On April 23, 2020, the Company filed a Current Report on Form 8-K (the “Form 8-K”) to indicate its intention to rely on the Order and delay the filing of November 28, 2017,its Quarterly Report for the first quarter ended May 2, 2020, which was 47,952,360.

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Stein Mart, Inc.

originally due to be filed with the SEC on or before June 16, 2020. Consistent with the Company’s statements in the Form 8-K, the Company was unable to file the Quarterly Report until July 16, 2020 due to circumstances related to the coronavirus (“COVID-19”) pandemic. In particular, the Company required additional time due to its previously announced reduction in staff, suspension of in-person operations at its corporate headquarters, and temporary closure of its stores for an unknown period of time, as well as other financial and operational concerns associated with or caused by the COVID-19 pandemic. These conditions caused significant disruptions to the Company’s operations requiring key personnel to devote considerable time and resources to respond to the emerging impacts to its business, which limited their availability to complete the Quarterly Report and to thoroughly evaluate the impact of the COVID-19 pandemic.

The accompanying Condensed Consolidated Financial Statements (Unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and footnotes required by GAAP for completeannual audited financial statements. In our opinion, all adjustments (consisting primarily of normal and recurring adjustments) considered necessary for a fair presentation have been included. Due to the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. These Condensed Consolidated Financial Statements (Unaudited) should be read in conjunction with the audited Consolidated Financial Statements included in our Annual Report on Form10-K/A 10-K for the year ended January 28, 2017,February 1, 2020, filed with the Securities and Exchange Commission (“SEC”) on April 18, 2017.

June 15, 2020.

On April 23, 2020, the Company filed a Current Report on Form 8-K (the “Form 8-K”) to indicate its intention to rely on the Order and delay the filing of its Quarterly Report for the first quarter ended May 2, 2020, which was originally due to be filed with the SEC on or before June 16, 2020. Consistent with the Company’s statements in the Condensed Consolidated Statements of Cash Flows (Unaudited) duringForm 8-K, the 39 weeks ended October 29, 2016,Company was unable to conformfile the Quarterly Report until July 16, 2020 due to the 2017 presentation.

Correction of an Immaterial Error

During the fourth quarter of fiscal 2016, we identified an immaterial prior period error in ourlower-of-cost-or-market adjustment for aged inventory. The immaterial error was corrected with a charge during the fourth quarter of fiscal 2016 resulting in anout-of-period increase in Cost of merchandise sold. The effect of this immaterial error on the 13 and 39 weeks ended October 29, 2016 would have been an increase of $0.2 million to Cost of merchandise sold, a decrease of $0.1 million in net income and an increase of $0.7 million to Cost of merchandise sold and a decrease of $0.4 million in net income, respectively.

Accrued Expenses and Other Current Liabilities

The major components of accrued expenses and other current liabilities are as follows (in thousands):

						October 28, 2017				January 28, 2017				October 29, 2016
Compensation and employee benefits						$	7,944			$	11,016			$	7,701
Unredeemed gift and merchandise return cards							8,777				11,954				8,180
Property taxes							17,364				14,274				15,000
Accrued vacation							7,715				7,715				7,306
Other							36,795				27,813				38,889
Accrued expenses and other current liabilities						$	78,595			$	72,772			$	77,076

Capital Leases

In October 2017, Stein Mart entered into a three-year capital lease agreement for networking and telephone equipment. The capital lease agreement carries a bargain purchase option for the equipment. The leased networking equipment has a useful life of three years and the telephone equipment has a useful life of five years; the equipment will be depreciated on a straight-line basis over the respective periods. The leased equipment was recorded at fair value as this amount was less than the present value of the minimum lease payments, which was $0.8 million.

The gross value of assets subject to capital leases was $0.8 million as of October 28, 2017, and is included in Property and equipment, net on the Condensed Consolidated Balance Sheets (Unaudited). The remaining capital lease obligation of $0.8 million as of October 28, 2017, is split between Accrued expenses and other current liabilities for the short-term portion and Other liabilities for the long-term portion on the Condensed Consolidated Balance Sheets (Unaudited).

Hurricanes Harvey and Irma

During the third quarter of 2017, hurricanes Harvey and Irma made landfall in Texas and Florida, respectively. We operate 44 stores in Texas and 46 stores in Florida and approximately half of these locations were closed for multiple days or had reduced hours of operation. We have recognized a loss of approximately $1.4 million in hurricane-related expenses, mainly related to damaged inventory. We have also received $0.5 million in insurance recoveries during the period. We continue to work with our insurers on our claims and will recover additional amounts for our lossescircumstances related to the hurricanes. Those recoveriescoronavirus (“COVID-19”) pandemic. In particular, the Company required additional time due to its previously announced reduction in staff, suspension of in-person operations at its corporate headquarters, and temporary closure of its stores for an unknown period of time, as well as other financial and operational concerns associated with or caused by the COVID-19 pandemic. These conditions caused significant disruptions to the Company’s operations requiring key personnel to devote considerable time and resources to respond to the emerging impacts to its business, which limited their availability to complete the Quarterly Report and to thoroughly evaluate the impact of the COVID-19 pandemic.

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of COVID-19. The pandemic has significantly impacted the economic conditions in the U.S., accelerating during the first half of March, as federal, state and local governments reacted to the public health crisis, creating significant uncertainties in the U.S. economy. In March 2020, we announced the temporary closure of all stores for an unknown period of time and significant actions taken to mitigate the ongoing impact of the COVID-19 pandemic on our cash flows to protect our business and associates for the long term in response to the crisis. Such actions include targeted reductions in discretionary operating expenses such as advertising and payroll expenses, including furloughing a significant number of our employees and temporarily reducing the payroll of remaining employees, reducing capital expenditures, reducing merchandise receipts, and utilizing funds available under our Revolving Credit Facility and Promissory Note. Further, we have sought and are seeking extended payment terms with all vendors, including merchandise, expense and rent vendors. We started reopening stores on April 23, 2020 as government jurisdictions have allowed, and as of June 15, 2020, we have reopened all of our stores with limited operating hours. We are unable to predict if additional periods of store closures will be recorded when theyneeded or mandated.

Continued impacts of the pandemic have had a material adverse impact on our revenues, earnings, liquidity and cash flows, and may require significant additional actions in response, including, but not limited to, further employee furloughs, reduced store hours, store closings, expense reductions or discounting of pricing of our products, all in an effort to mitigate such impacts. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the U.S., the impact on capital and financial markets and the related impact on consumer confidence and spending, all of which are received.

Stein Mart, Inc.

Noteshighly uncertain and cannot be predicted. This situation is rapidly changing and additional impacts to Condensedthe business may arise that we are not aware of currently. While the disruption is currently expected to be temporary, there is uncertainty around the duration. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity or capital resources cannot be reasonably estimated at this time.

The significant risks and uncertainties related to the Company's liquidity described above raise substantial doubt about the Company's ability to continue as a going concern over the next twelve months. The Consolidated Financial Statements - Continued

(Unaudited)

Recenthave been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and other commitments in the normal course of business. The accompanying Consolidated Financial Statements do not include any adjustments to reflect the possible future effects of this uncertainty on the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities.

Revenue from sales of our merchandise is recognized at the FASB issued ASUNo. 2016-02, Leases (Topic 842). This update requires organizationstime of sale net of any returns, discounts and percentage-off coupons. Our Ecommerce operation records revenue as online orders are fulfilled and provided to recognize lease assetsa carrier for delivery from our warehouse or directly from our vendors. Store sales include online orders that are fulfilled and leaseshipped or picked up from our stores. Shipping and handling fees charged to customers are also included in total net sales with corresponding costs recorded as cost of merchandise sold as they are considered a fulfillment cost. Future merchandise returns are estimated based on historical experience. Sales tax collected from customers is not recognized as revenue and is included in accrued expenses and other current liabilities on the balance sheet and also disclose key information about leasing arrangements. The main provisions of the new standard include: clarifications to the definitions of a lease, components of leases, and criteria for determining lease classification; requiring virtually all leased assets, including operating leases and related liabilities, to be reflected on the lessee’s balance sheet; and expanding and adding to the required disclosures for lessees. This ASU is effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual period. We are in the process of evaluating our lease portfolio and identifying what additional data will be needed to comply with the new standard. We have identified a software application suited to track and account for leases under the new standard. We plan to adoptASU 2016-02 in fiscal year 2019 and are currently evaluating the overall effect the adoption of this ASU will have on our financial condition, results of operations and cash flows. We currently believe the adoption of this ASU will have a significant effect on our Consolidated Balance Sheets dueuntil paid. Our shoe department and vintage luxury handbag department inventories are each owned by separate single suppliers under supply agreements. Our commissions from the sales in these areas are included in net sales on the Consolidated Statements of Operations.

Our gift and merchandise return cards may not ultimately be redeemed either in full or partially. We account for this “breakage” of unused amounts as revenue in proportion to the additionpattern of our applicable leased assets and related liabilities. We do not believerights exercised by the adoption of this ASU will have a significant effect on our results of operations as the depreciation and interest under the new standard will approximate our rent expense as itcustomer. Breakage revenue is currently being recorded.

In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers (Topic 606). This update provides a single comprehensive model for entities to use in accounting forrecorded within other revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASUNo. 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied.

We have completed an initial scoping analysisConsolidated Statements of the effect of the standards to identify the revenue streams that may be affected by this ASU. In our ongoing evaluation of this ASU, we have determined that the new standard will primarily apply to the following areas of our business: point of sale transactions, ecommerce, consignment, drop ship, shipping and handling, credit card income, gift card breakage and loyalty programs. We expect the adoption will not change the timing or amount of revenue recognized as it relates to revenue from point of sale at the registers in our stores, which constitutes approximately 97% of our Net sales revenue. We continue to evaluate other revenue streams, such as ecommerce sales and shipping revenue, and there may be a slight change in the timing of when such revenue is recognized.

This guidance was deferred by ASUNo. 2015-14, issued by the FASB in August 2015, and is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual and interim reporting periods beginning after December 15, 2016. While do not expect this change, if any, to have a material effect, we are currently evaluating the effect the adoption of these ASUs may have on our financial condition, results of operations and cash flows, as well as our preferred method of adoption. We will adopt these ASUs, including all related new disclosures, beginning in the first quarter of fiscal 2018.

Stein Mart, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited)

2. Shareholders’ Equity

Dividends

During the 39 weeks ended October 28, 2017, we paid a quarterly dividend of $0.075 per common share on April 14, 2017. During the 39 weeks ended October 29, 2016, we paid three quarterly dividends of $0.075 per common share on April 15, 2016, July 15, 2016 and October 14, 2016.

Stock Repurchase Plan

Operations. During the 13 weeks ended May 2, 2020 and May 4, 2019, we recognized $0.4 million and $0.6 million, respectively, of breakage revenue on unused gift and merchandise return cards.

We offer co-branded and private label credit cards under the Stein Mart brand. These cards are issued by Synchrony Bank (“Synchrony”) in accordance with our Amended and Restated Co-Brand and Private Label Credit Card Consumer Program Agreement (the “Agreement”). Synchrony extends credit directly to card holders, provides all servicing for the credit card accounts and bears all risk of credit and fraud losses. On August 21, 2019, we entered into an amendment to our Agreement with Synchrony whereby Synchrony waived its rights to require us to post cash reserves to cure our failure to satisfy one or more of the quarterly financial covenants specified in the Agreement for periods through October 28, 2017,31, 2020 (the “Exemption Period”). As consideration for Synchrony’s entry into this amendment, we agreed to reduce the amount of fees paid to us by Synchrony under the Agreement from September 1, 2019 through the end of the Exemption Period.

During the 13 weeks ended May 2, 2020 and May 4, 2019, we repurchased 5,636137,270 shares and 102,543 shares, respectively, of our common stock in the open market at a total cost of less than $0.1 million. During the 13 weeks ended October 29, 2016, we repurchased 15,999 shares of our common stock at a total cost of approximately $0.1 million. During the 39 weeks ended October 28, 2017, we repurchased 69,122 shares of our common stock at a total cost of approximately $0.2 million. During the 39 weeks ended October 29, 2016, we repurchased 166,657 shares of our common stock at a total cost of approximately $1.1 million.million in each period, respectively. Stock repurchases during these periods were for tax withholding amountstaxes due on the vesting of employee stock awards and during 2017 and 2016, included no shares purchased on the open market under our previously authorized stock repurchase plan.awards. As of October 28, 2017,May 2, 2020, there are 427,408366,889 shares that can be repurchased pursuant to the Board of Directors’ current authorization.

3.

Basic earnings (loss) per share under("EPS”) is computed by dividing net income (loss) by thetwo-class method. In applying thetwo-class method, income is allocated to both basic weighted-average number of common stock shares and participating securities based on their respective weighted-average shares outstanding for the period.

Diluted EPS is calculated by considering the impact of potential common stock equivalents on the weighted-average number of common shares outstanding.

The following table sets forth a reconciliation of basic weighted-average number of common shares to diluted weighted-average number of common shares (in thousands):

For the 13 weeks ended May 2, 2020, there were 0.3 million shares excluded from the diluted EPS calculation because the impact of their assumed exercise would be anti-dilutive due to a net loss in that period. These shares are comprised of a mix of restricted stock awards and restricted stock units. For periods of net loss, basic and diluted (loss) earnings per common share (in thousands, except per share data):

		13 Weeks Ended				13 Weeks Ended				39 Weeks Ended				39 Weeks Ended
		October 28, 2017				October 29, 2016				October 28, 2017				October 29, 2016
Basic:
Net (loss) income		$	(14,616	)		$	(11,010	)		$	(23,909	)		$	5,308
Income allocated to participating securities			-				18				2				22
Net (loss) income available to common shareholders		$	(14,616	)		$	(11,028	)		$	(23,911	)		$	5,286
Basic weighted-average shares outstanding			46,447				45,845				46,292				45,720
Basic (loss) earnings per common share		$	(0.31	)		$	(0.24	)		$	(0.52	)		$	0.12
Diluted:
Net (loss) income		$	(14,616	)		$	(11,010	)		$	(23,909	)		$	5,308
Income allocated to diluted participating securities			-				18				2				22
Net (loss) income available to common shareholders		$	(14,616	)		$	(11,028	)		$	(23,911	)		$	5,286
Basic weighted-average shares outstanding			46,447				45,845				46,292				45,720
Incremental shares from share-based compensation plans			-				-				-				879
Diluted weighted-average shares outstanding			46,447				45,845				46,292				46,599
Diluted (loss) earnings per common share		$	(0.31	)		$	(0.24	)		$	(0.52	)		$	0.11

Options to acquireEPS are the same, as the assumed conversion of stock-based awards are antidilutive.

Dilutive weighted average shares outstanding also excludes approximately 1.9 million and performance share awards totaling approximately 2.9 million and 1.4 million shares ofpotential common stock equivalents that were outstandingout-of-the-money during the 13 weeks ended October 28, 2017May 2, 2020 and October 29, 2016, respectively, were not included in the computationMay 4, 2019, respectively. These shares are comprised of diluted (loss) earnings per common share. Optionsa mix of stock options, restricted stock awards, and restricted stock units. Stock options excluded were those that had exercise prices greater than the average market price of the common shares such that inclusion would have been anti-dilutive. Options to acquireantidilutive. Restricted stock awards and units were shares and performance share awards totaling approximately 2.9 million and 2.1 million shares of common stock that were antidilutive as calculated using the treasury stock method.

On February 19, 2018, we entered into Amendment No. 1 (the “Credit Agreement Amendment”) to the Credit Agreement with Wells Fargo. The Credit Agreement Amendment provided for, among other things, an Accommodation Period (as defined in the Credit Agreement Amendment) during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively,which we were not includedrequired to meet the Fixed Charge Coverage Ratio (as defined in the computation of diluted (loss) earnings per common share. Options excluded were those that had exercise prices greater thanCredit Agreement). This change permitted us to borrow the average market pricefull amount of the common shares suchthen applicable borrowing base until we delivered our financial statements for the Measurement Period (as defined in the Credit Agreement) ended February 28, 2018. Pursuant to the Credit Agreement Amendment, a Cash Dominion Event (as defined in the Credit Agreement Amendment) occurred as of the effective date of the Credit Agreement Amendment and at all times thereafter. Because of the Cash Dominion Event, all of our cash receipts were swept daily to repay outstanding borrowings under the Credit Agreement and the amount outstanding under the Credit Agreement was classified as a short-term obligation. As noted below, the Third Credit Agreement Amendment removed the Cash Dominion Event effective September 18, 2018.

On September 18, 2018, we entered into Amendment No. 3 (the “Third Credit Agreement Amendment”) to the Credit Agreement with Wells Fargo. The Third Credit Agreement Amendment provided for, among other things, the following: (1) the increase of Aggregate Tranche A Revolving Loan Commitments (as defined in the Second Credit Agreement Amendment) from $225.0 million to $240.0 million; (2) an extension of the maturity date of the Revolving Credit Facility to the earlier of (a) the maturity date of the Term Loan Agreement (as defined below) or (b) September 18, 2023; and (3) the elimination of Cash Dominion Event status and a change in Cash Dominion to be triggered only in the event of (a) the occurrence and continuance of any Event of Default or (b) Excess Availability of less than (A) 10.0 percent of the loan cap at any time or (B) 12.5 percent of the loan cap for 3 consecutive business days. During 2018, debt issuance costs of less than $0.1 million were associated with the Third Credit Agreement Amendment and are being amortized over its term. Debt issuance costs of $0.1 million remaining under the initial Credit Agreement are being amortized over the new term of the Third Credit Agreement Amendment. The elimination of cash dominion status changed the debt classification from a short-term to long-term obligation at that inclusion would have been anti-dilutive. For periodstime.

On February 26, 2019, we entered into Amendment No. 4 (the “Fourth Credit Agreement Amendment”) to the Credit Agreement with Wells Fargo. The Fourth Credit Agreement Amendment provided for, among other things, a modification to the definition of net loss, basic“Capital Expenditures” and diluted EPS“Permitted Indebtedness” as defined in the Fourth Credit Agreement Amendment.

During the first quarter of 2020, due to the financial and operating impacts of the COVID-19 pandemic, certain Events of Default occurred that were subsequently waived on June 11, 2020, when we entered into Amendment No. 5 (the "Fifth Credit Agreement Amendment") to the Credit Agreement with Wells Fargo. The Fifth Credit Agreement Amendment provides for, among other things, the waiver of certain Events of Default and the modification of certain provisions of the Credit Agreement subject to the conditions set forth in the Fifth Credit Agreement Amendment. The Events of Default, which include the presence of a “going concern” explanatory paragraph in the report of our independent registered public accounting firm on our financial statements as of and for the year ended February 1, 2020, are further defined under Specified Defaults in the same, asFifth Credit Agreement Amendment. See Note 1, "Basis of Presentation" of the assumed conversion of stock options and performance awards are anti-dilutive.

Stein Mart, Inc.

Notes to Condensed Consolidated Financial Statements - Continued

for further discussion of our going concern evaluation. Due to the uncertainties concerning the Company's future liquidity and on-going covenant compliance as a result of the impact of the COVID-19 pandemic on the Company's business, the amount outstanding under our Credit Facilities is classified as a current obligation in the consolidated balance sheet as of May 2, 2020.