UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.  )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

CONN’S, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing proxy statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

CONN’S, INC.

2445 Technology Forest Blvd.

Building 4, Suite 800

The Woodlands, Texas 77381

, 2024

Dear Conn’s Stockholder:

On December 18, 2023, Conn’s, Inc. (the “Company”) entered into an investment agreement (the “Investment Agreement” and the transactions contemplated thereby, the “Investment Agreement Transactions”), among the Company, Franchise Group Newco BHF, LLC (“Newco BHF”), W.S. Badcock LLC (“Badcock”), Freedom VCM Interco Holdings, Inc. (“FVCM”) and Franchise Group, Inc. Pursuant to the Investment Agreement, Newco BHF contributed to the Company all of the issued and outstanding equity interests of Badcock and FVCM agreed to contribute residual interests in certain receivables then held by B. Riley Receivables II, LLC (“BRR2”) to Badcock upon the satisfaction of certain indebtedness of BRR2 in the future. In exchange for the contributions, the Company issued an aggregate of 1,000,000 shares of the Company’s nonvoting convertible preferred stock, par value $0.01 per share (“preferred stock”), allocating: (a) 656,847.95 of such shares to Newco BHF; and (b) 343,152.05 of such shares to FVCM. The preferred stock is subject to the terms and conditions set forth in the Certificate of Designations of Nonvoting Convertible Preferred Stock filed by the Company with the Secretary of State of the State of Delaware (the “Certificate of Designations”).

Pursuant to the Certificate of Designations, upon receipt of the requisite stockholder approvals of the Charter Amendment Proposal and the Conversion Proposal (as defined below) and the effectiveness of the amendments to the Company’s certificate of incorporation, the preferred stock will automatically convert into an aggregate of 24,540,295 shares of a new class of non-voting common stock, par value $0.01 per share (“non-voting common stock”), which represents 49.99% of the issued and outstanding shares of the Company’s common stock (inclusive of both voting common stock and non-voting common stock) immediately following the closing of the Investment Agreement Transactions and after giving effect to the issuance of the preferred stock and assuming the conversion of the preferred stock into non-voting common stock. The closing of the Investment Agreement Transactions occurred simultaneously with the signing of the Investment Agreement.

In connection with the Investment Agreement Transactions, on December 18, 2023, the Company amended (the “DDTL Amendment” and, together with the Investment Agreement Transactions, the “Transaction”) the Delayed Draw Term Loan and Security Agreement, dated as of July 31, 2023 (the “DDTL Agreement”) to provide that, upon approval by the Company’s stockholders of the Charter Amendment Proposal and the Warrant Exercise Proposal (each as defined below), any warrants issued pursuant to the DDTL Agreement will be exercisable for shares of non-voting common stock, which, automatically and without any further action, convert on a one-for-one basis into shares of voting common stock upon transfer to any person other than a Restricted Holder (as defined in that certain Investor Rights Agreement, dated December 18, 2023, among the Company and the holders of voting common stock identified therein), and the Share Cap and Beneficial Ownership Limit (each as defined below) will no longer apply.

Concurrently and in connection with the execution of the Investment Agreement, the Company entered into voting agreements (the “voting agreements”) with each director and certain executive officers and other stockholders of the Company. Subject to the terms and conditions of the voting agreements, such stockholders have agreed, among other things, to vote all of the shares of common stock held by them (representing in the aggregate approximately 43% of the total outstanding shares of common stock as of December 18, 2023) in favor of certain proposals described in the accompanying proxy statement for consideration at the special meeting.

The Company will hold a special meeting of stockholders (including any adjournments or postponements thereof, the “special meeting”) on    , 2024, at     a.m., Houston time, at 2445 Technology Forest Blvd., Build 4, Suite 800, The Woodlands, Texas 77381. At the special meeting stockholders will be asked to consider and vote upon the following proposals:

If the Charter Amendment Proposal is not approved by the required vote, the Company will not be able to consummate the transactions contemplated by the Conversion Proposal and the Warrant Exercise Proposal even if either or both of them receive the required vote.

The Board, after considering the factors more fully described in this proxy statement, has unanimously: (a) determined that the Investment Agreement and the DDTL Amendment and the transactions contemplated thereby, are advisable, fair to and in the best interests of the Company and its stockholders; (b) authorized the establishment of the preferred stock and approved the Certificate of Designations; (c) determined that the Charter Amendment is advisable, fair to and in the best interests of the Company and its stockholders; (d) authorized and approved the DDTL Amendment; and (e) recommended that the Company’s stockholders approve the proposals to be considered at the special meeting.

The Board unanimously recommends that you vote FOR the Charter Amendment Proposal, FOR the Conversion Proposal, FOR the Warrant Exercise Proposal and FOR the Adjournment Proposal, if necessary or appropriate.

The accompanying proxy statement, the annexes thereto and the other documents referred to therein provide detailed information about the special meeting, the Transaction and the proposals to be considered at the special meeting. Please carefully read the entire proxy statement, the annexes and documents incorporated by reference.

Your vote is important. Regardless of whether you attend the special meeting, it is important that your shares be represented. If you are a stockholder of record, you may submit your proxy over the Internet, by phone or by mail as described on the proxy card. If you hold your shares through a broker or other nominee, please follow the instructions that you receive from your broker or other nominee to ensure that your shares are voted. Submitting your proxy will not prevent you from attending the special meeting.

On behalf of the Board of Directors, I thank you for your support and appreciate your consideration of these matters.

The accompanying proxy statement is dated    , 2024 and the Notice of Internet Availability of Proxy Materials or the proxy materials, including this proxy statement, proxy card or voting instruction card are being distributed and made available on or about    , 2024.

CONN’S, INC.

2445 Technology Forest Blvd.

Building 4, Suite 800

The Woodlands, Texas 77381

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on    , 2024

NOTICE IS HEREBY GIVEN that the Board of Directors (the “Board”) of Conn’s, Inc., a Delaware corporation (the “Company”), has called a special meeting of stockholders (including any adjournment or postponement thereof, the “special meeting”) to be held on    , 2024, at     a.m., Houston time, at 2445 Technology Forest Blvd., Building 4, Suite 800, The Woodlands, Texas 77381 for the purposes provided below. The purposes of the special meeting are to:

If the Charter Amendment Proposal is not approved by the required vote, the Company will not be able to consummate the transactions contemplated by the Conversion Proposal and the Warrant Exercise Proposal even if either or both of them receive the required vote.

The Company will transact no other business at the special meeting except such business as may properly be brought before the special meeting. The matters on which stockholders will act at the special meeting are more fully described in the proxy statement, including all annexes attached thereto, accompanying this Notice of Special Meeting of Stockholders.

Each stockholder of record at the close of business on    , 2024 (the “record date”) is entitled to receive notice of, attend and vote at the special meeting. A complete list of stockholders of record entitled to vote at the special meeting will be on file at the Company’s corporate office at 2445 Technology Forest Blvd., Building 4, Suite 800, The Woodlands, Texas 77381, for a period of ten days prior to the special meeting. During such time the stockholders list will be open to examination by any stockholder during ordinary business hours for any purpose germane to the special meeting.

Your vote is important. Regardless of whether you attend the special meeting, it is important that your shares be represented. If you are a stockholder of record, you may submit your proxy over the Internet, by phone or by mail as described on the proxy card. If you hold your shares through a broker or other nominee, please follow the instructions that you receive from your broker or other nominee to ensure that your shares are voted. Submitting your proxy will not prevent you from attending the special meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON    , 2024: A complete set of proxy materials relating to the special meeting are also available on the Internet at www.conns.com, at www.proxyvote.com, and at the SEC’s website at www.sec.gov.

CONN’S, INC.

2445 Technology Forest Blvd.

Building 4, Suite 800

The Woodlands, Texas 77381

PROXY STATEMENT

FOR THE SPECIAL MEETING OF STOCKHOLDERS

To be Held on    , 2024

This proxy statement (including all annexes attached hereto, this “proxy statement”) and the accompanying proxy card are being provided to you in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Conn’s, Inc., a Delaware corporation (the “Company”), for use at a special meeting of stockholders of the Company to be held on    , 2024 (including any adjournment or postponement thereof, the “special meeting”). The purposes of the special meeting are to:

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If the Charter Amendment Proposal is not approved by the required vote, the Company will not be able to consummate the transactions contemplated by the Conversion Proposal and the Warrant Exercise Proposal even if either or both of them receive the required vote.

Under Delaware law and the Company’s governing documents, the Company will transact no other business at the special meeting except such business as may properly be brought before the special meeting. As of the date of this proxy statement, the Board knows of no business other than that set forth above to be transacted at the special meeting, but if other matters requiring a vote do arise, it is the intention of the persons named in the proxy card, to whom you are granting your proxy and to whom such proxy confers discretionary authority to vote on any unanticipated matters, to vote in accordance with their best judgment on such matters.

Your vote is important. Regardless of whether you attend the special meeting, it is important that your shares be represented. If you are a stockholder of record, you may submit your proxy over the Internet, by phone or by mail as described on the proxy card. If you hold your shares through a broker or other nominee, please follow the instructions that you receive from your broker or other nominee to ensure that your shares are voted. You may revoke your proxy or change your vote at any time before it is voted at the special meeting. Submitting your proxy will not prevent you from attending the special meeting.

The accompanying proxy statement is dated    , 2024 and the Notice of Internet Availability of Proxy Materials or the proxy materials, including this proxy statement, proxy card or voting instruction card are being distributed and made available on or about    , 2024.

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TABLE OF CONTENTS

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QUESTIONS AND ANSWERS

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting, including the proposals to be voted on by stockholders, voting and other matters. These questions and answers may not address all questions that may be important to you as stockholder. Please refer to the additional information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under the caption, “Where You Can Find More Information.”

Why am I receiving these materials?

The Board is furnishing this proxy statement and form of proxy card to the holders of common stock in connection with the solicitation of proxies to be voted at the special meeting.

When and where is the special meeting?

The special meeting to consider and vote on the proposals will be held on    , 2024, at     a.m., Houston time, at 2445 Technology Forest Blvd., Building 4, Suite 800, The Woodlands, Texas 77381.

What am I being asked to vote on at the Special Meeting?

At the special meeting, the Company’s stockholders will be asked to vote upon the following proposals:

Who is entitled to attend and vote at the special meeting?

Stockholders of record at the close of business on the record date are entitled to attend and vote on the matters presented at the special meeting. As of the record date,     shares of common stock were outstanding. Each holder of common stock shall be entitled to cast one vote on each matter properly brought before the special meeting for each such share owned at the close of business on the record date.

What constitutes a quorum for the special meeting?

A majority of the shares of common stock entitled to vote, present in person or represented by proxy, constitutes a quorum at the special meeting.

What vote is required to approve to each proposal and what is the recommendation of the Board?

The table below summarizes the recommendation of the Board, the vote required and the effect of abstentions and broker non-votes with respect to each proposal at the special meeting. As further explained below, the Company does not expect any broker non-votes at the special meeting because each of the proposals to be presented at the special meeting is considered non-routine.

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If the Charter Amendment Proposal is not approved by the required vote, the Company will not be able to consummate the transactions contemplated by the Conversion Proposal and the Warrant Exercise Proposal even if either or both of them receive the required vote.

How do I vote my shares?

Voting before the special meeting:

If you are a stockholder of record as of the record date, you may vote by any of the following methods:

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If you hold your shares in “street name” through an account with a broker or other nominee, you will receive voting instructions from your broker or other nominee.

Voting at the special meeting

If you are a stockholder of record as of the close of business on the record date, you may vote your shares at the special meeting if you attend in person. If you intend to vote your shares at the special meeting, you will need to bring valid picture identification with you. The Company will confirm that you were a stockholder of record on the record date and will provide you with a blank proxy card, which will serve as a ballot on which to record your vote.

If you hold your shares in “street name,” you must obtain a legal proxy from your broker or other nominee in order to vote at the special meeting. A legal proxy is an authorization from your broker or other nominee to vote the shares it holds in its name. In addition to a legal proxy, you will need to bring with you a valid picture identification and a recent account statement from your broker or other nominee, confirming your holdings on the record date. The Company will use these documents to confirm that you have proper authority to vote and, upon confirmation, will provide you with a blank proxy card to serve as a ballot.

Even if you plan to attend the special meeting, the Company encourages you to vote your shares before the meeting via the Internet, by telephone or by mail.

Can I change my vote or revoke my proxy?

Yes. You can revoke your proxy and change your vote at any time before the polls close for voting at the special meeting.

If you are the record holder of your shares, you may change your vote or revoke your proxy by:

Any written notice of revocation or later dated proxy that is mailed must be received before the close of business on    , 2024. Alternatively, you may hand deliver a written revocation notice or a later dated proxy to our Corporate Secretary at the special meeting before the polls are open.

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

Only the latest validly executed proxy that you submit will be voted at the special meeting.

What do I need to do now?

You should carefully read and consider this entire proxy statement and the annexes to this proxy statement, along with all of the documents referred to in this proxy statement, as they contain important information about,

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among other things, the Transaction and how it affects you. Then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone up until 11:59 p.m. Eastern Time the day before the meeting date (using the instructions provided in the enclosed proxy card), so that your shares can be voted at the special meeting. If you hold your shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your shares.

What happens if I sell or otherwise transfer my shares of the Company’s common stock after the Record Date but before the Special Meeting?

The record date for the special meeting is earlier than the date of the special meeting. If you sell or transfer your shares of common stock after the record date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies the Company in writing of such special arrangements, you will retain your right to vote those shares at the special meeting. Even if you sell or otherwise transfer your shares of common stock after the record date, the Company encourages you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card).

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, Inc., you are considered, with respect to those shares, to be the “stockholder of record.” In this case, the notice regarding availability of proxy materials and your proxy card have been sent directly to you by the Company.

If your shares are held through a broker or other nominee, you are considered the “beneficial owner” of shares of common stock held in “street name.” In that case, this proxy statement has been forwarded to you by your broker or other nominee. As the beneficial owner, you have the right to direct your broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to virtually attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the special meeting unless you obtain a “legal proxy” from your broker or other nominee.

If my broker or other nominee holds my shares in “street name,” will my broker vote my shares for me?

No. Your broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the special meeting only if you instruct your broker or other nominee how to vote. You should follow the procedures provided by your broker or other nominee to vote your shares.

What is a proxy?

A proxy is your legal designation of another person to vote your shares of common stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of common stock is called a “proxy card.” Timothy Santo, our Interim Chief Financial Officer, and Mark L. Prior, our Senior Vice President, General Counsel & Secretary, are the proxy holders for the special meeting, with full power of substitution and re-substitution.

If a stockholder gives a proxy, how are the shares voted?

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

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If you return a signed and dated proxy card without marking any vote selections, your shares will be voted FOR each of the proposals.

What should I do if I receive more than one set of voting materials?

Please sign, date and return (or grant your proxy electronically over the Internet or by telephone using the instructions provided in the enclosed proxy card) each notice regarding availability of proxy materials, proxy card and voting instruction card that you receive. You may receive more than one set of voting materials, including multiple copies of the notice regarding availability of proxy materials and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card.

Who will bear the cost of soliciting proxies for the special meeting?

The Company will pay for the costs of the special meeting, including any cost for mailing the Notice of Special Meeting of Stockholders and the notice regarding availability of proxy materials. The Company will reimburse brokers, custodians, nominees and other fiduciaries for the reasonable out-of-pocket fees and expenses they incur to forward the Company’s solicitation materials to stockholders. In addition to solicitation by mail, our officers, directors and employees may solicit proxies personally or by telephone, facsimile or electronic means. These officers, directors and employees will not receive any extra compensation for these services. Except as set forth in this proxy statement, neither the Company nor any person acting on its behalf has employed, retained or agreed to compensate any person to make solicitations or recommendations to stockholders concerning the proxy solicitation.

Where can I find the voting results of the Special Meeting?

The Company intends to publish final voting results in a Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission (the “SEC”) following the special meeting. All reports that the Company files with the SEC are publicly available when filed. For more information, please see the section of this proxy statement titled “Where You Can Find More Information.”

Who should I contact if I have any questions or need assistance in voting my shares, or if I need additional copies of the proxy materials?

If you have any questions or need assistance in voting your shares, or if you need additional copies of the proxy materials, please contact:

Conn’s, Inc.

Attention: Corporate Secretary

2445 Technology Forest Blvd.

Building 4, Suite 800

The Woodlands, Texas 77381

(936) 230-5899.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements within the meaning of the federal securities laws, including, but not limited to, the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “predict,” “will,” “potential,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Such forward-looking statements are based on our current expectations. The Company can give no assurance that such statements will prove to be correct, and actual results may differ materially. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent filings on Forms 10-K and 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

Consequently, all of the forward-looking statements that the Company makes in this proxy statement are qualified by the information contained or incorporated by reference herein, including: (a) the information contained under this caption; and (b) the information contained under the caption “Risk Factors,” and information in our consolidated financial statements and notes thereto included in our most recent filings on Forms 10-K and 10-Q. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements. Except as required by applicable law, the Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any future disclosures that the Company makes on related subjects as may be detailed in our other filings made from time to time with the SEC.

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THE SPECIAL MEETING

Date, Time and Place

The special meeting to consider and vote on the proposals will be held on    , 2024, at     a.m., Houston time, at 2445 Technology Forest Blvd., Building 4, Suite 800, The Woodlands, Texas 77381.

Purpose of the Special Meeting

At the special meeting, the Company’s stockholders will be asked to vote upon the following proposals:

If the Charter Amendment Proposal is not approved by the required vote, the Company will not be able to consummate the transactions contemplated by the Conversion Proposal and the Warrant Exercise Proposal even if either or both of them receive the required vote.

The Company will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement thereof.

Record Date; Shares Entitled to Vote; Quorum

You are entitled to vote at the special meeting if you owned shares of common stock at the close of business on the record date. Each holder of common stock will be entitled to one vote for each share of common stock owned at the close of business on the record date.

As of the close of business on the record date, there were     shares of common stock outstanding and entitled to vote at the special meeting. A majority of the shares of common stock entitled to vote, present in person or represented by proxy, constitutes a quorum at the special meeting.

A complete list of stockholders of record entitled to vote at the special meeting will be on file at the Company’s corporate office at 2445 Technology Forest Blvd., Building 4, Suite 800, The Woodlands, Texas 77381, for a period of ten days prior to the special meeting. During such time the stockholders list will be open to examination by any stockholder during ordinary business hours for any purpose germane to the special meeting.

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Special Meeting Attendance

If you are a stockholder of record as of the close of business on the record date, you may vote your shares at the special meeting if you attend in person. If you intend to vote your shares at the special meeting, you will need to bring valid picture identification with you. The Company will confirm that you were a stockholder of record as of the close of business on the record date and will provide you with a blank proxy card, which will serve as a ballot on which to record your vote.

If you hold your shares in “street name,” you must obtain a legal proxy from your broker or other nominee in order to vote at the special meeting. A legal proxy is an authorization from your broker or other nominee to vote the shares it holds in its name. In addition to a legal proxy, you will need to bring with you a valid picture identification and a recent account statement from your broker or other nominee, confirming your holdings on the record date. The Company will use these documents to confirm that you have proper authority to vote and, upon confirmation, will provide you with a blank proxy card to serve as a ballot.

Even if you plan to attend the special meeting, the Company encourages you to vote your shares before the meeting via the Internet, by telephone or by mail.

Vote Required; Abstentions and Broker Non-Votes

The votes required for each proposal are as follows:

A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a

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particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such shares. The Company does not expect any broker non-votes at the special meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas each of the proposals to be presented at the special meeting is considered non-routine. As a result, no broker will be permitted to vote your shares of common stock at the special meeting without receiving instructions.

Voting Agreements and Voting of the Company’s Directors and Executive Officers

Concurrently and in connection with the execution of the Investment Agreement, the Company entered into the voting agreements with each director and certain executive officers and other stockholders of the Company. Subject to the terms and conditions of the voting agreements, such stockholders have agreed, among other things, to vote all of the shares of common stock held by them (representing in the aggregate approximately 43% of the total outstanding shares of common stock as of December 18, 2023) in favor of certain proposals described in this proxy statement for consideration at the special meeting. See the section titled “The Transaction—Voting Agreements.”

Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:

If you have submitted a proxy, your appearance at the special meeting will not have the effect of revoking your prior proxy; provided that you do not vote in person or submit an additional proxy or revocation, which, in each case, will have the effect of revoking your proxy.

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee.

Any adjournment, postponement or other delay of the special meeting, including for the purpose of soliciting additional proxies, will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting, as adjourned, postponed or delayed.

Recommendation of the Board of Directors

The Board, after considering the factors more fully described in this proxy statement, has unanimously: (a) determined that the Investment Agreement and the DDTL Amendment and the transactions contemplated thereby, are advisable, fair to and in the best interests of the Company and its stockholders; (b) authorized the establishment of the preferred stock and approved the Certificate of Designations; (c) determined that the Charter Amendment is advisable, fair to and in the best interests of the Company and its stockholders; (d) authorized and approved the DDTL Amendment; and (e) recommended that the Company’s stockholders approve the proposals to be considered at the special meeting.

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The Board unanimously recommends that you vote FOR the Charter Amendment Proposal, FOR the Conversion Proposal, FOR the Warrant Exercise Proposal and FOR the Adjournment Proposal, if necessary or appropriate.

Solicitation of Proxies

The Company will pay for the costs of the special meeting, including any cost for mailing the Notice of Special Meeting of Stockholders and the notice regarding availability of proxy materials. The Company will reimburse brokers, custodians, nominees and other fiduciaries for the reasonable out-of-pocket fees and expenses they incur to forward the Company’s solicitation materials to stockholders. In addition to solicitation by mail, the Company’s officers, directors and employees may solicit proxies personally or by telephone, facsimile or electronic means. These officers, directors and employees will not receive any extra compensation for these services. Except as set forth in this proxy statement, neither the Company nor any person acting on its behalf has employed, retained or agreed to compensate any person to make solicitations or recommendations to stockholders concerning the proxy solicitation.

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THE TRANSACTION

This discussion of the Transaction is qualified in its entirety by reference to the Investment Agreement, the Certificate of Designations, the form of voting agreement, the investor rights agreement, the registration rights agreement and the DDTL Amendment, which are attached to this proxy statement as Annex A, Annex B, Annex C, Annex D, Annex E and Annex F, respectively, and in each case incorporated into this proxy statement by reference. You should carefully read and consider the entire Investment Agreement and the DDTL Amendment, which are the legal documents that govern the Transaction, and the Certificate of Designations, which is the legal document that governs the conversion of the preferred stock into the non-voting common stock, because these documents contain important information about the Transaction and how it affects you.

Parties Involved in the Transaction

Conn’s, Inc.

The Company is a leading specialty retailer that offers a broad selection of quality, branded durable consumer goods and related services in addition to proprietary credit solutions for its core credit-constrained consumers. The Company operates an integrated and scalable business through its retail stores and website. The Company’s complementary product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. The Company’s credit offering provides financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. The voting common stock trades on The Nasdaq Global Select Market under the symbol “CONN.” The principal executive offices of the Company are located at 2445 Technology Forest Blvd., Building 4, Suite 800, The Woodlands, Texas 77381 and its telephone number is (936) 230-5899.

Franchise Group Newco BHF, LLC

Newco BHF is a wholly-owned subsidiary of Franchise Group (as defined below). The principal executive offices of Newco BHF are located at 109 Innovation Court, Suite J, Delaware, Ohio 43015 and its telephone number is (740) 363-2222.

W.S. Badcock LLC

Badcock, formerly known as W.S. Badcock Corporation, is a leading home-furnishings retailer with a network of more than 380 stores located across eight southeastern states. The stores operate under the brand of “Badcock Home Furniture & more” and carry a complete line of furniture, appliances, bedding, electronics, home office equipment, accessories and seasonal items in a showroom format. The principal executive offices of Badcock are located at 200 North Phosphate Blvd, Mulberry, Florida 33860 and its telephone number is (800) 223-2625.

Freedom VCM Interco Holdings, Inc.

FVCM is the parent company of BRR2. The principal executive offices of FVCM are located at 109 Innovation Court, Suite J, Delaware, Ohio, 43015 and its telephone number is (740) 363-2222.

Franchise Group, Inc.

Franchise Group is an owner and operator of franchised and franchisable businesses. Franchise Group’s business lines include Pet Suppliers Plus, American Freight, the Vitamin Shoppe, Buddy’s Home Furnishings and Wag N’ Wash. On a combined basis, Franchise Group operates more than 2,200 locations predominately located in the U.S. that are either run by Franchise Group or operated pursuant to franchise or area developer agreements. The principal executive offices of Franchise Group are located at 109 Innovation Court, Suite J, Delaware, Ohio, 43015 and its telephone number is (740) 363-2222.

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The Stephens Group, LLC

Stephens Group is a private investment firm that partners with talented management teams to help build valuable businesses. Backed by the resources of the Witt Stephens, Jr. and Elizabeth Campbell families, the firm combines the operational expertise of a private equity firm with the flexibility provided by long-term capital. With over $2 billion of private equity assets under management, the firm has a long history of providing informed, sophisticated expertise and working with owners and managers to help them successfully achieve their strategic visions and build long-term value. Since 2006, Stephens Group has invested in over 50 companies, targeting investments in industries across the U.S., including industrial and commercial products and services, specialty distribution, technology infrastructure and vertical software. The principal executive offices of Stephens Group are located at 100 River Bluff Drive, Suite 500, Little Rock, AR 72202 and its telephone number is (501) 377-3401.

Stephens Inc.

Stephens is a private financial services firm focusing on investment banking, asset and wealth management, sales and trading, and public finance The principal executive offices of Stephens are located at 111 Center Street, Little Rock, AR 72201 and its telephone number is (800) 643-9691.

The Investment Agreement

On December 18, 2023, the Company entered into the Investment Agreement. Pursuant to the Investment Agreement, Newco BHF contributed to the Company all of the issued and outstanding equity interests of Badcock and FVCM agreed to contribute residual interests in certain receivables then held by BRR2 to Badcock upon the satisfaction of certain indebtedness of BRR2 in the future. In exchange for the contributions, the Company issued an aggregate of 1,000,000 shares of preferred stock, allocating: (a) 656,847.95 of such shares to Newco BHF; and (b) 343,152.05 of such shares to FVCM. The preferred stock is subject to the terms and conditions set forth in the Certificate of Designations.

Pursuant to the Certificate of Designations, upon receipt of the requisite stockholder approvals of the Charter Amendment Proposal and the Conversion Proposal and the effectiveness of the amendments to the Company’s certificate of incorporation, the preferred stock will automatically convert into an aggregate of 24,540,295 shares of non-voting common stock, which represents 49.99% of the issued and outstanding shares of the Company’s common stock (inclusive of both voting common stock and non-voting common stock) immediately following the closing of the Investment Agreement Transactions and after giving effect to the issuance of the preferred stock and assuming the conversion of the preferred stock into non-voting common stock. The closing of the Investment Agreement Transactions occurred simultaneously with the signing of the Investment Agreement.

The Certificate of Designations

On December 18, 2023, the Company filed the Certificate of Designations with the Secretary of State of the State of Delaware in connection with the transactions contemplated by the Investment Agreement. The Certificate of Designations provides for the designation of shares of the preferred stock.

Ranking and Dividend

The preferred stock ranks senior to the common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Holders of preferred stock are entitled to receive dividends on shares of preferred stock equal to, on an as if converted to common stock basis, and in the same form as dividends actually paid on shares of common stock. In addition, beginning on September 4, 2024, holders of preferred stock will receive dividends accruing daily on the basis of 12 30-day months and a 360-day year, at a rate of 8% per annum

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(the “Dividend Rate”); provided that following each dividend payment date, as described below, the Dividend Rate will increase 200 basis points, subject to a maximum Dividend Rate of 16% per annum; provided, further, that the Dividend Rate will automatically increase to 16% per annum for any period that an event of default (as described below) remains in effect (the “Preferred Dividends”). The Preferred Dividends will be cumulative and, once they begin to accrue, will be paid quarterly in arrears on the last day of March, June, September and December in each year and if nor paid on such date will compound and be added to the original issuance value.

Conversion

Effective immediately upon the receipt of stockholder approval of the Charter Amendment Proposal and the Conversion Proposal, all preferred stock will automatically be converted into 24,540,295 shares of non-voting common stock, subject to adjustment in certain circumstances, as set forth in the Certificate of Designations. Upon such conversion, all shares of preferred stock will no longer be outstanding and holders of preferred stock will have no rights with respect to the preferred stock other than the right to receive the corresponding shares of non-voting common stock.

Voting

Except as otherwise required by law, the preferred stock does not have voting rights. As long as shares of preferred stock are outstanding, the Company will not, without the consent of the holders of preferred stock representing a majority of the shares of preferred stock: (a) amend the Company’s certificate of incorporation or the Company’s bylaws, if such amendment would materially and adversely affect the rights, preferences or privileges of the preferred stock as compared to the rights of other equity securities of the Company; (b) authorize, create or issue, or obligate the Company to authorize, create or issue, any senior stock; (c) amend or waive any provision of the Certificate of Designations applicable to the holders of preferred stock or the preferred stock; (d) grant registration rights on terms more favorable than the registration rights granted in the registration rights agreement; or (e) effect the occurrence of a bankruptcy proceeding or the delisting of the common stock.

Liquidation Event

In the event of a liquidation event, after payment or provision for payments of the debts and other liabilities of the Company, the assets of the Company legally remaining available for distribution to the Company’s stockholders will be distributed: (a) first, to the holders of the preferred stock; and (b) second, the remaining balance, pro rata among (i) the holders of the common stock and (ii) the holders of any other securities of the Company having the right to participate in such distributions upon the occurrence of a liquidation event. Pursuant to the Certificate of Designations, a “liquidation event” means the occurrence, directly or indirectly, of one of the following, whether in a single transaction or a series of transactions: (a) the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company; (b) the merger or consolidation of the Company with or into another person or the merger of another person with or into the Company, or the sale, lease or transfer of all or substantially all of the assets of the Company to another person, or any recapitalization, reclassification or other transaction in which all or substantially of the common stock is exchanged for or converted into cash, securities or other property, other than (i) a transaction following which holders of securities that represented 100% of the common stock immediately prior to such transaction own, directly or indirectly (in substantially the same proportion to each other as immediately prior to such transaction, other than changes in proportionality as a result of any cash/stock election provided under the terms of the definitive agreement regarding such transaction), at least a majority of the voting power of the common stock of the surviving person in such merger or consolidation transaction immediately after such transaction or (ii) a sale, lease or transfer to a subsidiary or a person that becomes a subsidiary of the Company; or (c) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the beneficial owner, directly or indirectly, of a majority of the total voting power of the common stock, other than as a result of any such transaction in which the holders of securities that represented 100% of the common stock immediately prior to such transaction are substantially the

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same as the holders of securities that represent a majority of the total voting power of all classes of common stock of the surviving person or any parent entity that directly or indirectly wholly owns such surviving person immediately after such transaction.

Optional Redemption

At any time on or after May 22, 2028, upon the election of the holders of a majority of the preferred stock, the Company will redeem each share of preferred stock and will pay the holders of preferred stock an amount in cash per share equal to the product of: (1) the sum of (a) 24.540295 and (b) any accrued and unpaid dividends divided by $2.9396; and (2) the volume-weighted average price per share of the common stock as displayed under the heading Bloomberg VWAP on Bloomberg page “CSU <equity> AQR” for the 20 consecutive full trading days immediately preceding the date upon which the optional redemption occurs.

Events of Default

The Certificate of Designations provides an event of default occurs upon the occurrence of any of the following events: (1) the direct or indirect taking by the Company or any of its subsidiaries of any action requiring the approval of the preferred stock pursuant to the Certificate of Designations without obtaining such approval; (2) the failure by the Company to pay when due any amounts owed pursuant to the Certificate of Designations; (3) the material breach by the Company or any of its subsidiaries of any material covenant or agreement relating to the preferred stock as set forth in the Certificate of Designations; and (4) a bankruptcy event as described in the Certificate of Designations. Immediately following the occurrence of an event of default with respect to (1), (2) and (3) of the immediately preceding sentence, the holders of preferred stock must provide written notice to the Company, and following receipt of such notice, the Company will be entitled to 30 days to cure any such default to the extent curable, and no event of default will be deemed to have occurred if such default is cured within such cure period.

The Voting Agreements

Concurrently and in connection with the execution of the Investment Agreement, Newco BHF, FVCM, each director and certain executive officers and other stockholders of the Company entered into the voting agreements. Under the voting agreements, such stockholders agreed to vote their respective shares of common stock at the special meeting: (a) in favor of the Charter Amendment Proposal and the Conversion Proposal; (b) in favor of any proposal to postpone or adjourn the special meeting to a later date if there are not sufficient votes to approve the Charter Amendment Proposal and the Conversional Proposal or if there are not sufficient shares of common stock present in person or represented by proxy at such meeting to constitute a quorum, in each case, so long as such postponement or adjournment is effected in accordance with the terms of the Investment Agreement; and (c) against any agreement, transaction or other matter that is intended to, would or would reasonably be expected to (i) impede, postpone, materially adversely affect or interfere with the Charter Amendment Proposal and the Conversion Proposal or otherwise obtaining the stockholder approval, or (ii) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Company under the Investment Agreement, the Certificate of Designations, the registration rights agreement or the investor rights agreement or of such stockholder under the voting agreements. In total, such stockholders that signed voting agreements hold shares of common stock representing approximately 43% of the Company’s outstanding voting power as of December 18, 2023.

Investor Rights Agreement

On December 18, 2023, the Company, Newco BHF and FVCM entered into an investor rights agreement (the “investor rights agreement”). Pursuant to the investor rights agreement, for so long as Newco BHF and FVCM (together with their respective permitted assignees, the “FRG Investors”) continue to hold at least 20% of the preferred stock or non-voting common stock received upon conversion of the preferred stock issued at the

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closing of the Investment Agreement, the FRG Investors will have the right to designate one representative, subject to the consent of the Company, who will be invited to attend all meetings of the Board or any committee thereof in a non-voting observer capacity.

The investor rights agreement provides that until the second anniversary of the date of the investor rights agreement, the FRG Investors will not, without approval of the Board, transfer any equity securities of the Company, subject to certain exceptions.

For a period commencing on the date of the investor rights agreement and ending on the earlier of: (a) the occurrence of a specified termination event; and (b) three years from the date of the investor rights agreement (the earlier of (a) and (b), the “FRG Expiration Date”); without the prior written approval of the Company, the FRG Investors will not, and will not permit their respective affiliates, to acquire or purchase any equity securities of the Company other than: (1) acquisitions or purchases of such equity securities upon the conversion or exchange of any other equity securities that are issued pursuant to the Investment Agreement; (2) acquisitions or purchases of equity securities from the Company; (3) acquisitions or purchases of equity securities in a transfer permitted under the investor rights agreement; or (4) acquisitions or purchases in connection with the exercise of any remedies in its capacity as a lender to the Company or any of the Company’s subsidiaries.

Under the investor rights agreement, until the FRG Expiration Date, the FRG Investors will not, and will not permit any of their respective affiliates, to: (a) make, initiate, solicit or submit a proposal for, or offer of, any merger, consolidation, business combination, tender or exchange of or for a material portion of the assets, properties or businesses of the Company or any subsidiary of the Company or any of the FRG Investors equity securities of the Company; (b) make or in any way participate in any solicitation of proxies as a participant in any director election contest; (c) propose any matter for submission to a vote of the Company’s stockholders or call or seek to call a meeting of the Company’s stockholders; (d) grant proxies with respect to any voting securities of the Company to any person or deposit any voting securities of the Company in a voting trust or enter into any other agreement with respect to the voting thereof, other than as recommended by the Board, including in any proxy solicitation distributed by the Company; (e) form or join any group with respect to any voting securities of the Company with person; or (f) take any action, alone or in concert with other person, to remove or oppose the election of any directors of the Company or to seek to change the size or composition of the Board.

Pursuant to the investor rights agreement, each FRG Investor will have preemptive rights with respect to any issuance of any equity securities of the Company that are issued after the date of the investor rights agreement, subject to certain exceptions.

Furthermore, under the investor rights agreement, the Company will permit (a) any holder of preferred stock and (b) the FRG Investors for so long as any FRG Investor beneficially own shares of common stock, in the aggregate, in excess of 10% of common stock (on an as-converted basis), upon reasonable request, to have access to the books and records of the Company and the Company’s subsidiaries.

If an event of default under the Certificate of Designations occurs while any of the shares of preferred stock are outstanding, without limiting the other rights or remedies of holders of preferred stock, the holders of at least a majority of the preferred stock then outstanding may elect, by written notice to the Company, to compel the Company to initiate a process to consummate a transaction (the form of which would be determined by the Company), in good faith, the net proceeds of which will be used to redeem the preferred stock in full at a price equal to that payable upon a mandatory redemption pursuant to the FRG Investors’ right to require the Company to redeem shares of preferred stock under the Certificate of Designations. If the Company fails to consummate a transaction within 12 months of receipt of written notice by holders of a majority of the preferred stock then outstanding or fails to redeem the preferred stock in full, then the holders of a majority of the preferred stock then outstanding will have the right to direct such transaction process and appoint a majority of the directors of the Board.

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Registration Rights Agreement

On December 18, 2023, the Company, Newco BHF and FVCM entered into a registration rights agreement (the “registration rights agreement”). Pursuant to the registration rights agreement, the Company is required to use its reasonable best efforts to file and make effective immediately following the special meeting a resale registration statement covering the registrable securities described thereunder.

At any time that a shelf registration statement is effective, the holders of registrable securities may on up to three occasions require the company to undertake an underwritten offering if the expected gross proceeds exceed $10.0 million. The Company is not obligated to effect more than two underwritten offerings during any 12-month period.

The Warrant Amendment

Pursuant to the DDTL Agreement, as amended by the DDTL Amendment, in connection with the funding of each delayed draw term loan under the DDTL Agreement, but subject to the Share Cap (as defined below), the Company agreed to issue to each lender under the DDTL Agreement (or its affiliate or other designee) warrants to purchase a number of shares of voting common stock equal to 20% of the aggregate principal amount of such delayed draw term loan funded by such lender divided by the exercise price. The exercise price for a warrant issued under the DDTL Agreement is the lower of: (a) the closing price per share of voting common stock as of the close of market on the trading day immediately preceding the date of an advance of a delayed draw term loan; or (b) the lesser of (x) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) of the voting common stock immediately preceding the date of the DDTL Amendment or (y) the average Nasdaq Official Closing Price of the voting common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the date of the DDTL Amendment. Pursuant to the DDTL Agreement, as amended by the DDTL Amendment, warrants may be exercised on a cashless basis and will be exercisable for a term beginning on the date of issuance and ending on the ten-year anniversary of the issuance date. Also, pursuant to the DDTL Agreement, as amended by the DDTL Amendment, the number of shares of voting common stock for which each warrant is exercisable and the associated exercise price are subject to certain customary proportional adjustments for fundamental events, including stock splits and reverse stock splits, as set forth in the warrants.

If warrants issued under the DDTL Agreement, as amended by the DDTL Amendment, are exercisable for shares of voting common stock prior to shareholder approval of the Warrant Exercise Proposal, then: (i) no warrants will be issued to any lender under the DDTL Agreement, or any affiliate or other designee of a lender, if the total number of shares of voting common stock issuable upon exercise of a warrant would cause a such lender, affiliate or other designee and its respective affiliates and any other person whose beneficial ownership of common stock would be aggregated with such lender’s, affiliate’s or designee’s ownership for purposes of Section 13 of the Exchange Act, to beneficially own more than the Beneficial Ownership Limit; and (ii) the number of shares of voting common stock subject to any and all warrants will be limited to the extent necessary to ensure that the aggregate number of shares of voting common stock subject to warrants issued under the DDTL Agreement, as amended by the DDTL Amendment, does not exceed the Share Cap, which equals 19.99% of the shares of common stock of the Company issued and outstanding as of the date of the DDTL Amendment.

In connection with the Transaction, on December 18, 2023, the Company adopted the DDTL Amendment to provide that, upon approval by the Company’s stockholders of the Charter Amendment Proposal and the Warrant Exercise Proposal, any warrants issued pursuant to the DDTL Agreement, as amended by the DDTL Amendment, will be exercisable for shares of non-voting common stock, which, automatically and without any further action, convert on a one-for-one basis into shares of voting common stock upon transfer to any person other than a Restricted Holder (as defined in the investor rights agreement), and the Share Cap and Beneficial Ownership Limit will no longer apply.

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Background of the Transaction

The following chronology summarizes the key meetings and other events between representatives of the Company, on the one hand, and representatives of Badcock and Franchise Group on the other hand.

General

In the ordinary course of its business, the Board, with the assistance of management of the Company and the Company’s advisors, reviews and analyzes broader industry trends and potential strategic alternatives for the Company. During these reviews, management of the Company and the Board thoroughly consider potential strategic options available to the Company, the current and long-term prospects for the Company and the sectors in which it operates, as well as merger, acquisition and other opportunities to enhance stockholder value.

As described further below, the Board considered and ultimately approved the Transaction, after discussions with management of the Company and representatives of Deutsche Bank, Stephens, Sidley Austin LLP (“Sidley Austin”) and other advisors. In reaching its decision to enter into the Transaction, the Board thoroughly considered the current and long-term prospects for the Company and the sector in which it operates, including the consumer durable home goods retail sector, as well as lending in the subprime sector. Further, management of the Company advised the Board that the Transaction would provide strategic growth and synergy opportunities for its retail and consumer lending segments. The Board believes that the Transaction represents a critical step to scale the Company and take advantage of available synergies and is in the best interests of the Company’s stockholders.

Chronology

As a specialty retailer that provides credit solutions for its customers, the Company routinely focuses on ways to enhance its liquidity position. In the fall of 2022, the Company forecasted possible liquidity concerns and began discussing options for addressing the situation with its lenders. In November 2022, the Company executed an amendment to its credit agreement with JP Morgan Chase Bank NA (“JP Morgan Chase”), as administrative agent for the various lenders under the Company’s credit agreement. Among other things, the amendment provided the Company with temporary relief from certain liquidity covenant requirements. At that time, the Company started seeking alternative ways to enhance its liquidity position.

In September 2022, Mr. Brian Kahn, Franchise Group’s former Chief Executive Officer reached out to Mr. Norman Miller regarding ways in which Franchise Group and Badcock could partner with the Company. The two executives had previously met each other in an unrelated phone conversation in the fall of 2021 to discuss a former executive of the Company who Franchise Group was considering hiring. Mr. Miller had stepped down as Chief Executive Officer of the Company in August 2021 but had remained a director of the Company. He informed Franchise Group’s former Chief Executive Officer that he would pass along the conversation to the Company.

In October 2022, shortly after Mr. Miller had returned to the Company as Interim Chief Executive Officer, preliminary discussions between Franchise Group’s former Chief Executive Officer and Mr. Miller resumed via telephone regarding a potential transaction involving the Company, Badcock and Franchise Group.

From October 18, 2022 until October 25, 2022, Mr. Miller had additional high-level conversations with the former Chief Executive Officer of Franchise Group and other executives of Franchise Group and Badcock regarding a potential strategic transaction involving Badcock. During such period, Mr. Miller had preliminary discussions with management of Franchise Group regarding each company’s strategic position and potential synergies to explore whether there would be interest in a potential combination or other strategic transaction. The parties mutually agreed that further information exchange was warranted in order to understand whether a strategic combination would create value for stockholders of both the Company and Franchise Group.

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On October 25, 2022, to further evaluate a potential transaction, the Company and Franchise Group executed a mutual confidentiality agreement which imposed mutual non-disclosure obligations on each party for a period of two years in order to conduct due diligence.

In mid-to-late November 2022, including at a meeting on November 17, 2022, management of the Company and of Franchise Group engaged in high-level discussions regarding possible synergies associated with a potential transaction between the parties, including considering the impact of the Company offering its credit underwriting and loan origination services and other services in various home goods retail stores of Franchise Group. During these discussions, management of the Company noted the strategic value of a potential combination.

Towards the end of 2022 and early 2023, discussions relating to a potential strategic transaction between the Company and Franchise Group diminished as the Company focused on separate financing transactions.

In February 2023, to further enhance its liquidity, the Company entered into a three-year, $100 million secured second-lien term loan and security agreement with Pathlight Capital LP (“Pathlight”). Around the same time, despite the slowdown in discussions between the Company and Franchise Group relating to a potential strategic transaction, Franchise Group continued to provide the Company, from time to time, with various financial materials related to Badcock to assist the Company in its evaluation of a potential transaction. In early 2023, J.P. Morgan Securities LLC (“JP Morgan Securities”), who was serving as a financial advisor to Franchise Group, and Stephens facilitated a presentation and review of certain financial materials of Badcock to and by the Company’s management, with a view towards assisting the Company in evaluating a potential transaction.

On June 13, 2023, the Company held a Board meeting where Mr. Miller provided a business performance and sales update to the Board. Mr. Miller also delivered an update on the Company’s capital structure and delineated options available to the Company for raising additional capital, such as exploring a strategic transaction opportunity with various companies, including Badcock.

On June 19, 2023, the Company held a Board meeting where representatives of Sidley Austin delivered to the Board an overview of the duty of care owed by directors and officers of the Company, including the duty to exercise reasonable diligence and care in governing the Company, and the duty to remain informed about operations and other material information when making business decisions. Representatives of Sidley Austin also gave an overview of the duty of loyalty owed by directors and officers including the duty to place the interests of the Company ahead of personal interests, and to disclose potential conflicts of interest when considering transactions involving the Company. Next, Mr. Miller provided a business performance and sales update to the Board. Mr. Miller also gave an update on the Company’s capital structure and its discussions to date with its lenders. Mr. Miller updated the Board on recent discussions with Franchise Group and plans to meet with Franchise Group personnel in New York, NY.

On June 21, 2023, the former Chief Executive Officer of Franchise Group, along with Mr. Andrew Laurence, Executive Vice President of Franchise Group at the time, and Mr. Lee Wright, Chief Executive Officer of the Vitamin Shoppe, and previously Chief Commercial Officer of Franchise Group and Chief Operating Officer and Chief Financial Officer of the Company, met Mr. Miller and Mr. George Bchara, Chief Financial Officer of the Company at the time, in New York, NY to continue the discussions on a potential strategic transaction between the Company and Badcock. They also discussed the business performance of their respective companies and potential high-level operating and cost synergies.

Following the foregoing meeting in New York, NY, in late June 2023, management of the Company contacted representatives of Sidley Austin to begin discussing potential structures for a transaction with Badcock, including any necessary changes to the Company’s and Badcock’s financing arrangements.

On June 27, 2023, the Company held a Board meeting and, in addition to the usual matters conducted at its Board meetings, Mr. Miller gave an update on the Company’s capital structure, its discussions to date with its

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lenders and preparation for an asset-backed securities (“ABS”) offering. Mr. Miller also updated the Board on the meeting held with the Franchise Group personnel in New York, NY. The Board then instructed management of the Company to initiate discussions with representatives of Deutsche Bank and Stephens regarding exploring a transaction with Badcock. Following this meeting and as discussed below, representatives of Deutsche Bank consulted with the Company from time to time before being formally engaged by the Company on October 18, 2023, when the Company entered into an engagement letter with Deutsche Bank to serve as the Company’s primary financial advisor with respect to a potential transaction involving Badcock.

On each of July 6, July 13 and July 20, 2023, the Company held a Board meeting where Mr. Miller gave additional updates on the Company’s capital structure, the progress in the Company’s discussions with its lenders, discussions with Stephens Group and Stephens Investment Holdings, LLC (“Stephens Investment”) regarding their provision of a delayed-draw term loan facility in favor of the Company, and the progress made in the Company’s preparation for an ABS offering targeted for August 2023. In addition, Mr. Miller gave an update that the Company was conducting due diligence on Badcock and expected that the sharing of additional diligence materials would begin in August 2023.

On July 27, 2023, the Company held a Board meeting to further discuss the Company’s capital structure, the progress in the Company’s discussions with its lenders, the status of negotiation on the terms of the foregoing delayed term loan facility with Stephens Group and Stephens Investment, and the progress made in its preparation for the foregoing ABS offering in August 2023. Mr. Miller discussed at this meeting that the Company continued to conduct due diligence on Badcock.

On July 31, 2023, the Company entered into the delayed term facility with Stephens Group and Stephens Investment.

On August 3, 2023, the Company held a Board meeting where Mr. Miller gave a further update on the Company’s capital structure and the progress in the Company’s discussions with its lenders. Mr. Miller also discussed the completion of the foregoing delayed-draw term loan facility with Stephens Group and Stephens Investment and upcoming plans to close the foregoing ABS offering on or about August 14, 2023. Mr. Miller gave a further update on discussions between the Company and Franchise Group relating to a potential transaction involving Badcock. Mr. Miller also gave an overview of certain Badcock financial information prepared and provided by Franchise Group.

On August 22, 2023, the Company held a Board meeting. At the invitation of the Board, representatives of Stephens and Deutsche Bank provided the Board with an overview of Badcock during their discussion. Representatives of Stephens and Deutsche Bank also discussed certain strategic benefits of combining the Company with Badcock, including potential synergies anticipated by management of the Company that could be achieved in connection with a potential transaction. Management of the Company then discussed with the Board the incremental liquidity that management of the Company expected from the proposed Transaction, taking into account assumptions regarding the borrowing base, consolidated liquidity projections, pro forma capital structure, and financing terms that management of the Company anticipated to be requested from the Company’s lenders.

On August 29, 2023, at the direction of management of the Company, representatives of Deutsche Bank and Stephens circulated a due diligence request list to JP Morgan Securities. The Company started to receive materials responsive to such requests from Badcock in early September of 2023. Subsequently, the Company and Badcock established virtual data rooms and, during the period from September 2023 through signing of the definitive investment agreement on December 18, 2023, the Company and Badcock shared various diligence materials with each other in response to supplemental due diligence request lists developed by, and from time to time exchanged among, the parties’ representatives.

On August 31, 2023, senior members of management of the Company travelled to Badcock’s offices in Florida to meet with representatives of management of Franchise Group and Badcock. During their meetings,

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such senior members of management of the Company visited a Badcock store in the area and held discussions with representatives of management of Franchise Group and Badcock around the potential transaction. This was the first “face-to-face” meeting of the Company and Badcock personnel. Mr. Miller, Mr. Bchara, Mr. Mitchell Stiles, Badcock’s President, and other Badcock representatives were in attendance.

On September 7, 2023, the Company and representatives of Deutsche Bank, Stephens and Sidley Austin held a call to discuss legal structuring options for a potential transaction between Badcock and the Company, supplemental due diligence requests and a potential timeline for drafting a definitive acquisition agreement.

Generally, beginning in mid-September 2023 through the signing and closing of the Transaction on December 18, 2023, representatives from Stephens, Deutsche Bank and the Company conducted weekly meetings to share information on the progress of due diligence, negotiations and developments in the transaction.

On September 13, 2023, representatives of Sidley Austin and Willkie Farr & Gallagher LLP (“Willkie Farr”), outside legal counsel to Franchise Group and Badcock, held an introductory legal call to discuss general legal structural and timing considerations as well as a preliminary allocation of drafting responsibilities for the definitive documentation anticipated to be required to consummate a transaction between the Company and Badcock.

On September 15, 2023, Sidley Austin provided an initial draft of a term sheet with respect to the potential transaction (the “Term Sheet”) to Willkie Farr.

On September 18, 2023, the Company held a Board meeting where Mr. Miller gave an update on the Company’s capital structure, the progress in the Company’s discussions with its existing lenders, and discussions with additional potential new lenders. After evaluating the Company’s prior relationships with each of Deutsche Bank and Stephens and their respective qualifications, expertise, reputation and experience in mergers and acquisitions, the Board approved the Company to enter into engagement letter agreements with Deutsche Bank and Stephens to memorialize and finalize their appointments as the Company’s primary and secondary financial advisors, respectively, in connection with a transaction involving Badcock. In granting the approval, the Board noted that both Deutsche Bank and Stephens had a long-standing history with the Company and had served in financial advisory roles for the Company in connection with prior reviews of strategic transactions that were not consummated. The Board also noted Deutsche Bank’s reputation as a top-tier financial advisory firm with experience in the retail space and Stephens’ reputation as an expert in the specialty retail industry. The Board also approved the financial advisors’ respective fees, which were memorialized in the engagement letters. Representatives from Deutsche Bank and Stephens then joined the meeting and provided an update on several aspects of the proposed Transaction, including the due diligence process, transaction structuring and terms, financial considerations related to a potential combination, and a proposed timeline for completion of the transaction.

Between September 15, 2023, and October 11, 2023, management of the Company also held various internal discussions regarding potential financing and structuring options for a transaction with Badcock and ran pro forma liquidity projections. During this time, management of the Company also met with the Company’s existing lenders at JP Morgan Chase and Pathlight to discuss options with respect to re-financing the Company’s credit facilities in connection with any such transaction.

On October 4, 2023, the Company again held a Board meeting. At the invitation of the Board, representatives from Deutsche Bank and Stephens participated in this meeting. Management of the Company, with the assistance of representatives from Deutsche Bank and Stephens, gave an overview of various aspects of Badcock, including its retail store footprint, corporate structure and personnel, consumer credit offerings, and business model. The financial advisors additionally discussed certain aspects of a potential combined company with the Board, including the resulting footprint, number of stores, and anticipated operational and cost synergies anticipated by management of the Company to result from the proposed transaction. Representatives of Deutsche

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Bank and Stephens also discussed with the Board updated information regarding Badcock. Subsequently, management of the Company discussed with the Board the incremental liquidity that management of the Company expected from the proposed Transaction, taking into account assumptions regarding the borrowing base, consolidated liquidity projections, pro forma capital structure, and financing terms that management of the Company anticipated to be requested from the Company’s lenders.

On October 10, 2023, as previously approved by the Board, the Company entered into an engagement letter with Stephens as its secondary financial advisor with respect to a potential transaction involving Badcock.

On October 11, 2023, a telephonic meeting was convened amongst representatives from Sidley Austin and Willkie Farr to discuss the Term Sheet and proposed structure for the potential transaction, including potential NASDAQ listing rules that might be implicated and the feasibility of adopting a simultaneous sign and close transaction structure. The parties further discussed planned next steps and other matters relating to the timing of the potential transaction.

On October 16, 2023, Willkie Farr provided a revised draft of the Term Sheet to Sidley Austin, which, among other things, included additional proposed terms relating to the overall structure of the potential transaction and additional details on the terms of the preferred shares that would be issued to certain affiliates of Franchise Group as the consideration for the potential transaction.

Between October 17, 2023, and November 3, 2023, the parties exchanged multiple revised versions of the Term Sheet and certain members of management of the Company and of Franchise Group, along with representatives of Sidley Austin and Willkie Farr, engaged in a number of calls to discuss these iterations of the Term Sheet.

On October 18, 2023, as previously approved by the Board, the Company entered into an engagement letter with Deutsche Bank as its primary financial advisor with respect to a potential transaction involving Badcock. During the course of its engagement, management of the Company directed Deutsche Bank to assume for purposes of its financial analyses, and Deutsche Bank did assume, that if the proposed transaction with Badcock was not completed, the Company would need to raise $55,000,000 by selling its common stock.

On November 2, 2023, the Company held a Board meeting where management of the Company gave an update on due diligence progress with Badcock, proposed financing terms for the potential transaction with Badcock and the potential structure of the transaction. In addition, management of the Company provided an overview of Badcock, encompassing its retail stores, dealer network, corporate structure, personnel and credit offerings, as well as an overview of a potential combined business entity. Management of the Company then addressed consolidated liquidity projections, pro forma capital structure, and financing terms that the Company intended to request from its lenders in connection with a merger transaction involving the Company and Badcock.

On November 6, 2023, management of the Company became aware of and reviewed a Bloomberg article published on November 2, 2023 (the “Bloomberg Article”) reporting that the Securities and Exchange Commission (“SEC”) had charged Mr. John Hughes, president and chief compliance officer of the registered investment adviser Prophecy Asset Management LP (“PAM”), for his alleged involvement in a multi-year fraud that concealed losses of hundreds of millions of dollars from investors (the “Hughes Matter”). During the investigation of the Hughes Matter, Mr. Hughes stated that he had worked with two additional individuals, and the Bloomberg Article quoted a source as identifying the former Chief Executive Officer of Franchise Group as one of the individuals allegedly associated with the Hughes Matter. That evening, management of the Company and Sidley Austin held a teleconference to discuss the impact of the Hughes Matter on the potential transaction with Badcock.

On November 7, 2023, the Company and Sidley Austin, including representatives of Sidley Austin’s White Collar Investigations group, convened another call to discuss the potential implications of the Hughes Matter on

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the transaction with Badcock. Following that call, representatives of Sidley Austin and representatives of Willkie Farr had a call to further discuss the Hughes Matter. Willkie Farr informed Sidley Austin their understanding of the former Chief Executive Officer of Franchise Group’s alleged involvement in the matters underlying the SEC allegations was personal in nature, outside the scope of his employment with Franchise Group and Badcock and did not involve Franchise Group or Badcock. They also noted that Franchise Group was separately conducting an internal investigation through another law firm to determine (i) whether Franchise Group, independent of the former Chief Executive Officer of Franchise Group, had a relationship with PAM, (ii) if so, whether any such relationship played a role in the conduct alleged in the SEC complaint relating to the Hughes Matter, and (iii) whether the Hughes Matter has impacted the business or operations of Franchise Group.

Later on November 7, 2023, the Company held a Board meeting to discuss the Hughes Matter. Management of the Company provided an overview to the Board of the recent SEC complaint against Mr. Hughes. Representatives from Sidley Austin, Deutsche Bank and Stephens then joined the meeting. Sidley Austin gave an overview of its discussions with Willkie Farr with respect to their understanding of the matters underlying the SEC allegations and the internal investigation being conducted.

Later that same day, management of the Company determined that it was prudent to temporarily pause ongoing drafting of the merger and financing agreements relating to a potential transaction with Badcock while it considered the information contained in the Bloomberg Article on the Hughes Matter.

Between November 7, 2023, and November 10, 2023, management of the Company and representatives of Deutsche Bank, Stephens and Sidley Austin had various conversations regarding potential changes to the transaction structure. These discussions, particularly focusing on governance rights, aimed to mitigate any risks to the Company associated with the Hughes Matter, including risks relating to the Company’s reputation and potential risks relating to claims against the assets which the Company was acquiring in connection with the potential transaction.

On November 10, 2023, at the direction of management of the Company, representatives of Deutsche Bank held a telephonic discussion with representatives of JP Morgan Securities, serving as the financial advisor to Franchise Group, on the terms of the transaction and any potential structural changes to address the potential risks related to the Hughes Matter.

On November 13, 2023, the Company held a Board meeting where, among other topics, management of the Company presented on the strategic and financial rational for a merger transaction with Badcock, which includes increased retail scale, leveraging of the Company’s credit platform, and forecasted synergies and enhanced liquidity in a combined entity. Management of the Company then gave an update on the proposed revised transaction terms in light of the Bloomberg Article and the Hughes Matter.

On November 13, 2023, unrelated to the ongoing negotiations of the potential transaction with Badcock, Mr. Bchara submitted his voluntary resignation as Chief Financial Officer of the Company, effective November 17, 2023, and remained as an employee with the Company until December 1, 2023.

On November 14, 2023, Sidley Austin provided a further revised Term Sheet to Willkie Farr. This version of the Term Sheet incorporated the structural changes the Company had been discussing with its advisors and Board to mitigate risks associated with the Hughes Matter, including changes to the governance of the Company, the creation of a new class of non-voting common stock to be issued as consideration in the transaction, and an indemnity for losses related to the Hughes Matter.

On November 17, 2023, the Company promoted Timothy Santo to Interim Chief Financial Officer.

Later that same day, Sidley Austin provided diligence requests to Willkie Farr regarding the Hughes Matter and specifically relating to Franchise Group’s internal investigation into the Hughes Matter and its former Chief Executive Officer’s alleged involvement, if any, with the Hughes Matter.

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Between November 18, 2023, and November 21, 2023, Willkie Farr and Sidley Austin exchanged several drafts of the Term Sheet and held various teleconferences to discuss the updated terms reflected in those drafts. In addition, the Company attended various calls with representatives from Deutsche Bank, Stephens and Sidley Austin to discuss iterative changes to the Term Sheet, including, among others, changes to Franchise Group’s governance rights and post-closing transfer restrictions and the allocation of each party’s transaction expenses.

On November 26, 2023, Sidley Austin provided Willkie Farr with an initial draft of the Investment Agreement for the potential transaction. The initial draft reflected the terms included in the draft Term Sheet Sidley Austin delivered to Willkie Farr on November 20, 2023.

On November 27, 2023, JP Morgan Chase, the Company’s lead lender on its first lien revolving credit facility, informed the Company that it was willing to proceed with refinancing that credit facility in connection with a transaction with Badcock. However, Pathlight, the second lien lender, still had not agreed to an amendment of its second lien loan facility on terms acceptable to the Company as of such date. Accordingly, management of the Company initiated discussions to refinance its second lien term loan with BRF Finance Co., LLC, which offered more favorable terms, in connection with the transaction.

On November 28, 2023, a telephonic meeting was convened with certain senior members of management of the Company and of management of Franchise Group, along with representatives from Sidley Austin and Willkie Farr, to discuss, among other things, the structure of the consideration to be paid by the Company with respect to, and the treatment of, Badcock’s accounts receivable.

On November 30, 2023, Willkie Farr provided to Sidley Austin a revised draft of the Term Sheet.

Later that day, a telephonic meeting was convened with certain senior members of management of the Company, along with representatives of Stephens, Deutsche Bank and Sidley Austin, to discuss the proposed changes to the Term Sheet with respect to governance rights, transaction expenses and features of the preferred equity.

On December 1, 2023, a telephonic meeting was convened with certain senior members of management of the Company, along with representatives of Stephens, Deutsche Bank and Sidley Austin, to discuss the proposed changes to the Term Sheet, including Franchise Group’s right to appoint a board observer, the issuance of non-voting equity as consideration to Franchise Group, and certain compromises in respect of the transfer restrictions to be imposed on Franchise Group with respect to its equity consideration.

On December 4, 2023, Willkie Farr provided Sidley Austin with a revised draft of the Investment Agreement incorporating, among other things, updates corresponding to the changes reflected in the interim versions of the Term Sheet that had been exchanged since Sidley Austin provided the initial draft of the Investment Agreement to Willkie Farr.

On December 5, 2023, the Company held a Board meeting which representatives of Sidley Austin, Deutsche Bank and Stephens attended. During the meeting, representatives of Sidley Austin, Stephens and Deutsche Bank gave an overview of the proposed terms of the transaction involving Badcock, the diligence performed to date, the risk mitigating changes implemented in response to the Hughes Matter, and the status of the definitive transaction documentation. Representatives of Deutsche Bank also discussed with the Board certain preliminary financial information relating to the proposed Transaction.

Later that day, a telephonic meeting was convened with certain senior members of management of the Company, along with representatives of Stephens, Deutsche Bank and Sidley Austin, to discuss the proposed changes made in the updated draft of the Investment Agreement.

On December 6, 2023, certain senior members of management of the Company, along with representatives of Sidley Austin, Willkie Farr and Petrillo Klein & Boxer LLP (“Petrillo Klein + Boxer”), a law firm engaged by

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Franchise Group’s board of directors to conduct the internal investigation into the Hughes Matter, participated in a telephonic meeting. During this meeting, the parties discussed the circumstances surrounding the Hughes Matter and the scope and process of Franchise Group’s internal investigation of the Hughes Matter. Petrillo Klein + Boxer confirmed that (i) Franchise Group, independent of the former Chief Executive Officer of Franchise Group, had no relationship with PAM,(ii) it had not observed any evidence that the Hughes Matter or the former Chief Executive Officer of Franchise Group’s alleged former relationship with PAM impacted the business or operations of Franchise Group, (iii) the former Chief Executive Officer of Franchise Group’s alleged relationship with PAM occurred outside the scope of his duties and responsibilities as Franchise Group’s Chief Executive Officer and a member of its board, and (iv) based on their findings, any alleged conduct in connection with PAM or the Hughes Matter should not be imputed to Franchise Group.

Between December 7, 2023, and December 15, 2023, Sidley Austin and Willkie Farr exchanged revised drafts of the Investment Agreement and related ancillary agreements, and certain members of management of the Company and management of Franchise Group, as well as representatives of Sidley Austin and Willkie Farr, engaged in various teleconferences to discuss the evolving terms of the Investment Agreement and ancillary documentation.

On December 17, 2023, the Board held a special meeting attended by representatives from Sidley Austin, Stephens, Deutsche Bank and certain senior members of management of the Company. Representatives of Sidley Austin presented a summary of the terms and conditions of the Investment Agreement and other transaction documents relating to the acquisition of Badcock. Sidley Austin also delivered to the Board a summary of the Board’s fiduciary duties in connection with the transactions. Based on information previously provided to the Company about Deutsche Bank’s investment banking relationships over the prior two-year period, the Board affirmed that Deutsche Bank did not have any disqualifying conflicts of interest in serving as the Company’s financial advisor and providing an opinion in connection with the transaction. At the direction of management of the Company, Deutsche Bank assumed, for the purposes of certain of Deutsche Bank’s analyses relating to the Company on a stand-alone basis, that the Company would raise an additional $55,000,000 by selling common stock at a price of $3.04 per share. Representatives of Deutsche Bank then presented their financial analysis with respect to the consideration to be paid in the transaction and delivered an oral opinion to the Board, which was subsequently confirmed by delivery of a written opinion dated December 17, 2023, to the effect that, as of the date of such opinion and based upon and subject to the assumptions, limitations, qualifications and conditions described in Deutsche Bank’s opinion, the consideration to be paid by the Company pursuant to the Investment Agreement, consisting of an aggregate number of shares of preferred stock convertible into an aggregate number of shares of non-voting common stock equal to 49.99% of the common stock outstanding immediately following the closing of the Investment Agreement Transactions on a fully-diluted basis (as determined pursuant to the Investment Agreement), was fair from a financial point of view to the Company. Deutsche Bank did not express any opinion with respect to the potential adjustments to such consideration pursuant to Section 1.5 of the Investment Agreement. See “—Opinion of Deutsche Bank Securities Inc.”

After considering various factors, including those described in this proxy statement, and after consultation with the Company’s legal and financial advisors, at that meeting on December 17, 2023, the Board unanimously (i) approved the Investment Agreement and the Investment Agreement Transactions, (ii) determined that the Investment Agreement and Investment Agreement Transactions are advisable and in the best interests of the Company and its stockholders and (iii) resolved to recommend to the stockholders of the Company to vote in favor of the approval of the issuance of the non-voting common stock upon conversion of the preferred stock to be issued at closing of the Investment Agreement Transactions.

On December 18, 2023, the parties executed the Investment Agreement and related ancillary agreements, including (i) an amendment to the first lien financing arrangement with JP Morgan Chase (ii) an amendment to the third lien financing arrangement with Stephens Investment and Stephens Group and (iii) a new second lien financing arrangement with BRF Finance Co., LLC, which refinanced the Company’s existing second lien financing arrangement with Pathlight, and the Company completed its acquisition of Badcock pursuant to the terms of and subject to the conditions described in the Investment Agreement.

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Recommendation of the Board and Reasons for the Transaction

Recommendation of the Board

The Board, after considering the factors more fully described in this proxy statement, has unanimously: (a) determined that the Investment Agreement and the DDTL Amendment and the transactions contemplated thereby, are advisable, fair to and in the best interests of the Company and its stockholders; (b) authorized the establishment of the preferred stock and approved the Certificate of Designations; (c) determined that the Charter Amendment is advisable, fair to and in the best interests of the Company and its stockholders; (d) authorized and approved the DDTL Amendment; and (e) recommended that the Company’s stockholders approve the proposals to be considered at the special meeting.

The Board unanimously recommends that you vote FOR the Charter Amendment Proposal, FOR the Conversion Proposal, FOR the Warrant Exercise Proposal and FOR the Adjournment Proposal, if necessary or appropriate.

Reasons for the Transaction

In evaluating the Investment Agreement and the Transaction, the Board consulted with the Company’s management team, its financial advisors, and Sidley Austin LLP, as outside legal counsel to the Company. The Board unanimously approved the Investment Agreement and determined that the terms of the Investment Agreement and the Transaction, are advisable and in the best interest of the Company and its stockholders.

As the Company has disclosed in various public filings, it is interested in expanding its footprint within existing markets and expanding into new markets. Further to that stated plan, management of the Company has commenced efforts to grow the Company and further penetrate important markets within its existing geographical scope. In reaching its decision to approve and authorize the Transaction, the Board thoroughly considered the potential operational and cost synergies, the current and long-term prospects for the Company and the industries and geographical areas in which it operates. On that basis, the Board determined that the Transaction is the most optimal path forward and is in the best interest of the shareholders.

In unanimously recommending that shareholders approve the Charter Amendment Proposal, the Conversion Proposal and the Warrant Exercise Proposal, the Board considered numerous factors, including the following, among others and not necessarily in order of relative importance:

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The foregoing discussion of the information and factors that the Board considered is not intended to be exhaustive, but is meant to include certain material factors supporting the Transaction that the Board took into account. In view of the complexity and wide variety of factors considered, the Board did not find it practical to, and did not attempt to, quantify, rank or otherwise assign relative or specific weights or values to any of the factors considered. Rather, the Board made its determinations based on the totality of the information presented to them and the investigations conducted by them.

It should be noted that portions of this explanation of the reasoning of the Board and certain information presented in this section are forward-looking in nature and, therefore, should be read along with the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

Unaudited Financial Projections

In connection with the proposed Transaction, management of the Company prepared projections for (1) the Company on a stand-alone basis, (2) Badcock on a stand-alone basis and (3) pro forma for the Transaction for fiscal years 2024, 2025 and 2026. These non-public projections were provided to Deutsche Bank for use and consideration in its financial analyses and the preparation of its opinion to the Board. The Board considered these projections in connection with its consideration of the Transaction.

A summary of these projections is included below to give stockholders access to certain non-public unaudited projections that were made available to Deutsche Bank and the Board in connection with the proposed Transaction.

The Company cautions you that uncertainties are inherent in projections of any kind. Neither the Company nor any of its affiliates, advisors, officers, directors or representatives has made or makes any representation or can give any assurance to any stockholder or any other person regarding the ultimate performance of the Company compared to the summarized information set forth below or that any projected results will (or would, in the absence of the Transaction) be achieved.

The summary projections set forth below summarize the final projections provided to Deutsche Bank, and the Board prior to its authorization and approval of the execution and performance of the Investment Agreement by the Company. The inclusion of the following summary projections in this proxy statement should not be regarded as an indication that the Company or its representatives considered or consider the projections to be a reliable or accurate prediction of future performance or events, and the summary projections set forth below should not be relied upon as such.

The accompanying projections were not prepared with a view toward public disclosure or toward compliance with U.S. Generally Accepted Accounting Principles (“GAAP”), the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants, but, in the view of management of the Company, were prepared on a reasonable basis, reflect the best available estimates and

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judgments as of the date of preparation, and present, to the best of the Company management’s knowledge and belief as of the date of preparation, the expected course of action and the expected future financial performance of the Company.

Neither Ernst & Young LLP nor any other independent registered public accounting firm or other independent accountants has compiled, examined or performed any procedures with respect to the projections, nor expressed any opinion or any other form of assurance on such information or its achievability, and assumes no responsibility for, and disclaims any association with, the projections. The Board and the Audit Committee of the Board did not prepare, and do not give any assurance regarding, the summarized information.

The Company Unaudited Financial Projections

The table set forth below includes a summary of the Company standalone projections, which the Company’s management prepared based on internal financial analyses that the Company has historically used in connection with its strategic planning processes. The Company standalone projections have not been updated or revised to reflect information or results after the date of their preparation or as of the date of this proxy statement. The Company standalone projections were provided by the Company’s management to Deutsche Bank, and a summary is presented in the table below.

In developing the Company standalone projections, management of the Company made numerous material assumptions with respect to the Company for the period 2024 to 2026, including:

All of these assumptions involve variables making them difficult to predict, and most are beyond the control of the Company. Although management of the Company believed that there was a reasonable basis for their projections and underlying assumptions, any assumptions for near-term projected cases remain uncertain, and the risk of inaccuracy increases with the length of the forecasted period.

Management, utilizing assumptions it believed to be reasonable and materially consistent with its expectations relating to the financial and operating performance of the Company for the years ending January 31, 2024, 2025 and 2026, provided Deutsche Bank with the following forecasts on a stand-alone basis:

Badcock Unaudited Financial Projections

The table set forth below includes a summary of the Badcock standalone projections, which the Company’s management prepared based on information provided by Badcock’s management to the Company. The Badcock standalone projections have not been updated or revised to reflect information or results after the date of their preparation or as of the date of this proxy statement. The Badcock standalone projections were provided by the Company’s management to Deutsche Bank, and a summary is presented in the following table.

In developing the Badcock standalone projections, management of the Company used information provided by Badcock’s management and applied its own assumptions regarding Badcock’s business for the period 2024 to 2026, including:

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All of these assumptions involve variables making them difficult to predict, and most are beyond the control of the Company. Although management of the Company believed that there was a reasonable basis for their projections and underlying assumptions, any assumptions for near-term projected cases remain uncertain, and the risk of inaccuracy increases with the length of the forecasted period.

Management, utilizing assumptions it believed to be reasonable and materially consistent with its expectations relating to the financial and operating performance of Badcock for the years ending January 31, 2024, 2025 and 2026, provided to Deutsche Bank the following forecasts on a stand-alone basis.

Pro Forma Projections

The table set forth below includes a summary of the pro forma projections, which represent the Company’s management’s evaluation of the Company on a combined, pro forma basis taking into account the effects of the Transaction and the Company’s management’s view of, among other things, synergies. The Company pro forma projections have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this proxy statement. The Company pro forma projections were provided by the Company’s management to Deutsche Bank, and a summary is presented in the following table. Deutsche Bank was directed to use and rely upon the Company pro forma projections for purposes of Deutsche Bank’s opinion and related financial analyses by the Company’s management, and the Company pro forma projections were approved for Deutsche Bank’s use by the Board.

Other Information

The projections are forward-looking statements and are subject to risks and uncertainties. Accordingly, the assumptions made in preparing the projections may not prove to be reflective of actual results, and actual results may be materially different from those contained in the projections. None of Ernst & Young LLP, Deutsche Bank or any of their respective representatives assumes any responsibility for the validity, reasonableness, accuracy or completeness of the projected financial information, and the Company has not made any representations to stockholders regarding such information. The inclusion of the projections in this proxy statement should not be regarded as an indication that the Board or its financial or other advisors considered the projections predictive of actual or future events or that the projections should be relied on for that purpose. In light of the uncertainties inherent in any projected data, stockholders are cautioned not to rely on the foregoing projections.

THE COMPANY DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH PROJECTIONS ARE NO LONGER APPROPRIATE.

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Opinion of Deutsche Bank Securities Inc.

At the December 17, 2023 meeting of the Board, Deutsche Bank, one of the financial advisors to the Company, rendered its oral opinion to the Board, confirmed by delivery of a written opinion dated December 17, 2023, to the effect that as of the date of such opinion, and based upon and subject to the assumptions, limitations, qualifications and conditions described in Deutsche Bank’s written opinion, the Consideration to be paid by the Company pursuant to the Investment Agreement (consisting of an aggregate number of shares of preferred stock convertible into an aggregate number of shares of non-voting common stock equal to 49.99% of the common stock outstanding immediately following the closing of the Investment Agreement Transactions (as determined pursuant to the Investment Agreement)) was fair, from a financial point of view, to the Company. Deutsche Bank did not express any opinion with respect to the potential adjustments to such Consideration pursuant to Section 1.5 of the Investment Agreement.

The full text of Deutsche Bank’s written opinion, dated December 17, 2023, which sets forth the assumptions made, procedures followed, matters considered and limitations, qualifications and conditions on the review undertaken in connection with the opinion, is included as Annex H to this proxy statement and is incorporated herein by reference. The summary of Deutsche Bank’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the written opinion. Deutsche Bank’s opinion was approved and authorized for issuance by a Deutsche Bank fairness opinion review committee and was addressed to, and for the use and benefit of, the Board in connection with and for the purpose of its evaluation of the Investment Agreement Transactions. The scope of Deutsche Bank’s opinion was limited to the fairness, from a financial point of view, to the Company of the Consideration to be paid by the Company pursuant to the Investment Agreement as of the date of the opinion. The opinion did not address any other terms of the Investment Agreement Transactions or the Investment Agreement. Nor did it address the terms of any other agreement entered into, or to be entered into, in connection with the Investment Agreement Transactions, including, without limitation, the Transition Services Agreement (as defined in the Investment Agreement). At the direction of the Board, Deutsche Bank did not perform any analysis with respect to the potential value of the Residual Tranche 2 Receivables (as defined in the Investment Agreement) and, accordingly, Deutsche Bank expressed no opinion with respect to the allocation of the Consideration between Newco BHF and FVCM (or a designee thereof). Deutsche Bank also noted that Section 1.5 of the Investment Agreement provides for Franchise Group to potentially make a post-closing payment to the Company, as to which Deutsche Bank expressed no opinion. The Board did not ask Deutsche Bank to, and Deutsche Bank’s opinion did not, address the fairness of the Investment Agreement Transactions, or any consideration received or paid in connection therewith, to the holders of any class of securities, creditors or other constituencies of the Company, nor did it address the fairness of the contemplated benefits of the Investment Agreement Transactions. Deutsche Bank expressed no opinion as to the merits of the underlying decision by the Company to engage in the Investment Agreement Transactions or the relative merits of the Investment Agreement Transactions as compared to any alternative transactions or business strategies. In particular, Deutsche Bank was not engaged to, and did not, solicit any potential investors with respect to making a potential investment in the Company. Deutsche Bank did not consider, and was not asked to opine with respect to, the terms on which any such additional capital could be raised. Nor did Deutsche Bank express an opinion, and Deutsche Bank’s opinion did not constitute a recommendation, as to how any holder of shares of common stock should vote with respect to the proposals to be considered at the special meeting or any other matter. In addition, Deutsche Bank did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of the officers, directors, or employees of any parties to the Investment Agreement Transactions, or any class of such persons, in connection with the Investment Agreement Transactions whether relative to the consideration to be paid by the Company or otherwise. For purposes of its opinion, Deutsche Bank assumed, with the knowledge and consent of the Board, that the requisite approvals by the stockholders of the Company will be obtained, that the preferred stock will be converted into non-voting common stock prior to such time as the preferred stock begins to accrue dividends, and that the non-voting common stock is equivalent to the voting common stock from a financial point of view. Accordingly, for purposes of Deutsche Bank’s analysis, Deutsche Bank treated the consideration to be issued pursuant to the Investment Agreement as if the preferred stock has been converted into non-voting common stock. Deutsche Bank’s opinion did not in any manner address the prices at which common stock or any other securities will trade at any time.

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In connection with its role as financial advisor to the Company, and in arriving at its opinion, Deutsche Bank reviewed certain publicly available financial and other information concerning the Company and Badcock, and certain internal analyses, financial forecasts and other information relating to the Company, Badcock and the combined company (including estimates of the amount and timing of certain cost savings, operating efficiencies, revenue effects, financial synergies and other strategic benefits projected by the Company to be achieved as a result of the Investment Agreement Transactions (collectively, the “Synergies”)) provided by management of the Company. Deutsche Bank also held discussions with certain senior officers and other representatives and advisors of the Company regarding the businesses and prospects of the Company, Badcock and combined company. In particular, management of the Company informed Deutsche Bank that on a stand-alone basis, the Company could encounter negative liquidity in the near term and potentially breach the covenants under its credit facilities unless it raises additional capital or implements significant cost reductions. Deutsche Bank noted that the financial forecasts for the Company provided to Deutsche Bank by management of the Company did not take into account the dilution that would result from a capital raising transaction potentially necessary to address the negative liquidity expectations in the near term. As such, for certain analyses related to the Company on a stand-alone basis, Deutsche Bank, at the direction of the management of the Company, assumed that the Company would raise an additional $55,000,000 by selling common stock at a price of $3.04 per share. Deutsche Bank also considered information provided by management of the Company indicating that if the combined company performs in line with management’s expectations, the liquidity available to the combined company on a pro forma basis after giving effect to the refinancing of the balance sheet at closing would be sufficient to support the combined company’s ongoing operations.

In addition, Deutsche Bank:

Deutsche Bank did not assume responsibility for independent verification of, and did not independently verify, any information, whether publicly available or furnished to it, concerning the Company, Badcock or the combined company, including, without limitation, any financial information considered in connection with the rendering of its opinion. Accordingly, for purposes of its opinion, Deutsche Bank, with the knowledge and permission of the Board, assumed and relied upon the accuracy and completeness of all such information.

Deutsche Bank did not conduct a physical inspection of any of the properties or assets, and did not prepare, obtain or, review any independent evaluation or appraisal of any of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets or liabilities), of the Company, Badcock or any of their respective subsidiaries, nor did Deutsche Bank evaluate the solvency or fair value of the Company, Badcock, any of their respective subsidiaries, or the combined company (or the impact of the Investment Agreement Transactions thereon) under any law relating to bankruptcy, insolvency or similar matters. With respect to the financial forecasts, including, without limitation, the Synergies, made available to Deutsche Bank and used in its analyses, Deutsche Bank assumed, with the knowledge and permission of the Board, that such forecasts had been reasonably prepared on bases reflecting the best currently available estimates and judgments of management of the Company as to the matters covered thereby and that the Synergies would be realized in the amounts and in the time periods estimated by management of the Company. In rendering its opinion, Deutsche Bank expressed no view as to the reasonableness of such forecasts, including, without limitation, the Synergies or the assumptions on which they were based. Deutsche Bank’s opinion was necessarily based upon economic, market

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and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Deutsche Bank expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which it becomes aware of after the date of its opinion.

For purposes of rendering its opinion, Deutsche Bank assumed, with the knowledge and permission of the Board, that the requisite approvals of the stockholders of the Company would be obtained, that the preferred stock would be converted into non-voting common stock prior to such time as the preferred stock begins to accrue dividends, and that the non-voting common stock is equivalent to the voting common stock from a financial point of view. Accordingly, for purposes of Deutsche Bank’s analysis, Deutsche Bank treated the Consideration issuable pursuant to the Investment Agreement as if the preferred stock had been converted into non-voting common stock. Deutsche Bank has further assumed, with the knowledge and permission of the Board, that in all respects material to its analysis, the Investment Agreement Transactions would be consummated in accordance with the terms of the Investment Agreement, without any waiver, modification or amendment of any term, condition or agreement that would be material to its analysis. Deutsche Bank also assumed, with the knowledge and permission of the Board, that all material governmental, regulatory or other approvals and consents required in connection with the consummation of the Investment Agreement Transactions would be obtained and that in connection with obtaining any necessary governmental, regulatory or other approvals and consents, no restrictions, terms or conditions would be imposed that would be material to its analysis. Deutsche Bank is not a legal, regulatory, tax or accounting expert and relied on the assessments made by the Company and its other advisors with respect to such issues. Representatives of the Company informed Deutsche Bank, and Deutsche Bank assumed, with the knowledge and permission of the Board, that the final terms of the Investment Agreement, the Certificate of Designations and the amendment to the Company’s Certificate of Incorporation would not differ from the terms set forth in the drafts it reviewed in any respect material to its analysis.

The Company selected Deutsche Bank as its financial advisor in connection with the Investment Agreement Transactions based on Deutsche Bank’s qualifications, expertise, reputation and experience in mergers and acquisitions. Pursuant to an engagement letter between the Company and Deutsche Bank, dated October 18, 2023, the Company has agreed to pay Deutsche Bank a fee of $5,000,000, of which $2,500,000 became payable upon delivery of its opinion (or would have become payable upon Deutsche Bank advising the Company that it was unable to render an opinion) and the remainder of which was contingent upon consummation of the Investment Agreement Transactions. The Company has also agreed to reimburse Deutsche Bank for all reasonable fees, expenses and disbursements of its counsel and all of Deutsche Bank’s reasonable travel and other out-of-pocket expenses incurred in connection with the Investment Agreement Transactions or otherwise arising out of its engagement, in each case on the terms set forth in its engagement letter. The Company has also agreed to indemnify Deutsche Bank and its affiliates against certain liabilities, including certain liabilities arising out of its engagement or the Investment Agreement Transactions.

Deutsche Bank is an internationally recognized investment banking firm experienced in providing advice in connection with mergers and acquisitions and related transactions. Deutsche Bank is an affiliate of Deutsche Bank AG (together with its affiliates, the “DB Group”). One or more members of the DB Group have, from time to time, provided, and are currently providing, investment banking, commercial banking (including extension of credit) and other financial services to the Company or its affiliates for which they have received, and in the future may receive, compensation, including acting as a lender under the Company’s asset-based revolving credit facility (aggregate exposure of approximately $60 million, including undrawn commitments), the term of which was extended in connection with the Investment Agreement Transactions. The DB Group has received approximately less than €1.5 million in fees from the Company with respect to such services since January 1, 2022. The DB Group did not provide investment banking, commercial banking or other financial services to Franchise Group, Newco BHF or Badcock for which it received compensation in the two years prior to the date of Deutsche Bank’s opinion. The DB Group may provide investment and commercial banking services to the Company, Franchise Group or their respective affiliates in the future, for which the DB Group would expect to receive compensation. In the ordinary course of business, members of the DB Group may actively trade in the

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securities and other instruments and obligations of the Company, Franchise Group and their respective affiliates for their own accounts and for the accounts of their customers. Accordingly, the DB Group may at any time hold a long or short position in such securities, instruments and obligations.

Summary of Material Financial Analyses of Deutsche Bank

The following is a summary of the material financial analyses presented by Deutsche Bank to the Board at the meeting held on December 17, 2023, and that were used in connection with rendering Deutsche Bank’s opinion described above.

The following summary, however, does not purport to be a complete description of the financial analyses performed by Deutsche Bank, nor does the order in which the analyses are described represent the relative importance or weight given to the analyses by Deutsche Bank. Some of the summaries of the financial analyses below include information presented in tabular format. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables alone do not constitute a complete description of Deutsche Bank’s analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before December 15, 2023, and is not necessarily indicative of current market conditions.

In preparing its analyses, Deutsche Bank utilized calculations of, among other things (i) enterprise value (or “EV”), calculated as equity value plus net debt; (ii) earnings before interest, taxes, depreciation and amortization calculated as the sum of consolidated net income, depreciation, amortization, net interest expense and income tax expense (which we refer to as “EBITDA”); and (iii) EBITDA excluding from net income the impact of certain adjustments for non-recurring or non-cash items (which we refer to as “Adjusted EBITDA”). For additional information regarding the Company’s management’s projections for the Company and Badcock underlying these calculations, please see the section of this proxy statement entitled “—Unaudited Financial Projections.”

Discounted Cash Flow Analysis

Deutsche Bank performed discounted cash flow analyses for each of the Company and Badcock to determine ranges of implied net present equity values for the Company and Badcock, respectively. Deutsche Bank applied discount rates ranging from 14.5% to 16.5% to estimates of the estimated future unlevered free cash flows of the Company and Badcock through fiscal 2028 based upon projections for each company provided by the Company’s management as described under “—Unaudited Financial Projections” and to a range of estimated terminal values of the Company and Badcock, respectively, at the end of such period, to determine a range of implied enterprise values for each company as of October 31, 2023, after subtracting net debt of approximately $667 million for the Company and approximately $224 million for Badcock, respectively. For purposes of its financial analyses, Deutsche Bank calculated unlevered free cash flow as (a) Adjusted EBITDA, less (b) stock compensation expense, less (c) capital expenditures, less (d) taxes plus or less (e) change in net working capital. Deutsche Bank derived the foregoing range of discount rates by application of the capital asset pricing model, which requires certain company-specific inputs, including target capital structure weightings, the cost of long-term debt, future applicable marginal cash tax rate and a beta for each of the Company and Badcock, respectively, as well as certain financial metrics for the United States financial markets generally. The terminal values were calculated by applying multiples ranging from 9.0x to 10.0x to the Company’s management estimates of terminal year Adjusted EBITDA calculated for each company by growing fiscal 2028 EBITDA by 0.25%, assuming no change in net working capital and terminal year capital expenditures equal to terminal year depreciation and amortization, in each case as directed by management of the Company. Deutsche Bank assumed a tax rate of 21% for each of the Company and Badcock based on estimates provided by management of the Company. Deutsche Bank noted that it used the same assumptions for both the Company and Badcock given the similarities between the Company’s and Badcock’s business models. This analysis indicated implied ranges of equity value of approximately $237 million to $423 million for the Company and approximately $246 million to $329 million for Badcock.

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Based upon the implied equity values of the Company and Badcock described above, Deutsche Bank calculated a range of implied pro forma diluted equity ownership of Badcock stockholders in the combined company. For purposes of this analysis, Deutsche Bank assumed that the implied equity value of the combined company was the sum of the implied equity values of the Company and Badcock described above. Deutsche Bank calculated the implied pro forma equity ownership range assuming the lowest implied equity value for each company and the highest implied equity value for each company. This analysis resulted in a range of implied diluted equity ownership by Badcock stockholders in the combined entity of approximately 44% to 51%, compared with the 49.99% ownership represented by the number of shares of non-voting common stock to be issued upon exchange of the preferred stock, as stipulated in the calculations set forth in the Investment Agreement, which Deutsche Bank noted represented approximately 48% ownership on a fully-diluted basis after accounting for options, Performance Stock Units and Restricted Stock Units.

Historical Trading Metrics Analysis

Although Deutsche Bank reviewed and compared certain publicly available financial information and commonly used valuation measurements for seven selected publicly traded specialty retailers with information for the Company and Badcock, respectively, Deutsche Bank noted that, in its professional judgment, the Company was itself the most relevant comparable for Badcock due to (i) differences in business model between the Company and Badcock, on the one hand, and the other public companies, on the other (both the Company and Badcock have significant business presence in both the retail segment and the credit segment, setting them apart from the other selected public companies), and (ii) earnings volatility at the Company and the other public companies. Accordingly, for purposes of its analysis, Deutsche Bank did not rely on information relating to the other public companies because, as described above, the public company trading metrics were less relevant than the historical trading metrics of the Company.

Based upon the closing prices of the common stock on December 15, 2023, information contained in the Company’s most recent public filings, Wall Street analyst consensus, and estimates provided by management of the Company, Deutsche Bank conducted calculations to determine that the median multiple of the Company’s EV to estimated EBITDA as of December 15, 2023 for the forward four quarter period (“EV/NTM EBITDA”) over the last 10 years was 10.1x and that the median multiple of the Company’s EV to three-year average EBITDA (“EV/L3Y Avg. EBITDA”) over the last 10 years as of December 15, 2023 was 8.6x. Deutsche Bank also calculated the multiples of EV/NTM EBITDA and EV/L3Y Avg. EBITDA as of December 15, 2023 and the median multiples of EV/NTM EBITDA and EV/L3Y Avg. EBITDA, the three-year pre-COVID period ending on February 1, 2020 and the five-year pre-COVID period ending on February 1, 2020 as set forth in the following table:

Based in part upon the multiples described above and taking into account its professional judgment and experience, Deutsche Bank calculated the following ranges of implied equity value of each of the Company and Badcock, assuming multiple parity:

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Deutsche Bank noted that utilizing metrics from the last three years mitigated volatility and was not dependent on management projections while the NTM metrics captured near-term performance as projected by the Company’s management.

Based upon the implied equity values of the Company and Badcock described above, Deutsche Bank calculated a range of implied pro forma diluted equity ownership of Badcock stockholders in the combined company. For purposes of this analysis, Deutsche Bank assumed that the implied equity value of the combined company was the sum of the implied equity values of the Company and Badcock described above. Deutsche Bank calculated the implied pro forma equity ownership range assuming the lowest implied equity value for each company and the highest implied equity value for each company. This analysis resulted in a range of implied diluted equity ownership by Badcock stockholders in the combined entity of approximately 61% to 78% based on multiples of EV to L3Y Avg. EBITDA and approximately 45% to 49% based on multiples of EV to NTM EBITDA. Deutsche Bank compared these ranges with the 49.99% ownership represented by the number of shares of non-voting common stock to be issued upon the exchange of the preferred stock, as stipulated in the calculations set forth in the Investment Agreement, which Deutsche Bank noted represented approximately 48% ownership on a fully-diluted basis after accounting for options, Performance Stock Units and Restricted Stock Units.

Illustrative Has / Gets Analysis

Deutsche Bank performed a “Has / Gets” analysis in order to compare (1) the standalone equity value of the Company to (2) the value of the equity of the combined company owned by the Company’s shareholders after giving effect to the Investment Agreement Transactions and assuming conversion of the preferred stock into non-voting common stock.

For purposes of the “Has / Gets” analysis, Deutsche Bank performed a discounted cash flow analysis to determine a range of implied net present equity values for the combined company. Deutsche Bank applied discount rates ranging from 12.5% to 14.5% to estimates of the estimated future unlevered free cash flows of the combined company through fiscal year 2028 based upon projections provided by the Company’s management as described under “—Unaudited Financial Projections” and to a range of estimated terminal values of the combined company at the end of such period, to determine a range of implied enterprise values for the combined company as of October 31, 2023 after subtracting net debt of approximately $900 million, in each case based on information provided by the Company’s management taking into account the Synergies as described under “—Unaudited Financial Projections.”. For purposes of its financial analyses, Deutsche Bank calculated unlevered free cash flow as described above under “—Discounted Cash Flow Analysis.” Deutsche Bank derived the foregoing range of discount rates by application of the capital asset pricing model as described above, noting that the lower cost of capital was driven by the expected size of the combined company compared with the Company and Badcock on a standalone basis. The terminal values were calculated by applying multiples ranging from 9.0x to 10.0x to the Company’s management’s estimates of the combined company’s terminal year Adjusted EBITDA calculated by growing fiscal 2028 EBITDA by 0.25%, assuming no change in net working capital and terminal year capital expenditures equal to terminal year depreciation and amortization, in each case as directed by management of the Company. Deutsche Bank assumed a tax rate of 21% based on estimates provided by management of the Company. This analysis indicated an implied ranged of equity value of

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approximately $1.091 billion to $1.144 billion for the combined company (with a midpoint of approximately $1.119 billion). Deutsche Bank noted that the difference between this midpoint valuation for the equity of the combined company and the sum of the midpoints of the discounted cash flow valuations of the equity of each of the Company and Badcock described above, was approximately $506 million, of which approximately $365 million was attributable to the Synergies and the remainder was attributable to the application of a lower discount rate for the combined company.

Deutsche Bank calculated the implied value of the equity of the combined company owned by holders of common stock prior to the consummation of the Investment Agreement Transactions as 52% on a fully-diluted basis of the midpoint of such implied valuation range, or approximately $586 million compared with the midpoint of the range of implied equity value for the Company based on the standalone discounted cash flow analysis described above, which was approximately $327 million.

Illustrative Discounted Future Share Price Analysis

Deutsche Bank calculated an illustrative implied future prices of the shares of the common stock based on the Company’s management’s projections for the Company and of the shares of the pro forma combined company based on the Company’s management’s projections for the combined company. This analysis was designed to provide an indication of a theoretical future price of the equity of each of the Company and the pro forma combined company, calculated as a multiple of forward EBITDA. Deutsche Bank applied one-year forward EBITDA multiples ranging from 9.0x to 10.0x to estimated NTM EBITDA for each of the Company and the combined company based on the Company’s management’s estimates for each of fiscal years 2024-2027 to derive implied future values per share. For purposes of this analysis, Deutsche Bank assumed that, on a standalone basis, the Company would raise an additional $55 million of equity at a price of $3.04 per share.

Deutsche Bank noted that the illustrative implied future prices of the shares of the pro forma combined company were meaningfully higher than the illustrative implied future prices of the shares of the common stock without giving effect to the Investment Agreement Transactions.

Deutsche Bank also noted that it had not explored the ability of the Company to raise additional capital, that any such capital raise, if effectuated, could likely be more dilutive than the assumption described above and that in the event the Company did not proceed with the Investment Agreement Transactions or raise capital, a possible outcome could result in limited value for the holders of common stock.

The following table presents the results of this analysis:

Miscellaneous

This summary is not a complete description of Deutsche Bank’s opinion or the underlying analyses and factors considered in connection with Deutsche Bank’s opinion. The preparation of a fairness opinion is a complex process involving the application of subjective business and financial judgment in determining the most

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appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, is not readily susceptible to partial analysis or summary description. Deutsche Bank believes that its analyses described above must be considered as a whole and that considering any portion of such analyses and of the factors considered without considering all analyses and factors could create a misleading view of the process underlying its opinion. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying the Deutsche Bank opinion. In arriving at its fairness determination, Deutsche Bank considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, it made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction in the analyses described above is identical to the Company, Badcock, or the Investment Agreement Transactions.

In conducting its analyses and arriving at its opinion, Deutsche Bank utilized a variety of generally accepted valuation methods. The analyses were prepared solely for the purpose of enabling Deutsche Bank to provide its opinion as to the fairness, from a financial point of view, to the Company of the Consideration to be paid by the Company pursuant to the Investment Agreement as of the date of the opinion and do not purport to be appraisals or necessarily reflect the prices at which assets, businesses or securities actually may be sold, which are inherently subject to uncertainty.

As described above, in connection with its analyses, Deutsche Bank made, and was provided by management of the Company with, numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Deutsche Bank, the Company, or Badcock. Analyses based on estimates or forecasts of future results are not necessarily indicative of actual past or future values or results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the Company, Badcock or their respective advisors, Deutsche Bank does not assume responsibility if future results or actual values are materially different from these forecasts or assumptions.

The terms of the Investment Agreement Transactions, including the Consideration, were determined through arm’s-length negotiations between the Company and Franchise Group and were approved by the Board. Although Deutsche Bank provided advice to the Board during the course of these negotiations, the decision to enter into the Investment Agreement was solely that of the Board. Deutsche Bank did not recommend any specific consideration to the Company or the Board, or that any specific amount or type of consideration constituted the only appropriate consideration for the Investment Agreement Transactions. As described above, the opinion of Deutsche Bank and its presentation to the Board were among a number of factors considered by the Board in making its determination to approve the Investment Agreement and the transactions contemplated thereunder.

Financial Statements of the Business Acquired

Copies of the historical financial statements of Badcock are included elsewhere in this proxy statement, which comprise the historical audited consolidated financial statements of Badcock as of December 31, 2022 (successor) and for the transition period from November 22, 2021 through December 25, 2021 (successor) and from July 1, 2021 through November 21, 2021 (predecessor) and the fiscal year ended June 30, 2021 and 2020 (predecessor), and the unaudited consolidated financial statements of Badcock for the periods August 22, 2023 through and as of September 30, 2023 (successor), January 1, 2023 through August 21, 2023 (predecessor), and as of and for the nine-month period ended September  24, 2022 (predecessor).

Interests of the Company’s Directors and Executive Officers

When considering the recommendation of the Board with respect to the Transaction, you should be aware that the Company’s directors and executive officers may have interests in the transactions that are different from, or in addition to, those of the Company’s stockholders more generally. The Board was aware of these interests

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and considered them, among other matters, in evaluating and negotiating the Transaction, in reaching its decision to approve the Investment Agreement and the DDTL Amendment, and the consummation of the transactions contemplated thereby, and in recommending that the Company’s stockholders vote in favor of the proposal to be considered at the special meeting. These interests include that Bob L. Martin, a member of the Board and Lead Independent Director, is an Operating Partner of Stephens Group, one of the lenders under the DDTL Agreement; and Douglas H. Martin, a member of the Board, is a Senior Executive Vice President of Stephens, an affiliate of Stephens Investments Holdings LLC, one of the lenders under the DDTL Agreement. Stephens also acted as a financial advisor to the Company in connection with the Investment Agreement Transactions. Each of Stephens, and its affiliates, and Stephens Group, and its affiliates, are significant stockholders of the Company and have executed voting agreements. See the section titled “Security Ownership of Certain Beneficial Owners and Management.”

Accounting Treatment

The Transaction will be accounted for using the acquisition method of accounting for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 805 Business Combinations, with the Company representing the accounting acquirer under this guidance. The unaudited pro forma combined financial statements were prepared in accordance with Article 11 of Regulation S-X, as amended by Final Rule Release No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses. The unaudited pro forma combined financial information is presented to illustrate the estimated effects of the Transaction.

Regulatory Approvals for the Transaction

The transactions contemplated by the Investment Agreement were not subject to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules promulgated thereunder by the Federal Trade Commission or other foreign laws and regulations covering similar matters.

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PROPOSAL 1

THE CHARTER AMENDMENT PROPOSAL

Overview

The Board is submitting for stockholder approval the Charter Amendment Proposal, which contemplates an amendment to the Certificate of Incorporation to, among other things: (i) increase the number of authorized shares of capital stock to 2,125,000,000; (ii) increase the number of authorized shares of common stock to 1,099,000,000; and (iii) authorize 1,025,000,000 shares of a new class of non-voting common stock.

In December 2023, the Board approved the Charter Amendment, which involves the amendment of Article Four of the Company’s Certificate of Incorporation and the addition of a new Section A to Article Four of the Certificate of Incorporation. The complete text of the Charter Amendment is set forth on Annex G to this proxy statement. You are urged to read the Charter Amendment carefully and in its entirety.

If the Company’s stockholders approve the Charter Amendment, the Company intends to file the corresponding amendment to the Certificate of the Incorporation with the Delaware Secretary of State immediately following the special meeting. The conversion of the preferred stock into non-voting common stock will occur on the date that the Charter Amendment Proposal and the Conversion Proposal are approved.

Purpose of the Charter Amendment

The purpose of the Charter Amendment is to (1) authorize the issuance of shares of non-voting common stock in the conversion of the preferred stock and (2) increase the total number of authorized shares of common stock to support the total number of shares potentially issuable upon conversion of the preferred stock to non-voting common stock, the issuance of the maximum possible number of shares of non-voting common stock upon exercise of the warrants issued pursuant to the DDTL Agreement, and the conversion of that non-voting common stock into voting common stock. This Charter Amendment would authorize a new class of stock as there are currently no outstanding shares of non-voting common stock. Pursuant to the terms of the preferred stock, as set forth in the Certificate of Designations, the holders of preferred stock will receive non-voting common stock upon conversion of their preferred stock, which will occur on the date that the Charter Amendment Proposal and the Conversion Proposal are approved by stockholders. The Company expects 24,540,295 shares of non-voting common stock to be issued in the conversion of preferred stock. The non-voting common stock will be identical to the common stock in all respects, except that the non-voting common stock will have no voting rights other than those required by Delaware law.

In addition, as more fully described under the section titled “Proposal 3 – The Warrant Exercise Proposal,” if the Charter Amendment Proposal and the Warrant Exercise Proposal are approved, any warrants issued pursuant to the DDTL Agreement, as amended by the DDTL Amendment, will be exercisable for non-voting common stock, which shares automatically and without any further action, convert on a one-for-one basis into shares of voting common stock upon transfers to any person other than a Restricted Holder (as defined in the investor rights agreement and described further under the section titled “—Material Terms of the Non-Voting Common Stock” below). The maximum number of shares of non-voting common stock issuable under warrants issued pursuant to the DDTL Agreement, as amended by the DDTL Amendment, would be 1,000,000,000, assuming $50.0 million aggregate principal amount of delayed draw term loans are issued thereunder the DDTL Agreement at an exercise price of $0.01. As of the date of this proxy statement, there are no amounts drawn under the DDTL Agreement and no warrants have been issued.

Effect of the Amendment

The new shares of non-voting common stock to be authorized by adoption of the Charter Amendment would have rights identical to the currently outstanding shares of voting common stock, except that the non-voting common stock will have only those voting rights required by Delaware law. Adoption of the Charter Amendment

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and issuance of the non-voting common stock would not affect the rights of the holders of currently outstanding shares of voting common stock, except for effects incidental to increasing the number of shares of common stock outstanding, such as dilution of the earnings per share and voting power of current holders of common stock upon conversion of the non-voting common stock into voting common stock upon a transfer to any person other than a Restricted Holder (described further under the section titled “—Material Terms of the Non-Voting Common Stock” below). Under the Certificate of Incorporation, the Company’s stockholders do not have preemptive rights with respect to the non-voting common stock. As a result, if the Board decides to issue additional shares of non-voting common stock, the existing holders of common stock would not have any preferential rights to purchase such shares.

The Company will not be able to consummate the transactions contemplated by the Conversion Proposal and the Warrant Exercise Proposal if the Charter Amendment Proposal is not approved by the required vote.

Material Terms of the Non-Voting Common Stock

Holders of non-voting common stock will not be entitled to vote except as required by Delaware law. Where the shares of non-voting common stock are entitled to vote under Delaware law, each holder of non-voting common stock will have one vote for each share of non-voting common stock held of record solely on the matters to which such shares are entitled to vote, and subject to the rights and limitations specified by Delaware law. Other than voting rights, the voting common stock and non-voting common stock have the same rights and privileges, share ratably in all assets of the Company available upon its liquidation, dissolution or winding-up, will be entitled to receive dividends in the same amount per share and at the same time when, as and if declared by the Board, and are identical in all other respects as to all other matters (other than voting). Holders of non-voting common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any additional shares of voting or non-voting common stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to the non-voting common stock.

Each share of non-voting common stock will automatically convert into one share of voting common stock in the event of a transfer to a person other than a Restricted Holder. The Restricted Holders are Newco BHF, FVCM, B. Riley Financial, Inc., Brian Kahn and each of their respective controlled affiliates.

Subject to the prior rights of the holders of shares of preferred stock that may be issued and outstanding, the holders of non-voting common stock are entitled to receive dividends when, as and if declared by the Board out of funds lawfully available for the payment of dividends.

Required Vote

The affirmative vote of the majority of the issued and outstanding shares of common stock is required to approve the Charter Amendment Proposal. Abstentions and broker non-votes will be counted towards the tabulation of votes cast on the Charter Amendment Proposal and will have the same effect as a vote against the Charter Amendment Proposal.

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PROPOSAL 2

THE CONVERSION PROPOSAL

Overview

The Board is submitting for stockholder approval the Conversion Proposal, which, if approved, would result in the issuance of 24,540,295 shares of non-voting common stock upon the conversion of the preferred stock.

Pursuant to the Investment Agreement, the Company issued an aggregate of 1,000,000 shares of preferred stock, consisting of 656,847.95 shares of preferred stock to Newco BHF and 343,152.05 shares of preferred stock to FVCM. The preferred stock, subject to the terms set forth in the Certificate of Designations and approval by the Company’s stockholders of the Charter Amendment Proposal and the Conversion Proposal, is convertible into an aggregate of 24,540,295 shares of non-voting common stock, which represented 49.99% of the issued and outstanding shares of common stock outstanding immediately following the closing after giving effect to the issuance of the preferred stock and assuming the conversion of the preferred stock into non-voting common stock. See the section titled “The Transaction—The Certificate of Designations” for more information regarding the terms of the preferred stock.

Nasdaq Stockholder Approval Requirement

The voting common stock into which the non-voting common stock will convert, on a one-for-one basis upon any transfer to a person other than a Restricted Holder, is listed on the Nasdaq Global Select Market, and, as such, the Company is subject to the Nasdaq Listing Rules, including Nasdaq Listing Rule 5635. In order to comply with the Nasdaq Listing Rules and to satisfy conditions under the Investment Agreement, the Company is seeking stockholder approval of the Conversion Proposal. Nasdaq Listing Rule 5635(a)(1) requires stockholder approval prior to the issuance of securities that: (i) have or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock; or (ii) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. Although the issuance of the shares of non-voting common stock upon conversion of the preferred stock would not trigger the stockholder approval requirements of Nasdaq Listing Rule 5635 by itself, stockholder approval is required because the non-voting common stock may convert into voting common stock in the future upon any transfer to a person other than a Restricted Holder. Therefore, in accordance with the requirements of Nasdaq Listing Rule 5635(a), and pursuant to the terms of the Investment Agreement and the Certificate of Designations, the Company is seeking the approval of its stockholders for the issuance of the non-voting common stock, which automatically and without any further action, convert on a one-for-one basis into shares of voting common stock upon transfer to any person other than a Restricted Holder, to the holders of preferred stock.

Consequences of Approving the Conversion Proposal

The Board is not seeking the approval of the Company’s stockholders to authorize the Company’s entry into the Investment Agreement. The Investment Agreement has already been executed and delivered, and the closing of the Investment Agreement has occurred. If the Charter Amendment Proposal and the Conversion Proposal are approved by stockholders, then:

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Consequences of Failing to Approve the Conversion Proposal

If either the Charter Amendment Proposal or the Conversion Proposal is not approved, the Company would not be able to issue the shares of non-voting common stock upon conversion to the holders of preferred stock. Additionally, unless stockholder approval of the Charter Amendment Proposal and the Conversion Proposal is received:

Required Vote

The affirmative vote of the majority of shares of common stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve the Conversion Proposal. Abstentions and broker non-votes will be counted towards the tabulation of votes cast on the Conversion Proposal and will have the same effect as a vote against the Conversion Proposal.

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PROPOSAL 3

THE WARRANT EXERCISE PROPOSAL

Overview

The Board is submitting for stockholder approval the Warrant Exercise Proposal, which, if approved, would authorize the issuance of up to 1,000,000,000 shares of non-voting common stock, which is the maximum possible number of shares of non-voting common stock issuable upon the exercise of any warrants issued pursuant to the DDTL Agreement, and which shares automatically and without any further action, convert on a one-for-one basis into shares of voting common stock upon transfer to any person other than a Restricted Holder.

Pursuant to the DDTL Agreement, as amended by the DDTL Amendment, in connection with the funding of each delayed draw term loan thereunder, but subject to the Share Cap (as defined below), prior to approval of the Charter Amendment Proposal and the Warrant Exercise Proposal, the Company agreed to issue to each lender under the DDTL Agreement (or its affiliate or other designee) warrants to purchase a number of shares of voting common stock equal to 20% of the aggregate principal amount of such delayed draw term loan funded by such lender divided by the exercise price. The exercise price for a warrant issued under the DDTL Agreement, as amended by the DDTL Amendment, is the lower of: (a) the closing price per share of voting common stock as of the close of market on the trading day immediately preceding the date of an advance of a delayed draw term loan; or (b) the lesser of (x) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) of the voting common stock immediately preceding the date of the DDTL Amendment or (y) the average Nasdaq Official Closing Price of the voting common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the date of the DDTL Amendment. Pursuant to the DDTL Agreement, as amended by the DDTL Amendment, warrants may be exercised on a cashless basis and will be exercisable for a term beginning on the date of issuance and ending on the ten-year anniversary of the issuance date. Also, pursuant to the DDTL Agreement, as amended by the DDTL Amendment, the number of shares of voting common stock for which each warrant is exercisable and the associated exercise price are subject to certain customary proportional adjustments for fundamental events, including stock splits and reverse stock splits, as set forth in the warrants.

If warrants are issued under the DDTL Agreement, as amended by the DDTL Amendment, prior to shareholder approval of the Warrant Exercise Proposal, then because they are exercisable for shares of voting common stock: (i) no warrants will be issued to any lender under the DDTL Agreement, as amended by the DDTL Amendment, or any affiliate or other designee of a lender, if the total number of shares of voting common stock issuable upon exercise of a warrant would cause such lender, affiliate or other designee and its respective affiliates and any other person whose beneficial ownership of common stock would be aggregated with such lender’s, affiliate’s or designee’s ownership for purposes of Section 13 of the Exchange Act, to beneficially own more than the Beneficial Ownership Limit; and (ii) the number of shares of voting common stock subject to any and all warrants will be limited to the extent necessary to ensure that the aggregate number of shares of voting common stock subject to warrants issued under the DDTL Agreement, as amended by the DDTL Amendment, does not exceed the Share Cap, which equals 19.99% of the shares of common stock of the Company issued and outstanding as of the date of the DDTL Amendment.

In connection with the Transaction, on December 18, 2023, the Company adopted the DDTL Amendment to provide that, upon approval by the Company’s stockholders of the Charter Amendment Proposal and the Warrant Exercise Proposal, any warrants issued pursuant to the DDTL Agreement will be exercisable for shares of non-voting common stock, which, automatically and without any further action, convert on a one-for-one basis into shares of voting common stock upon transfer to any person other than a Restricted Holder (as defined in the investor rights agreement), and the Share Cap and Beneficial Ownership Limit will no longer apply.

Bob L. Martin, a member of the Board and Lead Independent Director, is an Operating Partner of Stephens Group, one of the lenders under the DDTL Agreement; and Douglas H. Martin, a member of the Board, is a Senior Executive Vice President of Stephens, an affiliate of Stephens Investments Holdings LLC, one of the lenders under the DDTL Agreement. Each of Stephens, and its affiliates, and Stephens Group, and its affiliates, are significant stockholders of the Company. Stephens also acted as an advisor to the Company in connection with the Investment Agreement Transactions.

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Nasdaq Stockholder Approval Requirement

The voting common stock into which the non-voting common stock will convert, on a one-for-one basis upon any transfer to a person other than a Restricted Holder is listed on the Nasdaq Global Select Market, and, as such, the Company is subject to the Nasdaq Listing Rules, including Nasdaq Listing Rule 5635. In order to comply with the Nasdaq Listing Rules and to satisfy obligations under the DDTL Amendment, the Company is seeking stockholder approval of the Warrant Exercise Proposal. Nasdaq Listing Rule 5635(a)(1) requires stockholder approval prior to the issuance of securities that: (i) have or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock; or (ii) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. Although the issuance of the shares of non-voting common stock upon exercise of warrants issued pursuant to the DDTL Agreement, as amended by the DDTL Amendment, would not trigger the stockholder approval requirements of Nasdaq Listing Rule 5635 by itself, stockholder approval is required because the non-voting common stock may convert into voting common stock in the future. Therefore, in accordance with the requirements of Nasdaq Listing Rule 5635(a), and pursuant to the terms of the DDTL Agreement, as amended by the DDTL Amendment, the Company is seeking the approval of its stockholders for the issuance of the non-voting common stock issuable upon exercise of any warrants issued pursuant to the DDTL Agreement, as amended by the DDTL Amendment.

Consequences of Approving the Warrant Exercise Proposal

The Board is not seeking the approval of the Company’s stockholders to authorize the Company’s entry into the DDTL Agreement or the DDTL Amendment. The DDTL Agreement and the DDTL Amendment have already been executed and delivered by the Company. If the Warrant Exercise Proposal is approved by stockholders, then:

Consequences of Failing to Approve the Warrant Exercise Proposal

If either the Charter Amendment Proposal or the Warrant Exercise Proposal is not approved:

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Required Vote

The affirmative vote of the majority of shares of common stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve the Warrant Exercise Proposal. Abstentions and broker non-votes will be counted towards the tabulation of votes cast on the Warrant Exercise Proposal and will have the same effect as a vote against the Warrant Exercise Proposal.

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PROPOSAL 4

THE ADJOURNMENT PROPOSAL

Overview

The Board is submitting for stockholder approval the Adjournment Proposal, which will give the Board authority to adjourn the special meeting, if necessary or appropriate, as determined in the discretion of the Board, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the Charter Amendment Proposal, the Conversion Proposal and the Warrant Exercise Proposal or in the absence of a quorum, in each case, so long as such adjournment is effected in accordance with the terms of the Investment Agreement. If stockholders approve the Adjournment Proposal, the special meeting could be adjourned by the Board to any date and the Company could use the additional time to solicit additional proxies, including soliciting proxies from stockholders who have previously voted. If the special meeting is adjourned for the purpose of soliciting additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time before their use.

The Company does not intend to call a vote on the adjournment proposal if the Charter Amendment Proposal, the Conversion Proposal and the Warrant Exercise Proposal are approved at the special meeting.

Required Vote

The affirmative vote of the majority of shares of common stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve the Adjournment Proposal. Abstentions and broker non-votes will be counted towards the tabulation of votes cast on the Adjournment Proposal and will have the same effect as a vote against the Adjournment Proposal.

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UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

On December 18, 2023, the Company entered into the Investment Agreement. Pursuant to the Investment Agreement, Newco BHF contributed to the Company all of the issued and outstanding equity interests of Badcock and FVCM agreed to contribute residual interests in certain receivables then held by BRR2 to Badcock upon the satisfaction of certain indebtedness of BRR2 in the future. In exchange for the contributions, the Company issued 1,000,000 shares of preferred stock to Newco BHF and FVCM. The preferred stock, subject to the terms set forth in the Certificate of Designations, is convertible into an aggregate of 24,540,295 shares of Non-Voting Common Stock, which represents 49.99% of the issued and outstanding shares of common stock, par value $0.01 of the Company (“Common Stock”), outstanding immediately following the closing after giving effect to the issuance of the preferred stock and assuming the conversion of the preferred stock into Non-Voting Common Stock. The closing of the contributions and the issuance of the preferred stock occurred simultaneously with the signing of the Investment Agreement.

Prior to the Transaction, Franchise Group held 100% of the equity interests of Newco BHF, which in turn held 100% of the issued and outstanding equity interests of Badcock, whereas FVCM held 100% of the issued and outstanding equity interests of BRR2.

The Transaction will be accounted for using the acquisition method of accounting for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 805 Business Combinations with the Company representing the accounting acquirer under this guidance. The unaudited pro forma combined financial statements were prepared in accordance with Article 11 of Regulation S-X, as amended by Final Rule Release No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses. The unaudited pro forma combined financial information is presented to illustrate the estimated effects of the Transaction.

The unaudited pro forma combined statement of operations for the annual period ended January 31, 2024 combines the Company’s audited consolidated statement of operations for the annual period ended January 31, 2024 with Badcock’s unaudited statement of operations for the predecessor period from February 1, 2023 to August 21, 2023 and the successor period from August 22, 2023 to the acquisition date of December 17, 2023 (not presented elsewhere in the proxy), giving effect to the Transaction as if it occurred on February 1, 2023.

The purchase price of the Transaction has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of December 18, 2023; the excess of the fair value of the net assets over the consideration transferred. The Company has made a preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed using information currently available. The finalization of the Company’s purchase accounting assessment may result in changes to the valuation of assets acquired and liabilities assumed, which could have a material impact on the accompanying unaudited pro forma combined financial information. The unaudited pro forma statement of operations includes $16.4 million of nonrecurring transaction costs.

The unaudited pro forma combined financial information contains certain reclassification adjustments to conform the historical Badcock financial statement presentation to the Company’s financial statement presentation. Additionally, the unaudited pro forma combined financial information contains adjustments reflecting the Transaction and accounting policy alignment. The adjustments related to the Transaction are shown in a separate column as “Transaction Adjustments” whereas the adjustments related to the accounting policy alignment are shown in a separate column as “Inventory Policy Alignment.”

Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma combined statements of operations for the annual period ended January 31, 2024.

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The following unaudited pro forma combined financial information should be read in conjunction with the Company’s consolidated financial statements and related notes and Badcock’s financial statements and related notes. The Company’s financial statements and related notes are included in the Company’s Annual Report on Form 10-K for the annual period ending January 31, 2024 filed on April 18, 2024. Badcock’s audited financial statements and related notes for the year ended December 31, 2022 and unaudited financial statements and related notes for the predecessor period January 1, 2023 to August 21, 2023 and the successor period August 22, 2023 to September 30, 2023 are included elsewhere in this proxy statement.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma combined financial information and related notes are presented for illustrative purposes only, and do not purport to represent what the actual consolidated results of operations or financial condition would have been had the Transaction occurred on the dates indicated, nor are they necessarily indicative of the combined company’s future results of operations or financial position. Additionally, the unaudited pro forma combined financial statements do not reflect the costs of any integration activities or the benefits that may result from future cost savings due to operating efficiencies, or any revenue, tax, or other synergies that may result from the Transaction.

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CONN’S, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED JANUARY 31, 2024

(Amounts in thousands, except per share data)

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

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NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1. Basis of Pro Forma Presentation

The unaudited pro forma combined financial information is presented to illustrate the pro forma effects of the Transaction. The Company’s information is derived from the Company’s audited consolidated statement of operations for the annual period ended January 31, 2024, all of which were prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”).

Badcock’s historical financial information is derived from its unaudited statement of operations for the predecessor period February 1, 2023 to August 21, 2023 and the successor period August 22, 2023 to December 17, 2023 (not presented elsewhere in the proxy), all of which were prepared in accordance with U.S. GAAP.

The unaudited pro forma combined statements of operations illustrate the effects of the Transaction as if it had been completed on February 1, 2023. The pro forma adjustments are preliminary and based on estimates of the purchase consideration and estimates of fair value and useful lives of the assets acquired and liabilities assumed. The final purchase price allocations will be based on estimated fair value of the assets acquired and the liabilities assumed as of the closing date of the Transaction and could result in material changes to the unaudited pro forma combined financial information.

The Company will apply FASB ASC Topic 820 Fair Value Measurements for the purpose of measuring the estimated fair value of the assets acquired and liabilities assumed in determining the final purchase price allocations. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers unrelated to the Company in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

The unaudited pro forma combined financial information has been prepared using the acquisition method of accounting in accordance with FASB ASC Topic 805 Business Combinations (“Topic 805”), where the Company is the accounting acquirer of Badcock. Under Topic 805, acquisition-related costs (such as investment banking, legal service, financing-related items, insurance, and other advisory fees) incurred by and on behalf of the Company are not part of the allocation of the consideration transferred but are part of the transaction accounting adjustments for the Transaction, without constituting a separate material transaction. Adjustments were made for transaction costs to the extent that they were incurred or expected to be incurred but not already recognized in the historical financial statements.

The unaudited pro forma combined information is preliminary, presented solely for informational purposes and does not purport to represent what the combined statements of operations or balance sheet would have been for the periods or dates indicated, nor is it necessarily indicative of the future consolidated results of operations or financial position. The actual results reported in periods following the Transaction may differ significantly from those reflected in the unaudited pro forma combined financial information presented herein for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma adjustments and actual amounts, cost savings or associated costs to achieve such savings from operating efficiencies, synergies, debt refinancing, or other restructuring that may result from the Transaction, but for which are not reflected herein. Any non-recurring items related to the Transaction were reflected in the unaudited pro forma combined financial information as they will not recur beyond twelve months after the Transaction.

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2. Description of the Transaction

On December 18, 2023, the Company entered into the Investment Agreement with NewCo BHF, Badcock, FVCM and Franchise Group in which Newco BHF contributed all of the issued and outstanding equity interests of Badcock to the Company, making Badcock a wholly owned subsidiary of the Company, and FVCM agreed to cause BRR2 to transfer all residual interests in certain receivables held by BRR2 to the Company. At the closing of the Transaction, the Company issued 1,000,000 shares of convertible preferred stock valued at $62.2 million and paid $7.0 million in transactions costs on behalf of Badcock, resulting in total consideration transferred of $69.2 million.

At the time of issuance of these unaudited pro forma combined financial statements, the determination of purchase consideration as defined in Topic 805 is preliminary.

3. Adjustments to Badcock’s Financial Statements

The adjustments reflected in Badcock’s historical unaudited statement of operations for the predecessor period February 1, 2023 to August 21, 2023 and the successor period August 22, 2023 to December 17, 2023 (not presented elsewhere in the proxy) were made to align Badcock’s accounting policies and presentation with those of the Company. The impacts of the August 21, 2023 transaction involving Franchise Group and its affiliates, as discussed in the Badcock unaudited interim financial statements are reflected in the table below.

The Company identified certain reclassifications and accounting policy alignment adjustments that were necessary to conform Badcock’s financial information presentation to that of the Company. For purposes of the unaudited pro forma combined financial statements, Badcock’s historical statements of operations have been adjusted to reflect these reclassifications and accounting policy alignment adjustments below. The assessment of the Company’s management is ongoing and, at the time of preparing the unaudited pro forma combined financial statements, other than the adjustments and reclassifications made herein, the Company’s management was not aware of any other material differences.

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Unaudited Statement of Operations for the Predecessor period February 1, 2023 to August 21, 2023 and the Successor period August 22, 2023 to December 17, 2023 (not presented elsewhere in the proxy).

The following table illustrates the impact of aligning financial statement line items to conform to the Company’s financial statement presentation for the period from February 1, 2023 to December 17, 2023, in thousands:

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Reclassification and Policy Alignment Adjustments

In addition to aligning Badcock’s historical financial information to conform to the Company’s financial statement line items, the following summary represents accounting policy alignment and reclassifications to conform Badcock’s historical financial information to the Company’s financial statement presentation and accounting policies:

1(a) Transaction adjustment reflects $8.2 million of discount income from the step down of accounts receivable fair value adjustment.

1(b) Alignment adjustment reflects reclass from service and other revenue:

1(c) Transaction adjustment impact on cost of goods sold, as follows:

1(d) Alignment adjustment reclass of $85.8 million from selling, general and administrative expenses to provision for bad debts

1(e) Alignment adjustment reclass of $120.7 million from dealer commissions to selling, general and administrative expenses

1(f) Transaction adjustment reflects $960 thousand of depreciation from the step up of plant, property, and equipment fair value adjustment impact on selling, general, and administrative expense.

1(g) Reflects adjustment of $300 thousand to decrease freight costs to dealers capitalized into inventory to align with the Company’s inventory capitalization policy

1(h) Reflects adjustment of $11.1 million to adjust effective tax rate to 22.61%

4. Transaction Adjustments

Adjustments in the unaudited pro forma financial information are represented by the following:

1(a) Reflects adjustment to decrease freight costs to dealers capitalized into inventory to align with the Company’s inventory capitalization policy.

1(b) Transaction adjustments to selling, general and administrative expenses as follows:

1(c) Provision for Income Tax: Reflects $14.2 million adjustment to align benefit to income taxes to management’s estimate of 22.61% effective rate applied to the pro forma combined loss before income taxes.

1 (d) Earnings Per Share.

Basic and diluted pro forma weighted average shares outstanding were increased by the 24.5 million shares contingently issuable as part of the purchase consideration, which reflect the conversion to common shares contemplated by the proxy vote. The pro forma net income increased for the annual period ending January 31,

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2024, mainly due to the bargain purchase gain recognized, resulting in an increase in the basic and diluted pro forma earnings per share. The net loss and amount of weighted average shares outstanding increased for the twelve months ended January 31, 2024, due to the inclusion of both the Company’s and Badcock’s net losses and adjustments discussed above. Due to pro forma net loss incurred for the period, preferred shares were excluded from the calculation because they are not contractually obligated to participate in losses. The pro forma basic and diluted earnings per share decreased for the interim period. The following table reflects the corresponding pro forma adjustments, in thousands, except per share amounts:

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BADCOCK

The following discussion should be read in conjunction with Badcock’s consolidated financial statements and the accompanying notes included elsewhere in this proxy statement. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed below and elsewhere in this proxy statement, including “Cautionary Note Regarding Forward-Looking Statements.”

Business

Badcock is a multi-state home furnishings retailer carrying a complete line of furniture, bedding, appliances, and home entertainment items. Brand name merchandise is purchased from a variety of manufacturers and warehoused in Badcock’s three distribution centers, with sales occurring primarily through Badcock’s corporate stores or its dealer stores. The Mulberry, FL, LaGrange, GA, and Mebane, NC, distribution centers supply over 60 corporate and over 300 dealer home furnishings retail outlets doing business under the name “Badcock Home Furniture & more.” Dealers are independent businesspeople who operate one or more retail furniture stores under the Badcock name. Badcock maintains ownership of the inventory and consigns it to the dealers to sell to the end customer. Under this concept of operation, the local dealer can combine the advantages of a large corporation with the flexibility of an independently operated retail outlet. Badcock also provides financing terms for those customers who wish to pay for their purchases over time. Credit granting and collection activities are largely centralized.

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Results of Operations

The following table summarizes Badcock’s consolidated results of operations for the nine months ended

September 30, 2023 and 2022 and for the years ended December 31, 2022 and June 30, 2021:

Comparison of Nine Months Ended September 30, 2023 and Nine Months Ended September 30, 2022

Total revenue. Net revenue for the nine months ended September 30, 2023 was $534.9 million compared to $699.8 million for the nine months ended September 30, 2022, a decrease of $164.9 million or 24%. The decrease was primarily related to macroeconomic headwinds, testing of third party financing in corporate stores, and a decrease in Interest income from amortization of account receivable discount.

Product cost of revenue. Product cost of revenue for the nine months ended September 30, 2023 was $217.9 million compared to $261.0 million for the nine months ended September 30, 2022, a decrease of $43.1 million or 17%. The decrease was primarily related to a decrease in product revenue of 20% offset by reduced international freight costs on merchandise.

Selling, general and administrative expenses. Selling, general and administrative expenses for the nine months ended September 30, 2023 was $173.3 million compared to $201.3 million for the nine months ended September 30, 2022, a decrease of $27.9 million or 14%. The decrease was primarily related to a reduction in the Provision for bad debts and a decrease in labor expense.

Dealer commissions. Dealer commissions for the nine months ended September 30, 2023 was $103.7 million compared to $126.7 million for the nine months ended September 30, 2022, a decrease of $23.0 million or 18%. The decrease was primarily related to a reduction in total revenue.

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Interest expense. Interest expense for the nine months ended September 30, 2023 was $137.8 million compared to $175.5 million for the nine months ended September 30, 2022, a decrease of $37.7 million or 21%. The decrease was primarily related to a reduction in secured borrowings.

Comparison of Year Ended December 31, 2022 and Year Ended June 30, 2021

Total revenue. Net revenue for the year ended December 31, 2022 was $919.1 million compared to $901.9 million for the year ended June 30, 2021, an increase of $17.1 million or 2%. The increase was primarily related to Interest income from amortization of account receivable discount offset by a decrease in product revenues.

Product cost of revenue. Product cost of revenue for the year ended December 31, 2022 was $353.1 million compared to $389.4 million for the year ended June 30, 2021, a decrease of $36.3 million or 9%. The decrease was primarily related to a decrease in product revenues offset by increasing freight costs on merchandise.

Selling, general and administrative expenses. Selling, general and administrative expenses for the year ended December 31, 2022 was $271.2 million compared to $215.8 million for the year ended June 30, 2021, an increase of $55.4 million or 26%. The increase was primarily related to an increase in the Provision for bad debts.

Dealer commissions. Dealer commissions for the year ended December 31, 2022 was $168.1 million compared to $179.1 million for the year ended June 30, 2021, a decrease of $11.0 million or 6%. The decrease was primarily related to a decrease in total revenues.

Interest expense. Interest expense for the year ended December 31, 2022 was $239.9 million compared to $12.9 million for the year ended June 30, 2021, an increase of $227.0 million or 1,759%. The increase was primarily related to an increase in secured borrowings.

The following table summarizes Badcock’s consolidated results of operations for the six months ended

December 31, 2021 and 2020 and for the years ended June 30, 2021 and June 30, 2020: