Lulus Fashion Lounge Holdings Inc

From time to time, we may be a party to litigation and subject to claims, including employment claims, wage and hour claims, intellectual property claims, privacy claims, contractual and commercial disputes and other matters that arise in the ordinary course of our business. We accrue a liability when management believes information available prior to the issuance of the condensed consolidated financial statements indicates it is probable a loss has been incurred as of the date of the condensed consolidated financial statements and the amount of loss can be reasonably estimated. We adjust our accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal costs are expensed as incurred.

As disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, we received a cease and desist letter alleging intellectual property infringement. This matter was resolved by the parties at a confidential mediation subsequent to the quarter ended September 29, 2024. As of September 29, 2024, the Company had accrued a liability net of anticipated insurance receivable related to resolution of this matter in an amount that was not material to the Company’s condensed consolidated financial statements.

Other than as discussed above, we are not presently a party to any legal proceedings that we believe would, if determined adversely to us, materially and adversely affect our future business, financial condition, cash flows, or results of operations.