lease arrangement. Refer to
Note 6, Leases, of the accompanying notes to our consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.

Wynagrodzenie oparte na kapitale

Equity-based compensation is measured at the grant date or modification date
("measurement date") for all equity-based awards made to employees and
nonemployees based on the estimated fair value of the awards. Equity-based
compensation expense is recognized on a straight-line basis over the period the
employee or non-employee is required to provide service in exchange for the
award, which is generally the vesting period. We recognize forfeitures as they
occur.

Under an employment agreement entered into with Mr. McCreight in 2021 and
subject to ongoing employment, and in light of the closing of the IPO, Mr.
McCreight will receive two bonuses to settled in fully-vested shares of our
common stock equal to $3.0 million each ($6.0 million in aggregate) on March 31,
2022 and March 31, 2023. We initially concluded that the two bonuses were
liability-classified upon issuance. Upon the completion of the IPO, the two
bonuses became equity-classified as they no longer met the criteria for
liability classification and $2.9 million was reclassified from accrued expenses
and other current liabilities and other noncurrent liabilities to additional
paid-in capital in 2021. Under a new employment agreement with Mr. McCreight
signed in November 2022, reflecting his new role as Executive Chairman, which
became effective on the Effective Date, Mr. McCreight will receive two bonuses
equal to $2.0 million and $1.0 million in March 2023 and March 2024,
respectively, which will be settled in RSUs that vest in 4 and 2 quarterly
installments from March 2023 and March 2024, respectively, through December 2023
and June 2024, respectively. We concluded that the two bonuses were
liability-classified upon issuance in November 2022.

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Spis treści

The fair value of grants of restricted stock or restricted stock units is based
on the fair value of our common stock underlying the award on the measurement
date. For stock option awards, we apply the Black-Scholes option pricing model
to determine the fair value. The model utilizes the estimated per share fair
value of our underlying common stock at the measurement date, the expected or
contractual term of the option, the expected stock price volatility, risk-free
interest rates, and the expected dividend yield of the common stock.

Szacunki oczekiwanej zmienności opieramy na historycznej zmienności porównywalnych spółek z reprezentatywnej grupy porównawczej wybranej na podstawie danych branżowych, finansowych i kapitalizacji rynkowej.

Determining the grant date fair value of options using the Black-Scholes option
pricing model requires us to make assumptions and judgments. These estimates
involve inherent uncertainties and, if different assumptions had been used,
stock-based compensation expense could have been materially different from

the
amounts recorded.

Income Taxes

We compute our provision for income taxes using the asset and liability method,
under which deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial reporting
and tax bases of assets and liabilities and for operating losses and tax credit
carryforwards. Deferred tax assets and liabilities are measured using the
currently enacted tax rates that apply to taxable income in effect for the years
in which they are expected to be realized or settled.

Deferred tax assets are evaluated for future realization and reduced by a
valuation allowance to the amount that is more likely than not to be realized.
We consider many factors when assessing the likelihood of future realization,
including our recent cumulative loss, earnings expectations in earlier future
years, and other relevant factors.  We believe that it is more likely than not
that forecasted income, together with future reversals of existing taxable
temporary differences and results of recent operations, will be sufficient to
fully recover the deferred tax assets. In the event that the Company determines
all or part of the net deferred tax assets are not realizable in the future, the
Company would record a valuation allowance.

Najnowsze komunikaty księgowe

Więcej informacji na temat ostatnich oświadczeń księgowych, terminu ich przyjęcia oraz naszej oceny znajduje się w nocie 2, Istotne zasady rachunkowości — ostatnio wydane oświadczenia rachunkowe, towarzyszących informacji dodatkowych do naszego skonsolidowanego sprawozdania finansowego, zawartych w innym miejscu niniejszego raportu rocznego na formularzu 10-K , w zakresie, w jakim to zrobiliśmy, o ich potencjalnym wpływie na naszą sytuację finansową i wyniki naszej działalności.

JOBS Ustawa o rachunkowości Wybory

We are an "emerging growth company," as defined in the JOBS Act. Under the JOBS
Act, emerging growth companies can delay adopting new or revised accounting
standards until such time as those standards apply to private companies. We have
elected to use this extended transition period until we are no longer an
emerging growth company or until we affirmatively and irrevocably opt out of the
extended transition period. Accordingly, our consolidated financial statements
and our unaudited interim consolidated financial statements may not be
comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.

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