Note 15 – Subsequent Events

On May 7, 2025, the Company entered into an additional $5.2 million term loan (the “Additional Term Loan”) with Beyond to provide flexibility for general working capital purposes and for the support of the Company’s updated store conversion strategy. The Additional Term Loan consisted of $5.0 million in cash and $0.2 million in unpaid collaboration fees for the first 13 weeks of fiscal 2025 and any accrued and unpaid interest on the $8.5 million existing term loan. In addition, effective May 7, 2025 the agreement also provides Beyond the right to convert the $13.7 million of outstanding loans under the Beyond Credit Agreement into shares of the Company’s common stock at a price equal to the closing price on Nasdaq on the day prior to the date on which a conversion election is made, up to a number of shares equal to 19.90% of the outstanding shares of the Company’s common stock on May 7, 2025. Beyond has the option to convert up to a greater number of shares, but not more than a number that would result in Beyond, holding for so long as any obligations remain outstanding under the 2023 Credit Agreement, 65% of the total outstanding number of shares of the Company’s common stock after such conversion, provided that such conversion would be subject to Nasdaq shareholder approval rules, if applicable.

On May 7, 2025, the existing collaboration fee payable to Beyond of 0.25% of all revenues increased to 0.50% of brick-and-mortar retail revenues only, to capture the expanded brand opportunity, while eliminating the 3.0% licensed brand royalty. In addition, on May 7, 2025, the Company also entered into a purchase agreement providing for the future sale to Beyond, for a purchase price of $5 million, of Kirkland’s right, title and interest in and to its trademarks and domain names comprised of or containing the element KIRKLAND’S ( the “Kirkland’s Brand”), the consummation of which is conditioned upon the consent of Bank of America, N.A. as the Company's senior lender and the release of all liens on the Kirkland’s Brand including the claims of the Agent under the 2023 Credit Agreement.

On May 20, 2025, a tornado hit the Company’s leased Jackson, Tennessee distribution center, causing damage to the Company’s assets and disruptions to the Company's operations, particularly with respect to its e-commerce channel. The Company maintains insurance policies to cover the repair or replacement of the Company’s assets that suffered loss or damage, and the Company is working closely with its insurance carriers to ascertain the full amount of insurance proceeds, net of the deductible on the policies, due to the Company as a result of the damages and the loss the Company suffered. The Company’s insurance policies also provide coverage for interruption to its business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered. At this time, the amount of combined property damage and business interruption costs and recoveries cannot be estimated, but currently the Company is still able to operate in the facility.

As of June 17, 2025, the Company had $38.8 million of outstanding debt and $5.1 million of outstanding letters of credit under its revolving credit facility with no availabilty for borrowing, after the minimum required excess availability covenant, and $13.7 million in term loans to Beyond.