WASHINGTON,
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT |
COMMISSION FILE NUMBER:
TRANS WORLD ENTERTAINMENT CORPORATION
| New York | 14-1541629 | |
| I.R.S. Employer Identification | ||
2818 N. Sullivan Rd. Ste 130 Spokane Valley, WA | 99216 | |
| Address of Principal Executive Offices | Zip Code |
38 Corporate Circle
Albany, New York 12203
(
(518) 452-1242
(Registrant’s telephone number, including area code)
the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $.01 par value per share | KSPN | NASDAQ Stock Market |
☐
| Large accelerated filer | Accelerated filer |
| Non-accelerated filer | |
| Smaller reporting company | |
| Emerging growth company ☐ |
Indicate by check mark whether the registrant is
Emerging growth company o
Indicateindicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
☐
☒
36,208,844
TRANS WORLD ENTERTAINMENT CORPORATION
| October 28, | January 28, | October 29, | ||||||||||
| 2017 | 2017 | 2016 | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 3,924 | $ | 27,974 | $ | 4,708 | ||||||
| Restricted cash | 1,503 | - | - | |||||||||
| Merchandise inventory | 144,754 | 126,004 | 157,827 | |||||||||
| Prepaid expenses and other assets | 13,184 | 15,356 | 13,903 | |||||||||
| Total current assets | 163,365 | 169,334 | 176,438 | |||||||||
| Restricted cash | 10,731 | 16,103 | 16,100 | |||||||||
| Net fixed assets | 43,472 | 45,097 | 41,902 | |||||||||
| Goodwill | 39,191 | 39,191 | 39,800 | |||||||||
| Net intangible assets | 24,940 | 27,857 | 28,737 | |||||||||
| Other assets | 7,247 | 10,228 | 10,272 | |||||||||
| TOTAL ASSETS | $ | 288,946 | $ | 307,810 | $ | 313,249 | ||||||
| LIABILITIES | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payable | $ | 45,378 | $ | 52,307 | $ | 61,956 | ||||||
| Short-term borrowings | 5,000 | - | 5,936 | |||||||||
| Accrued expenses and other current liabilities | 9,805 | 9,198 | 9,116 | |||||||||
| Deferred revenue | 7,231 | 9,228 | 7,813 | |||||||||
| Total current liabilities | 67,414 | 70,733 | 84,821 | |||||||||
| Contingent consideration | 2,115 | 8,552 | 10,381 | |||||||||
| Other long-term liabilities | 29,236 | 30,589 | 28,927 | |||||||||
| TOTAL LIABILITIES | 98,765 | 109,874 | 124,129 | |||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued) | - | - | - | |||||||||
| Common stock ($0.01 par value; 200,000,000 shares authorized; 64,255,171, 64,252,671 and 64,252,671 shares issued, respectively) | 643 | 643 | 643 | |||||||||
| Additional paid-in capital | 340,391 | 338,075 | 337,439 | |||||||||
| Treasury stock at cost (28,138,116, 28,137,283 and 28,137,283 shares, respectively) | (230,144 | ) | (230,144 | ) | (230,144 | ) | ||||||
| Accumulated other comprehensive loss | (788 | ) | (802 | ) | (658 | ) | ||||||
| Retained earnings | 80,079 | 90,164 | 81,840 | |||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 190,181 | 197,936 | 189,120 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 288,946 | $ | 307,810 | $ | 313,249 | ||||||
| April 30, | January 29, | May 1, | ||||||||||
| 2022 | 2022 | 2021 | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 828 | $ | 1,218 | $ | 5,030 | ||||||
| Restricted cash | 1,158 | 1,158 | 1,184 | |||||||||
| Accounts receivable | 2,727 | 2,335 | 3,113 | |||||||||
| Merchandise inventory | 32,254 | 29,277 | 22,567 | |||||||||
| Prepaid expenses and other current assets | 558 | 649 | 592 | |||||||||
| Total current assets | 37,525 | 34,637 | 32,486 | |||||||||
| Restricted cash | 2,160 | 2,447 | 3,277 | |||||||||
| Fixed assets, net | 2,441 | 2,335 | 2,366 | |||||||||
| Operating lease right-of-use assets | 1,990 | 2,144 | 2,595 | |||||||||
| Intangible assets, net | 0 | 0 | 475 | |||||||||
| Cash surrender value | 3,800 | 4,154 | 4,168 | |||||||||
| Other assets | 872 | 965 | 1,230 | |||||||||
| TOTAL ASSETS | $ | 48,788 | $ | 46,682 | $ | 46,597 | ||||||
| LIABILITIES | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payable | $ | 7,664 | $ | 6,271 | $ | 5,682 | ||||||
| Short-term borrowings | 10,508 | 9,966 | 0 | |||||||||
| Accrued expenses and other current liabilities | 2,208 | 2,362 | 2,640 | |||||||||
| Current portion of operating lease liabilities | 663 | 649 | 609 | |||||||||
| Current portion of PPP loan | 0 | 0 | 2,018 | |||||||||
| Total current liabilities | 21,043 | 19,248 | 10,949 | |||||||||
| Operating lease liabilities | 1,439 | 1,608 | 2,101 | |||||||||
| Long-term debt | 7,944 | 4,356 | 5,261 | |||||||||
| Other long-term liabilities | 13,987 | 14,185 | 15,954 | |||||||||
| TOTAL LIABILITIES | 44,413 | 39,397 | 34,265 | |||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
Preferred stock ($0.01 par value; 5,000,000 shares authorized; NaN issued) | 0 | 0 | 0 | |||||||||
Common stock ($0.01 par value; 200,000,000 shares authorized; 3,902,985, 3,902,985 and 3,889,169 shares issued, respectively) | 39 | 39 | 39 | |||||||||
| Additional paid-in capital | 360,738 | 359,220 | 358,749 | |||||||||
Treasury stock at cost (1,410,417, 1,410,417 and 1,410,417 shares, respectively) | (230,170 | ) | (230,170 | ) | (230,170 | ) | ||||||
| Accumulated other comprehensive loss | (910 | ) | (910 | ) | (2,007 | ) | ||||||
| Accumulated deficit | (125,322 | ) | (120,894 | ) | (114,279 | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 4,375 | 7,285 | 12,332 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 48,788 | $ | 46,682 | $ | 46,597 | ||||||
thousands)
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net sales | $ | 91,817 | $ | 65,039 | $ | 293,482 | $ | 203,127 | ||||||||
| Other revenue | 1,184 | 1,242 | 3,964 | 3,232 | ||||||||||||
| Total revenue | 93,001 | 66,281 | 297,446 | 206,359 | ||||||||||||
| Cost of sales | 61,420 | 39,409 | 194,390 | 121,960 | ||||||||||||
| Gross profit | 31,581 | 26,872 | 103,056 | 84,399 | ||||||||||||
| Selling, general and administrative expenses | 40,558 | 34,680 | 122,763 | 97,415 | ||||||||||||
| Income from joint venture | (866 | ) | - | (1,038 | ) | - | ||||||||||
| Loss from operations | (8,111 | ) | (7,808 | ) | (18,669 | ) | (13,016 | ) | ||||||||
| Interest expense | 83 | 179 | 200 | 523 | ||||||||||||
| Other income | (59 | ) | (51 | ) | (8,824 | ) | (1,068 | ) | ||||||||
| Loss before income tax expense | (8,135 | ) | (7,936 | ) | (10,045 | ) | (12,471 | ) | ||||||||
| Income tax (benefit) expense | (64 | ) | (7,452 | ) | 40 | (7,358 | ) | |||||||||
| Net loss | $ | (8,071 | ) | $ | (484 | ) | $ | (10,085 | ) | $ | (5,113 | ) | ||||
| BASIC AND DILUTED LOSS PER SHARE: | ||||||||||||||||
| Basic and diluted loss per share | $ | (0.22 | ) | $ | (0.02 | ) | $ | (0.28 | ) | $ | (0.17 | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted | 36,190 | 31,434 | 36,181 | 30,854 | ||||||||||||
| Thirteen Weeks Ended | ||||||||
April 30, 2022 | May 1, 2021 | |||||||
| Net revenue | $ | 31,791 | $ | 40,617 | ||||
| Cost of sales | 24,940 | 30,821 | ||||||
| Gross profit | 6,851 | 9,796 | ||||||
| Selling, general and administrative expenses | 10,517 | 10,657 | ||||||
| Loss from operations | (3,666 | ) | (861 | ) | ||||
| Interest expense | 762 | 555 | ||||||
| Loss from operations before income tax expense | (4,428 | ) | (1,416 | ) | ||||
| Income tax expense | 0 | 0 | ||||||
| Net loss | $ | (4,428 | ) | $ | (1,416 | ) | ||
| BASIC AND DILUTED INCOME PER SHARE: | ||||||||
| Basic and diluted loss per common share | $ | (1.78 | ) | $ | (0.61 | ) | ||
| Weighted average number of common shares outstanding – basic and diluted | 2,493 | 2,317 | ||||||
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net loss | $ | (8,071 | ) | $ | (484 | ) | $ | (10,085 | ) | $ | (5,113 | ) | ||||
| Amortization of pension costs | (5 | ) | 51 | (15 | ) | 154 | ||||||||||
| Comprehensive loss | $ | (8,076 | ) | $ | (433 | ) | $ | (10,100 | ) | $ | (4,959 | ) | ||||
| Thirteen Weeks Ended | ||||||||
April 30, 2022 | May 1, 2021 | |||||||
| Net loss | $ | (4,428 | ) | $ | (1,416 | ) | ||
| Amortization of pension gain | 0 | 0 | ||||||
| Comprehensive loss | $ | (4,428 | ) | $ | (1,416 | ) | ||
(unaudited)
| As of or for the | ||||||||
| Thirty-nine Weeks Ended | ||||||||
| October 28, 2017 | October 29, 2016 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | ($ | 10,085 | ) | ($ | 5,113 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of fixed assets | 7,558 | 5,436 | ||||||
| Amortization of intangible assets | 2,917 | 174 | ||||||
| Amortization of lease valuations, net | (12 | ) | - | |||||
| Deferred tax benefit | - | (7,502 | ) | |||||
| Long term incentive compensation | 2,314 | 670 | ||||||
| Adjustment to contingent consideration | (1,437 | ) | - | |||||
| Loss on disposal of fixed assets | 459 | 703 | ||||||
| Gain on sale of investments | - | (800 | ) | |||||
| Increase in cash surrender value | (227 | ) | (790 | ) | ||||
| Gain on insurance proceeds | (8,733 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Merchandise inventory | (18,750 | ) | (23,111 | ) | ||||
| Prepaid expenses and other current assets | 2,172 | (5,311 | ) | |||||
| Other assets | (497 | ) | 6,359 | |||||
| Accounts payable | (6,929 | ) | 5,281 | |||||
| Accrued expenses, deferred revenue and other current liabilities | (1,390 | ) | (8,345 | ) | ||||
| Other long-term liabilities | (1,307 | ) | 2,470 | |||||
| Net cash used in operations | (33,947 | ) | (29,879 | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Acquisition of a business | - | (36,600 | ) | |||||
| Purchases of fixed assets | (6,392 | ) | (16,726 | ) | ||||
| Proceeds from company owned life insurance and SERP death benefits | 14,363 | - | ||||||
| Investment in joint venture | (2,575 | ) | - | |||||
| Proceeds from sale of investments | - | 1,600 | ||||||
| Purchases of investments | - | (500 | ) | |||||
| Capital distributions from joint venture | 632 | - | ||||||
| Net cash provided by (used in) investing activities | 6,028 | (52,226 | ) | |||||
| FINANCING ACTIVITIES: | ||||||||
| Exercise of long term equity awards | - | 39 | ||||||
| Payments to shareholders | (5,000 | ) | - | |||||
| Payments of long term borrowings | - | (4,727 | ) | |||||
| Proceeds from short term borrowings | 5,000 | 5,936 | ||||||
| Purchase of treasury stock | - | (2,646 | ) | |||||
| Net cash provided by (used in) financing activities | - | (1,398 | ) | |||||
| Net decrease in cash and cash equivalents | (27,919 | ) | (83,503 | ) | ||||
| Cash, cash equivalents, and restricted cash, beginning of year | 44,077 | 104,311 | ||||||
| Cash, cash equivalents, and restricted cash, end of year | $ | 16,158 | $ | 20,808 | ||||
| Supplemental disclosures and non-cash investing and financing activities: | ||||||||
| Interest paid | $ | 200 | $ | 523 | ||||
| Fair value of assets acquired, including cash acquired | - | 93,152 | ||||||
| Liabilities assumed | - | (24,256 | ) | |||||
| Net assets acquired | - | 68,896 | ||||||
| Less: Contingent consideration not yet paid | - | (10,381 | ) | |||||
| Less: Fair value of shares issued as consideration | - | (20,415 | ) | |||||
| Less: Indemnity liability not yet paid | - | (1,500 | ) | |||||
| Acquisition of a business | $ | - | $ | 36,600 | ||||
| Issuance of restricted performance based awards / deferred / restricted shares under deferred / restricted stock agreements | - | 6,074 | ||||||
| Thirteen Weeks Ended April 30, 2022 | ||||||||||||||||||||||||||||||||
| Number of shares outstanding | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Deficit) | Shareholders’ Equity | |||||||||||||||||||||||||||||
Common Shares | Treasury Shares | Common Stock | Additional Paid-in Capital | Treasury Stock At Cost | ||||||||||||||||||||||||||||
| Balance as of January 29, 2022 | 3,903 | (1,410 | ) | $ | 39 | $ | 359,220 | $ | (230,170 | ) | $ | (910 | ) | $ | (120,894 | ) | $ | 7,285 | ||||||||||||||
| Net Loss | - | - | 0 | 0 | 0 | 0 | (4,428 | ) | (4,428 | ) | ||||||||||||||||||||||
| Issuance of warrants | 0 | - | 0 | 1,518 | 0 | 0 | 0 | 1,518 | ||||||||||||||||||||||||
| Balance as of April 30, 2022 | 3,903 | $ | (1,410 | ) | $ | 39 | $ | 360,738 | $ | (230,170 | ) | $ | (910 | ) | $ | (125,322 | ) | $ | 4,375 | |||||||||||||
| Thirteen Weeks Ended May 1, 2021 | ||||||||||||||||||||||||||||||||
| Number of shares outstanding | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Deficit) | Shareholders’ Equity | |||||||||||||||||||||||||||||
Common Shares | Treasury Shares | Common Stock | Additional Paid-in Capital | Treasury Stock At Cost | ||||||||||||||||||||||||||||
| Balance as of January 30, 2021 | 3,337 | (1,410 | ) | $ | 33 | $ | 346,495 | $ | (230,169 | ) | $ | (2,007 | ) | $ | (112,863 | ) | $ | 1,489 | ||||||||||||||
| Net Loss | - | - | 0 | 0 | 0 | 0 | (1,416 | ) | (1,416 | ) | ||||||||||||||||||||||
| Exercise of warrants | 136 | 0 | 2 | 0 | (1 | ) | 0 | 0 | 1 | |||||||||||||||||||||||
| Sale of shares, net of expenses | 416 | 0 | 4 | 12,227 | 0 | 0 | 0 | 12,231 | ||||||||||||||||||||||||
| Amortization of unearned compensation/restricted stock amortization | - | - | 0 | 27 | 0 | 0 | 0 | 27 | ||||||||||||||||||||||||
| Balance as of May 1, 2021 | 3,889 | $ | (1,410 | ) | $ | 39 | $ | 358,749 | $ | (230,170 | ) | $ | (2,007 | ) | $ | (114,279 | ) | $ | 12,332 | |||||||||||||
| Thirteen Weeks Ended | ||||||||
April 30, 2022 | May 1, 2021 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income loss | $ | (4,428 | ) | $ | (1,416 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of fixed assets | 293 | 346 | ||||||
| Amortization of intangible assets | 0 | 257 | ||||||
| Stock-based compensation | 0 | 27 | ||||||
| Interest on long-term debt | 106 | 242 | ||||||
| Amortization of ROU asset | 154 | 147 | ||||||
| Change in cash surrender value | 354 | (312 | ) | |||||
| Changes in operating assets and liabilities that provide (use) cash: | ||||||||
| Accounts receivable | (392 | ) | (396 | ) | ||||
| Merchandise inventory | (2,977 | ) | 1,949 | |||||
| Prepaid expenses and other current assets | 92 | (28 | ) | |||||
| Other long-term assets | 93 | 113 | ||||||
| Accounts payable | 1,393 | (3,211 | ) | |||||
| Accrued expenses and other current liabilities | (140 | ) | 147 | |||||
| Other long-term liabilities | (368 | ) | (378 | ) | ||||
| Net cash used in operating activities | (5,820 | ) | (2,513 | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of fixed assets | (399 | ) | (444 | ) | ||||
| Net cash provided by (used in) investing activities | (399 | ) | (444 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from short term borrowings | 542 | 0 | ||||||
| Proceeds from long term borrowings | 5,000 | 0 | ||||||
| Proceeds from stock offering | 0 | 12,231 | ||||||
| Exercise of warrants | 0 | 1 | ||||||
| Payment of short term borrowings | 0 | (6,339 | ) | |||||
| Net cash provided by financing activities | 5,542 | 5,893 | ||||||
| Net decrease in cash, cash equivalents, and restricted cash | (677 | ) | 2,936 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 4,823 | 6,555 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 4,146 | $ | 9,491 | ||||
| Supplemental disclosures and non-cash investing and financing activities: | ||||||||
| Interest paid | $ | 202 | $ | 153 | ||||
| Warrants issued with debt | $ | 1,633 | $ | 0 | ||||
Trans World Entertainment Corporation
learn from diverse experiences. Our empathy ignites innovation and empowers meaningful change.
Management anticipatesuncertainty with respect to any cash requirements due to a shortfall in cash from operations will be funded byavailable future funding, the Company has concluded that there is substantial doubt about the Company’s revolving credit facility, as discussed in note 9 in the interim condensed consolidated financial statements.
In connection with the preparation of these interim condensed consolidated financial statements, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to the entity’s ability to continue as a going concern within one year afterconcern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
direct result of COVID-19, most of our employees are working remotely. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, reserves and allowances, and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19, including the actions taken to contain or treat it, as well as the economic impact on local, regional, national and international customers and markets, which are highly uncertain and cannot be predicted at this time. Management is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the response to curb its spread, currently we are not able to estimate the effects of the COVID-19 outbreak to our results of operations, financial condition, or liquidity.
in accordance with U.S. GAAPaccounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations applicable to interim financial statements.
January 28, 2023.
There have been no material changes to the accounting policies applied to our consolidated results and footnote disclosures.
29, 2022.
In February 2016, the FASB issued ASU No. 2016-02, “Leases”, which will replace most existing lease accounting guidance in U.S. GAAP. The core principle of this ASU is that an entity should recognize the rights and obligations resulting from leases as assets and liabilities. The new standard requires qualitative and specific quantitative disclosures to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities, including significant judgments and changes in judgments. The new standard will be effective for the Company’s fiscal year beginning February 3, 2019, and requires the modified retrospective method of adoption. Early adoption is permitted. The Company is in the process of determining the method and timing of adoption and assessing the impact of ASU 2016-02 on its consolidated financial statements. Given the nature of the operating leases for the Company’s home office, distribution center, and stores, the Company expects an increase to the carrying value of its assets and liabilities.
In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment
by eliminating step two from the goodwill impairment test whereby a goodwill impairment loss is determined by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Rather, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of intangible assets acquired in a reporting unit with its carrying amountbusiness acquisition, including the Company’s acquisition of Kaspien in 2016, is subject to many estimates and recognizing an impairment chargeassumptions. Our identifiable intangible assets that resulted from our acquisition of Kaspien consist of technology and tradenames. As of October 30, 2022, the intangible assets were fully amortized.
In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which is intended to improve the presentation of net periodic pension cost and net periodic post-retirement benefit cost in an entity’s financial statements by requiring the service cost component be disaggregated from other components of net benefit costs and presented in the same line item or items as other compensation costs for the employees. Additionally, only the service cost component of net benefit cost is eligible for capitalization when applicable. ASU 2017-07 is effective for the Company’s fiscal year beginning February 3, 2019, and must be applied retrospectively. ASU 2017-07 is permitted for early adoption, but only at the beginning of an annual period for which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact that this ASU will have on its reporting and asset recognition.
In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,” which provided clarity as to what changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for the Company for interim and annual periods in fiscal year beginning February 3, 2019, with early adoption permitted and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date.
Note 4. Acquisition and Investment
Business Combination-etailz
On October 17, 2016, the Company completed the purchase of all2021 consisted of the issuedfollowing:
| Thirteen Weeks Ended | ||||||||
(amounts in thousands) | April 30, 2022 | May 1, 2021 | ||||||
| Amortized intangible assets: | ||||||||
| Technology | $ | 0 | $ | 97 | ||||
| Trade names and trademarks | 0 | 160 | ||||||
| Total amortization expense | $ | 0 | $ | 257 | ||||
The Company paid $32.3 million in cash, issued 5.7 million shares of Trans World Entertainment Corporation stock (TWMC Stock) at closing to the shareholders of etailz (the selling shareholders) as consideration for the selling shareholders’ ownership, and paid $4.3 million in cash advances to settle obligations of the selling shareholders. Based on the fair value of $3.56 per share of TWMC Stock on the acquisition date, the shares had a value of $20.4 million. An earn-out of up to a maximum of $14.6 million would be payable in fiscal 2018 and fiscal 2019 subject to the achievement by etailz of $6.0 million in operating income in fiscal 2017 and $7.5 million in fiscal 2018 as outlined in the share purchase agreement prior to its amendment as discussed in the following paragraph. In connection with the acquisition, the Company assumed the liability of the selling shareholders for etailz’s employee retention bonus plan, of which $1.9 million was due and payable at closing and funded as part of the cash advances and the remaining $2.3 million will be earned over a two year service period. The acquisition and related costs were funded primarily from the Company’s cash on hand and short term borrowings under its revolving credit facility. The acquisition was accounted for using the purchase method of accounting.
During the Company’s second quarter, the share purchase agreement with the selling shareholders of etailz was amended to provide that $11.5 million be released from the earnout escrow account and the $3.1 million
remaining in the earnout escrow account may be payable in cash to the selling shareholders in 2019, subject to the achievement by etailz of operating income in excess of $15.5 million during the twenty-four month period ending February 2, 2019. In the event that etailz achieves operating income in excess of $13.5 million, but less than $15.5 million, an earnout of $1.6 million would be payable in 2019. If etailz operating income is below $13.5 million, the $3.1 million escrow would be returned to the Company.
The amount released from escrow was disbursed during the Company’s second quarter as follows: $5.0 million to the Company for future investment to support growth initiatives, $5.0 million to the selling shareholders, and $1.5 million to the Company (to be allocated to increase the maximum amount available under the etailz employee retention bonus plan from $4.2 million to $5.7 million).
During the Company’s second quarter, the Company recorded a $1.4 million benefit related to its contingent consideration liability. The decrease in the value of the contingent consideration liability resulted from the actual financial results of etailz and the amendment of the earnout agreement as described in the paragraph above. This benefit is recordedamortization included in selling, general and administrative expenses inof the Company’sinterim condensed consolidated statements of operations.
The results of operations of etailz are reported in the Company’s etailz segment and have been included in the consolidated results of operations of the Company from the date of acquisition. The following unaudited pro forma financial information for the thirteen and thirty-nine weeks ended October 29, 2016, presents consolidated information as if the etailz acquisition had occurred on February 1, 2016. Because of different fiscal period ends, and in order to present results for comparable periods, the unaudited pro forma consolidated financial information for the thirty-nine weeks ended October 29, 2016, combines (i) the Company’s historical statement of operations for the thirty-nine weeks ended October 29, 2016, and (ii) etailz historical statement of income for the period from January 1, 2016 through August 31, 2016 and October 1, 2016 through October 16, 2016. The unaudited pro forma financial information for the thirteen weeks ended October 29, 2016, combines (i) the Company’s historical statement of operations for the thirteen weeks ended October 29, 2016;April 30, 2022 and (ii) etailz historical statement of income for the period from JulyMay 1, 2016 through August 31, 20162021 was $0.3 million and October 1, 2016 through October 16, 2016. The unaudited pro forma financial information is presented after giving effect to certain adjustments for acquisition-related costs, depreciation, amortization of definite lived intangible assets, interest expense on acquisition financing, and related income tax effects. The unaudited pro forma financial information is based upon currently available information and upon certain assumptions that the Company believes are reasonable under the circumstances. The unaudited pro forma financial information does not purport to present what the Company’s results of operations would actually have been if the aforementioned transaction had in fact occurred on such date or at the beginning of the period indicated, nor does it project the Company’s financial position or results of operations at any future date or for any future period.
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||
| October 29, 2016 | October 29, 2016 | |||||||
| Pro forma total revenue | $ | 90,655 | $ | 287,060 | ||||
| Pro forma net loss | (6,945 | ) | (13,513 | ) | ||||
| Pro forma basic and diluted loss per share | $ | (0.19 | ) | $ | (0.37 | ) | ||
| Pro forma weighted average number of common shares outstanding – basic and diluted | 36,157 | 36,257 | ||||||
Joint Venture
On April 11, 2017, the Company entered into an agreement with another party for the purpose of acquiring and selling certain retail merchandise. etailz holds a 50% economic interest in the arrangement as of October 28, 2017. The initial cash investment was $2.6 million dollars. During the thirty-nine weeks ended October 28, 2017, the Company received distributions in the amount of $1.7 million from the joint venture, of which $0.7 million was a return of capital and $1.0 million was the Company’s share of joint venture income. The remaining investment of $1.9 million was included in other assets in the interim condensed consolidated balance sheets as of October 28, 2017.
Note 5. Goodwill and Other Intangible Assets
Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.
Determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates, and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment if circumstances indicate that the carrying amount may not be recoverable.
We are continuing to amortize certain vendor relationships, technology, and trade names and trademarks that have finite lives.
Identifiable intangible assets as of October 28, 2017 consisted of the following (in thousands, except weighted-average amortization period):
| October 28, 2017 | ||||||||||||||||
| Amortization Period (in months) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||
| Vendor relationships | 120 | $ | 19,100 | $ | 2,010 | $ | 17,090 | |||||||||
| Technology | 60 | 6,700 | 1,403 | 5,297 | ||||||||||||
| Trade names and trademarks | 60 | 3,200 | 647 | 2,553 | ||||||||||||
| $ | 29,000 | $ | 4,060 | $ | 24,940 | |||||||||||
| The changes in net intangibles and goodwill from January 28, 2017 to October 28, 2017 were as follows: | ||||||||||||||||
| (in thousands) | January 28, 2017 | Amortization | October 28, 2017 | |||||||||||||
| Amortized intangible assets: | ||||||||||||||||
| Vendor relationships | $ | 18,522 | $ | 1,432 | $ | 17,090 | ||||||||||
| Technology | 6,302 | 1,005 | 5,297 | |||||||||||||
| Trade names and trademarks | 3,033 | 480 | 2,553 | |||||||||||||
| Net amortized intangible assets | $ | 27,857 | $ | 2,917 | $ | 24,940 | ||||||||||
| Unamortized intangible assets: | ||||||||||||||||
| Goodwill | $ | 39,191 | - | $ | 39,191 | |||||||||||
| Total unamortized intangible assets | $ | 39,191 | - | $ | 39,191 | |||||||||||
Estimated amortization expense for the remainder of fiscal 2017 and the five succeeding fiscal years and thereafter is as follows:
| Year | Annual Amortization | |||
| ( in thousands) | ||||
| 2017 | $ | 971 | ||
| 2018 | 3,890 | |||
| 2019 | 3,890 | |||
| 2020 | 3,890 | |||
| 2021 | 3,325 | |||
| 2022 | 1,910 | |||
| Thereafter | 7,064 | |||
Depreciation and amortization included in the condensed consolidated statements of operations is as follows:
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| Cost of sales | $ | 163 | $ | 104 | $ | 474 | $ | 301 | ||||||||
| Selling, general and administrative expenses | 3,425 | 2,222 | 9,989 | 5,309 | ||||||||||||
| Total | $ | 3,588 | $ | 2,326 | $ | 10,463 | $ | 5,610 | ||||||||
Note 7. Segment Data
As described in Note 1 to the interim condensed consolidated financial statements, we operate in two reportable segments as shown in the following table. Results for etailz are included in the consolidated results for all periods presented for fiscal 2017. For periods presented for fiscal 2016, results for etailz are included in consolidated results from October 17, 2016 through October 29, 2016.
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
| (in thousands) | October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
| Total Revenue | ||||||||||||||||
| fye | $ | 52,105 | $ | 62,457 | $ | 176,006 | $ | 202,535 | ||||||||
| etailz | 40,896 | 3,824 | $ | 121,440 | $ | 3,824 | ||||||||||
| Total Company | $ | 93,001 | $ | 66,281 | $ | 297,446 | $ | 206,359 | ||||||||
| Gross Profit | ||||||||||||||||
| fye | $ | 21,347 | $ | 25,932 | $ | 73,342 | $ | 83,459 | ||||||||
| etailz | 10,234 | 940 | 29,714 | 940 | ||||||||||||
| Total Company | $ | 31,581 | $ | 26,872 | $ | 103,056 | $ | 84,399 | ||||||||
| Loss From Operations | ||||||||||||||||
| fye | $ | (7,858 | ) | $ | (5,083 | ) | $ | (17,703 | ) | $ | (10,291 | ) | ||||
| etailz | (253 | ) | (2,725 | ) | (966 | ) | (2,725 | ) | ||||||||
| Total Company | $ | (8,111 | ) | $ | (7,808 | ) | $ | (18,669 | ) | $ | (13,016 | ) | ||||
| Total Assets | ||||||||||||||||
| fye | $ | 186,869 | $ | 222,362 | ||||||||||||
| etailz | 102,077 | 90,887 | ||||||||||||||
| Total Company | $ | 288,946 | $ | 313,249 | ||||||||||||
Note 8. Restricted Cash
In connection with the acquisition of etailz and under the terms of the share purchase agreement, as amended (see Note 4), the Company designated $1.5 million of the restricted cash to be made available to satisfy any indemnification claims within 18 months from the date of acquisition and $3.2 million of the restricted cash to equal the maximum earn-out amount that could be paid to the selling shareholders of etailz in accordance with the share purchase agreement, as amended.
In addition, as a result of the death of its former Chairman, the Company received $7.5holds $3.3 million which is held in a rabbi trust, and wasof which $1.2 million is classified as restricted cash in current assets and $2.2 million is classified as restricted cash in other assets on the accompanying interim condensed consolidated balance sheet as of October 28, 2017.
April 30, 2022.
| October 28, | January 28, | October 29, | ||||||||||
| 2017 | 2017 | 2016 | ||||||||||
| Cash and cash equivalents | $ | 3,924 | $ | 27,974 | $ | 4,708 | ||||||
| Restricted cash | 12,234 | 16,103 | 16,100 | |||||||||
| Total cash, cash equivalents and restricted cash | $ | 16,158 | $ | 44,077 | $ | 20,808 | ||||||
April 30, 2022 | January 29, 2022 | May 1, 2021 | ||||||||||
| Cash and cash equivalents | $ | 828 | $ | 1,218 | $ | 5,030 | ||||||
| Restricted cash | 3,318 | 3,605 | 4,461 | |||||||||
| Total cash, cash equivalents and restricted cash | $ | 4,146 | $ | 4,823 | $ | 9,491 | ||||||
In January 2017, the Company Facility
swing line loans.
As of October 28, 2017, the Company had $5.0 million in outstanding borrowings under the revolving credit facility and $49.0 million was available for borrowing. As of October 29, 2016, the Company had $5.9 million in outstanding borrowings under the revolving credit facility and $53.7 million was available for borrowing. The weighted average interest rate on total, LIBO Rate and Prime Rate, outstanding borrowings for the thirteen week period ended October 28, 2017 and October 29, 2016 was 2.69% and 3.73%, respectively.
Note 10. Stock Based Compensation
As of October 28, 2017, there was approximately $0.9 million of unrecognized compensation cost related to stock awards that is expected to be recognized as expense over a weighted average period of 2.7 years.
As of October 28, 2017, stock
The table below outlines the assumptions that the Company used to estimate the fair value of stock based awards granted during the thirty-nine weeks ended October 28, 2017:
144,346.
| Number of Shares Subject To Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Other Share Awards (1) | Weighted Average Grant Fair Value | ||||||||||||||||
| Balance January 28, 2017 | 2,459,564 | $ | 3.58 | 7.3 | 170,927 | $ | 3.87 | |||||||||||||
| Granted | 620,000 | 1.84 | - | 65,000 | 1.85 | |||||||||||||||
| Forfeited | (288,750 | ) | 3.07 | - | - | - | ||||||||||||||
| Cancelled | (164,150 | ) | 5.43 | - | (5,000 | ) | 3.53 | |||||||||||||
| Exercised | - | - | - | (52,500 | ) | 3.50 | ||||||||||||||
| Balance October 28, 2017 | 2,626,664 | $ | 3.11 | 7.2 | 178,427 | $ | 3.26 | |||||||||||||
| Exercisable October 28, 2017 | 1,361,164 | $ | 3.32 | 5.8 | 63,427 | $ | 4.50 | |||||||||||||
April 30, 2022:
| Employee Stock Award Plans | ||||||||||||||||||||
Number of Shares Subject To Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Other Share Awards (1) | Weighted Average Grant Fair Value | ||||||||||||||||
Balance January 29, 2022 | 85,965 | $ | 13.41 | 7.5 | 90,000 | $ | 15.39 | |||||||||||||
| Granted | 15,000 | 6.55 | 9.9 | 0 | 0 | |||||||||||||||
| Forfeited | (17,880 | ) | 6.50 | 9.1 | (55,000 | ) | 13.63 | |||||||||||||
| Canceled | (6,806 | ) | 28.58 | - | 0 | 0 | ||||||||||||||
| Exercised | 0 | 0 | - | 0 | 0 | |||||||||||||||
Balance April 30, 2022 | 76,279 | $ | 11.04 | 7.1 | 35,000 | $ | 18.14 | |||||||||||||
Exercisable April 30, 2022 | 28,163 | $ | 17.07 | 4.4 | 0 | $ | 0 | |||||||||||||
In connection with the acquisition of etailz, the Company issued 1,572,552 restricted shares of Company stock to a key etailz employee, with a grant date fairintrinsic value of $3.56 per share. These shares vest ratably through January 2019. As of October 28, 2017, the Company recognized $2.6 million of compensation cost related to these shares, of which $1.9 millionstock awards exercisable was recorded in fiscal 2017. As of October 28, 2017, there was approximately $3.0 million of unrecognized compensation cost related to these restricted shares that is expected to be recognized as expense over the next 15 months.
all periods presented.
2022.
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| Service cost | $ | 16 | $ | 15 | $ | 48 | $ | 45 | ||||||||
| Interest cost | 139 | 137 | 417 | 411 | ||||||||||||
| Amortization of prior service costs | 4 | 55 | 12 | 166 | ||||||||||||
| Amortization of net gain(1) | (9 | ) | (4 | ) | (27 | ) | (12 | ) | ||||||||
| Net periodic pension cost | $ | 150 | $ | 203 | $ | 450 | $ | 610 | ||||||||
| Thirteen Weeks Ended | ||||||||
(amounts in thousands) | April 30, 2022 | May 1, 2021 | ||||||
Interest cost | $ | 89 | $ | 63 | ||||
| Net periodic pension cost | $ | 89 | $ | 63 | ||||
compared to 1.9 million shares and 1.8 million shares, respectively, for the thirteen and thirty-nine weeks ended October 29, 2016.
The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net deferred tax assets, which remain fully reserved.
Store Manager Class Actions
Two former Store Managers filed actions alleging claims of entitlement to unpaid compensation As a result, the liability for overtime. In one action, the plaintiff seeks to represent a class of allegedly similarly situated employees who performed the same position (Store Manager and Senior Assistant Manager) while the other plaintiff seeks to represent a class of allegedly similarly situated employees who performed the same position (Store Manager).
Specifically, Carol Spackcases listed below is remote.
On May 19, 2017, Natasha Roper filed a complaint against Trans Worldan amount equal, in the U.S. District Courtaggregate, to 9.0% of the proceeds received by the Company in respect of certain distributions by the Company or Kaspien; recapitalizations or financings of the Company or Kaspien (with appropriate carve out for trade financing in the Northern Districtordinary course); repayment of New York (Case No.: 1:17-cv-0553-TJM-CFH)intercompany indebtedness owing to the Company by Kaspien; or sale or transfer of any stock of the Company or Kaspien.
TRANS WORLD ENTERTAINMENT CORPORATION
October 28, 2017
May 1, 2021
29, 2022.
empowers meaningful change.
partners within our platform. charges. April 30, 2022 debt. payable. expenditures. during fiscal 2022. 29, 2022. 29, 2022.Profit:Profit: Gross profit is calculated based on the cost of product in relation to its retail selling value. Changes in gross profit are impacted primarily by thenet sales levels, mix of products sold, by discounts negotiated with vendors, discounts offered to customers,obsolescence, distribution costs, and Amazon commissions and fulfillment fees paid to Amazon. fees.Company records its distributiontotal value of merchandise sold over a given time period through a customer-to-customer exchange site. It is the measurement of merchandise value sold across all channels and product shrink expenses in cost of sales. Distribution expenses include those costs associated with receiving, shipping, inspecting and warehousing product and costs associated with product returns to vendors. Warehousing cost of sales also includes obsolescence costs and is reduced by the benefit of vendor allowances, net of direct reimbursements of expense.Amazon commissions, general operating and overhead expenses and depreciation charges (excluding those related to distribution operations, as disclosed in Note 6 to the condensed consolidated financial statements). Selling, general and administrative expenses also include fixed asset write offs associated with store closures and change in square footage, if any, gift card breakage, and etailz related amortization and compensation costs. net inventory investment (merchandise inventory less accounts payable) and working capital (current assets less current liabilities) as relevant indicators of its financial position. See Liquidity and Capital ResourcesCash Flows section for further discussion of these items.19 and Thirty-nine Weeks Ended October 28, 2017and Thirty-nine Weeks Ended October 29, 2016Segment Highlights:etailz results included in the tables below are for the period when etailz was acquired, therefore, etailz results are only included in the thirteen and thirty-nine weeks ended October 28, 2017. Thirteen Weeks Ended Thirty-nine Weeks Ended October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016 Total Revenue fye $ 52,105 $ 62,457 $ 176,006 $ 202,535 etailz 40,896 3,824 121,440 3,824 Total Company $ 93,001 $ 66,281 $ 297,446 $ 206,359 Gross Profit fye $ 21,347 $ 25,932 $ 73,342 $ 83,459 etailz 10,234 940 29,714 940 Total Company $ 31,581 $ 26,872 $ 103,056 $ 84,399 Loss From Operations fye $ (7,858 ) $ (5,083 ) $ (17,703 ) $ (10,291 ) etailz (253 ) (2,725 ) (966 ) (2,725 ) Total Company $ (8,111 ) $ (7,808 ) $ (18,669 ) $ (13,016 ) Reconciliation of etailz Loss from Operations to etailz Adjusted Income (Loss) from Operations etailz loss from operations $ (253 ) $ (2,725 ) $ (966 ) $ (2,725 ) Acquisition related transaction expenses - 2,228 - 2,228 Acquisition related amortization and compensation expenses (1) 2,087 $ 303 4,613 303 etailz adjusted income (loss) from operations (2) $ 1,834 $ (194 ) $ 3,647 $ (194 ) (1)Acquisition related expenses for the thirteen weeks ended October 28, 2017 consisted of amortization expense of intangible assets of $1 million and compensation expense of $1.1 million. Acquisition related expenses for the thirty-nine weeks ended October 28, 2017 consisted of amortization expense of intangible assets of $2.9 million and compensation expense of $3.1million, net of a $1.4 million benefit resulted from a contingent consideration liability adjustment.(2)In addition to the results of operations determined in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), we reported non-GAAP adjusted operating income for the etailz segment as shown above.Total Revenue.May 1, 2021total revenue: Thirteen Weeks Ended Change Thirty-nine Weeks Ended Change October 28,
2017 October 29,
2016 $ % October 28,
2017 October 29,
2016 $ % (in thousands) fye revenue $ 52,105 $ 62,457 $ (10,352 ) -16.6 % $ 176,006 $ 202,535 $ (26,529 ) -13.1 % etailz revenue 40,896 3,824 37,072 n/a 121,440 3,824 117,616 n/a Total revenue $ 93,001 $ 66,281 $ 26,720 40.3 % $ 297,446 $ 206,359 $ 91,087 44.1 % TotalNet revenue : Thirteen weeks ended Change April 30, 2022 May 1, 2021 $ % Amazon US $ 29,620 93.2 % $ 37,516 92.4 % $ (7,896 ) -21.0 % Amazon International 1,287 4.0 % 2,268 5.6 % (981 ) -43.3 % Walmart, Target & other marketplaces 430 1.4 % 378 0.9 % 52 13.8 % Subtotal Retail as a Service 31,337 98.6 % 40,162 98.9 % (8,825 ) -22.0 % Subscriptions 454 1.4 % 455 1.1 % (1 ) -0.2 % Net revenue $ 31,791 100.0 % $ 40,617 100.0 % $ (8,826 ) -21.7 % 40.3% and 44.1% forto 1.4% of net revenue from 1.1% of net revenue in the thirteen and thirty-nine weeks ended October 28, 2017 as compared tocomparable period from the same period lastprior year. The increase was driven by $40.9 million and $121.4 million in revenue for the thirteen and thirty-nine weeks ended October 28, 2017 as a result of the acquisition of etailz in October 2016, which offsets the decline in fye revenue.20fye SegmentThe following table sets forth a period over period comparison of net fye sales by merchandise category: Thirteen Weeks Ended Change Thirty-nine Weeks Ended Change October 28,
2017 October 29,
2016 $ % Comp
Store Net
Sales October 28,
2017 October 29,
2016 $ % Comp
Store Net
Sales(in thousands, except store data) fye net sales $ 50,921 61,215 $ (10,294 ) -16.8 % -11.0 % $ 172,042 199,303 $ (27,261 ) -13.7 % -8.0 % Other revenue 1,184 1,242 (58 ) (4.7 %) 3,964 3,232 732 22.6 % Total revenue $ 52,105 $ 62,457 $ (10,352 ) -16.6 % $ 176,006 $ 202,535 $ (26,529 ) -13.1 % As a % of fye net sales Lifestyle 38.0 % 32.3 % 0.2 % 35.4 % 28.6 % 9.2 % Video 32.3 % 35.2 % -15.4 % 32.9 % 37.3 % -15.8 % Music 18.9 % 21.7 % -23.0 % 20.4 % 23.8 % -20.6 % Electronics 10.4 % 10.1 % -4.3 % 10.8 % 9.4 % 4.3 % Video Games 0.4 % 0.7 % -41.0 % 0.5 % 0.9 % -43.9 % Store Count: 268 294 (26 ) -8.8 % Total Square footage (in thousands) 1,491 1,649 (158 ) -9.6 % Net sales. Net sales decreased 16.8% and 13.7% during the thirteen weeks and thirty-nine weeks ended October 28, 2017, respectively, as comparedattributable to the same period last year. The decline in net sales resulted from an 8.8% decline in total stores in operation for the thirty-nine weeks ended October 28, 2017 as compared to the same period last year, and an 11.0% and 8.0% decline in comparable store net sales for the thirteen and thirty-nine weeks ended October 28, 2017, respectively.Lifestyle:Comparable store net salesincrease in the lifestyle (trend) category increased 0.2% duringnumber of partners and higher gross merchandise value (“GMV”) of partner revenue flowing through the thirteen weeks ended October 28, 2017. During the thirty-nine weeks ended October 28, 2017, lifestyle category increased 9.2%. Lifestyle products represented 38.0% and 35.4% of total net sales for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, compared to 32.3% and 28.6% in the comparable periods last year. platform Amazon Marketplace. is focused on identifying, creating and delivering merchandise that differentiates its customer experience and brand with unique and engaging products.Media Categories:Media categories, which consist of Video and Music, continue to experience industry wide declines due to non-physical options. As a result, the fye segment is shifting its product mix to growing categories of entertainment and pop culture related merchandise, which is categorized as Lifestyle.Video:Comparable store sales in the video category decreased 15.4% and 15.8% during the thirteen and thirty-nine week periods ended October 28, 2017, respectively. The video category represented 32.3% and 32.9% of total net sales for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, compared to 35.2% and 37.3% in the comparable periods last year.Music:During the thirteen and thirty-nine weeks ended October 28, 2017, music sales in comparable stores decreased 23.0% and 20.6%, respectively, versus the thirteen and thirty-nine weeks ended October 29, 2016. The music category represented 18.9% and 20.4% of total net sales for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, compared to 21.7% and 23.8% for the thirteen and thirty-nine weeks ended October 29, 2016.21Electronics:Comparable store net sales in the electronics category decreased 4.3% and increased 4.3% during the thirteen and thirty-nine weeks ended October 28, 2017, respectively due to lower average retail prices. Electronics net sales represented 10.4% and 10.8% of total net sales for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, compared to 10.1% and 9.4% in the comparable periods last year.Other Revenue.Other revenue, which was primarily related to commissions and fees earned from third parties, was approximately $1.2 million and $4.0 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, compared to $1.2 million and $3.2 million in the comparable periods last year.etailz Segmentetailz reported $40.9 million and $121.4 million sales for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. etailz generates revenue across a broad array of product lines primarily through the Amazon Marketplace.
Categories include apparel, baby, beauty, electronics, health & personal care, home/kitchen/grocery, pets, sporting goods, toys & art.22 Thirteen Weeks ended Thirty-nine Weeks Ended Change Change October 28,
2017 October 29,
2016 $ % October 28,
2017 October 29,
2016 $ % (in thousands) (in thousands) fye gross profit $ 21,347 $ 25,932 ($ 4,585 ) -17.7 % $ 73,342 $ 83,459 ($ 10,117 ) -12.1 % etailz gross profit 10,234 940 $ 9,294 n/a 29,714 940 $ 28,774 n/a Total gross profit $ 31,581 $ 26,872 $ 4,709 17.5 % $ 103,056 $ 84,399 $ 18,657 22.1 % fye gross profit as a % of fye revenue 41.0 % 41.5 % 41.7 % 41.2 % etailz gross profit as a % of etailz revenue 25.0 % 24.6 % 24.5 % 24.6 % Total gross profit as a % of total revenue 34.0 % 40.5 % 34.6 % 40.9 % Gross profit increased 17.5% to $31.6 million for the thirteen weeks ended October 28, 2017 compared to $26.9 million for the thirteen weeks ended October 29, 2016. For the thirty-nine weeks ended October 28, 2017, gross profit increased 22.1% to $103.1 compared to $84.4 million for the comparable period last year. The increase in gross profit is primarily the result of the acquisition of etailz in October 2016, which offset the decline in fye gross profit.fye SegmentTotal gross profit as a percentage of total revenue for the thirteen and thirty-nine weeks ended October 28, 2017 was 41.0% and 41.7%, respectively, compared to 41.5% and 41.2% for the comparable periods last year.etailz Segmentetailz reported gross profit of $10.2 million and $29.7 million for the thirteen and thirty-nine weeks ended October 28, 2017. etailz gross profit as a percentage of revenue was 25.0% and 24.5% for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Thirteen Weeks Ended Change (amounts in thousands) $ % Merchandise margin $ 14,046 $ 18,982 $ (4,936 ) (26.0 )% % of net revenue 44.2 % 46.7 % (2.5 )% Fulfillment fees (4,568 ) (6,449 ) (1,881 ) (29.2 )% Warehousing and freight (2,627 ) (2,737 ) (110 ) (4.0 )% Gross profit $ 6,851 $ 9,796 $ (2,945 ) (30.1 )% % of net revenue 21.6 % 24.1 % 23 Thirteen Weeks ended Thirty-nine Weeks Ended Change Change October 28,
2017 October 29,
2016 $ % October 28,
2017 October 29,
2016 $ % (in thousands) (in thousands) fye SG&A, excluding depreciation, amortization, and acquistion related transaction costs $ 26,790 $ 28,968 $ (2,178 ) -7.5 % $ 84,102 $ 88,616 ($ 4,514 ) -5.1 % As a % of total FYE revenue 51.4 % 46.4 % 5.0 % 47.8 % 43.8 % 4.0 % etailz SG&A, excluding depreciation, amortization, and acquistion related compensation expenses 9,225 959 8,266 n/a 26,964 959 26,005 n/a etailz acquisition related compensation expenses, net of a contingency adjustment 1,118 303 815 n/a 1,708 303 1,405 n/a Depreciation and amortization 3,425 2,222 1,203 54.1 % 9,989 5,309 4,680 88.2 % etailz acquisition related transaction costs - 2,228 (2,228 ) n/a - 2,228 (2,228 ) n/a Total SG&A $ 40,558 $ 34,680 $ 5,878 16.9 % $ 122,763 $ 97,415 $ 25,348 26.0 % As a % of total revenue 43.6 % 52.3 % 41.3 % 47.2 % Thirteen weeks ended Change $ % Selling expenses $ 4,601 $ 6,230 $ (1,629 ) -26.1 % General and administrative expenses 5,916 4,427 1,489 33.6 % SG&A Expenses $ 10,517 $ 10,657 $ (140 ) -1.3 % As a % of total revenue 33.1 % 26.2 % $5.9wages and marketing expenses and a one-time charge for severance expenses. Also included in general and administrative expenses is an expense of $0.3 million related to the reduction in cash surrender value compared to an increase of $0.3 million for the comparable prior year period.October 28, 2017 due to expenses for etailz, acquisition related compensation expenses, and higher depreciation and amortization expenses, offset slightly by lower fye expenses. SG&A expenses increased $25.3 million for the thirty-nine weeks ended October 28, 2017 due to expenses for etailz, acquisition related compensation expenses, and higher depreciation and amortization expenses, offset slightly by lower fye expenses, and a benefit recorded to the Company’s contingent consideration.fye SegmentSG&A excluding depreciation, amortization, and acquisition related transaction costs decreased $2.2 million, or 7.5%, and $4.5 million, or 5.1%, for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. As a percentage of fye revenue, SG&A expenses, excluding depreciation, amortization, and acquisition related transaction costs for the thirteen and thirty-nine weeks ended October 28, 2017 were 51.4% and 47.8%April 30, 2022 compared to 46.4% and 43.8% for the same period last year. The increase in the rate was primarily due to the comp sales decline and expenses to support the upgrading of the Company’s digital and data capability, including the re-platforming of fye.com.etailz Segmentetailz reported SG&A, excluding depreciation, amortization, and acquisition related compensation expenses, of $9.2 million and $27.0$0.6 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, which primarily includes commission fees and payroll costs.Depreciation and Amortization.Consolidated depreciation and amortization expense increased $1.2 million and $4.7 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Amortization of intangibles, as described in Note 5 to the condensed consolidated financial statements, increased $0.8 million and $2.8 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Depreciation expense increased $0.4 million and $1.9 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, primarily due to the fye segment’s investments in technology enhancements, new and remodeled stores and the chain wide rollout of new marketplace fixtures to support the fye segment’s shift in merchandising assortment from media categories to its lifestyle category.24Income from Joint Venture.etailz segment is a party to a Joint Venture Agreement as described in Note 4 to the Company’s condensed consolidated financial statements. Income from the joint venture was $866 thousand and $1,038 thousand for the thirteen and thirty-nine weeks ended October 28, 2017, respectively.Interest Expense.Interest expense was $83 thousand and $200 thousand during the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Interest expense consisted primarily of unused commitment fees and the amortization of fees related to the Company’s credit facility. Interest expense during the thirteen and thirty-nine weeks ended October 29, 2016 was $179 thousand and $523 thousand, respectively.May 1, 2021. The reductionincrease in interest expense was due to lower commitment feesincreased short and lower interest rates resulted from the amendment of the credit facility as discussed inlong-term borrowings. See Note 97 to the interim condensed consolidated financial statements.Gain (Loss)Condensed Consolidated Financial Statements for further detail on Insurance Proceeds.The gain on insurance proceeds related to the death of the Company’s former Chairman was $8.7 million during the thirty-nine weeks ended October 28, 2017, which consisted of an $8.8 million gain recorded during the first fiscal quarter of 2017 and a loss of $129 thousand recorded during the second fiscal quarter of 2017.Other Income. Other income was $59 thousand and $91 thousand during the thirteen and thirty-nine weeks ended October 28, 2017, respectively, compared to $51 thousand and $1.1 million for the same periods last year. Other income for the thirty-nine weeks ended October 29, 2016 included an $800 thousand gain on the sale of an investment. During the third quarter of fiscal 2016, in connection with the acquisition of etailz, the Company recognized a tax benefit of $7.5 million related to the reduction of its valuation allowance equivalent to the net deferred tax liabilities recorded on the etailz opening balance sheet. In assessing the realizability of the net deferred tax assets at the time of the acquisition of etailz, management considered whether it is more likely than not that some portion or all of the remaining deferred tax assets will not be realizable. Management considered the scheduled reversal of taxable temporary differences, projected future taxable income when combining Trans World Entertainment projected income or loss with etailz projected income or loss, and tax planning strategies when making this assessment. Based on the available objective evidence, management concluded that a full valuation allowance should be recorded against itsthe Company's deferred tax assets net of the deferred tax liabilities recorded in connection with the etailz acquisition. As a result, there were insignificant tax expense (benefit) amounts recorded during the thirteen and thirty-nine weeks ended October 28, 2017.
April 30, 2022 and May 1, 2021.25following table sets forthnet loss for the thirteen weeks ended April 30, 2022 was $4.3 million as compared to $1.4 million for the comparable prior year period.period over period comparisonlesser extent, cash generated from operations. Our cash requirements relate primarily to working capital needed to operate Kaspien, including funding operating expenses, the purchase of inventory and capital expenditures. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and amount of our revenue; the timing and amount of our operating expenses; the timing and costs of working capital needs; successful implementation of our strategy and planned activities; and our ability to overcome the impact of the Company’sCOVID-19 pandemic.loss: Thirteen Weeks Ended Thirty-nine Weeks Ended Change Change October 28,
2017 October 29,
2016 $ October 28,
2017 October 29,
2016 $ (in thousands) (in thousands) Loss before income tax $ (8,135 ) $ (7,936 ) $ (199 ) $ (10,045 ) $ (12,471 ) $ 2,426 Income tax expense (benefit) (64 ) (7,452 ) 7,388 40 (7,358 ) 7,398 Net loss $ (8,071 ) $ (484 ) $ (7,587 ) $ (10,085 ) $ (5,113 ) $ (4,972 ) Forloss of $4.4 million and $1.4 million for the thirteen and thirty-nine weeks ended October 28, 2017, the Company’s net loss increased $7.6 millionApril 30, 2022 and $5.0 million,May 1, 2021, respectively. The increase in the net loss was primarily dueattributable to a decrease in sales and gross margin. In addition, the income tax benefit recordedCompany has an accumulated deficit of $125.3 million as of April 30, 2022 and net cash used in operating activities for the thirteen weeks ended April 30, 2022 was $5.8 million. Net cash used in operating activities for the thirteen weeks ended May 1, 2021 was $2.5 million.third quarterCompany's Annual Report on Form 10-K filed April 29, 2022, the Company experienced negative cash flows from operations during fiscal 2021 and 2020 and we expect to incur net losses in fiscal 2022.2016.LIQUIDITYLiquidityour revenue; the timing and Cash Flows:In connection withamount of our operating expenses; the preparationtiming and costs of working capital needs; successful implementation of our strategy and planned activities; and our ability to overcome the impact of the COVID-19 pandemic. There can be no assurance that we will be successful in further implementing our business strategy or that the strategy, including the completed initiatives, will be successful in sustaining acceptable levels of sales growth and profitability. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.conducted an evaluationto meet its liabilities and to continue as a going concern is dependent on improved profitability, the strategic initiatives for Kaspien and the availability of future funding. Based on recurring losses from operations, negative cash flows from operations, the expectation of continuing operating losses for the foreseeable future, and uncertainty with respect to whetherany available future funding, the Company has concluded that there were conditions and events, considered in the aggregate, which raisedis substantial doubt as toabout the entity’sCompany’s ability to continue as a going concern within one year after the date of the issuance, or the date of availability, of theconcern. The financial statements to be issued, notingdo not include any adjustments that there did not appear to be evidencemight result from the outcome of substantial doubtthis uncertainty.the entity’s ability to continue as a going concern.The Company’s primary sourcesApril 30, 2022, we had cash and cash equivalents of $0.8 million, net working capital are cash provided by operationsof $16.5 million, and borrowing capacity under its revolving credit facility. The Company’s cash flows fluctuate from quarter to quarter due to various items, including seasonality of sales and earnings, merchandise inventory purchases and returns, the related terms$10.5 in borrowings on the purchases and capital expenditures. Management believes it will have adequate resources to fund its cash needs for the foreseeable future, including its capital spending, its seasonal increase in merchandise inventory and other operating cash requirements and commitments.Management anticipates any cash requirements due to a shortfall in cash from operations will be funded by the Company’sour revolving credit facility, as further discussed in Note 9below.Company’s interim condensed consolidated financial statements.
public of $32.50 per share. The gross proceeds of the offering were approximately $13.5 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. The Company used the net proceeds from the offering for general corporate purposes, including working capital to implement its strategic plans, investments in technology to enhance its scalable platform and its core retail business.26 As of or for the
Thirty-nine Weeks Ended Change (in thousands) October 28,
2017 October 29,
2016 $ Operating Cash Flows (33,947 ) (29,879 ) (4,068 ) Investing Cash Flows 6,028 (52,226 ) 58,254 Financing Cash Flows - (1,398 ) 1,398 Capital Expenditures (1) (6,392 ) (16,726 ) 10,334 Purchases of business, net of cash acquired (1) - (36,600 ) 36,600 Cash, Cash Equivalents, and Restricted Cash (2) 16,158 20,808 (4,650 ) Merchandise Inventory 144,754 157,827 (13,073 ) Working Capital 95,951 91,617 4,334 (1) Included in Investing Cash Flows (2) Cash and cash equivalents per condensed consolidated balance sheets $ 3,924 $ 4,708 $ (784 ) Add: restricted cash 12,234 16,100 (3,866 ) Cash, cash equivalents, and restricted cash $ 16,158 $ 20,808 $ (4,650 ) As of or for the Thirteen Weeks Ended Change (amounts in thousands) April 30, May 1, 2022 2021 $ Operating Cash Flows $ (5,820 ) $ (2,513 ) $ (3,307 ) Investing Cash Flows (399 ) (444 ) 45 Financing Cash Flows 5,542 5,893 (351 ) (399 ) (444 ) 45 4,146 9,491 (5,345 ) Merchandise Inventory 32,254 22,567 9,687 $ 828 $ 5,030 Add: restricted cash 3,318 4,461 Cash, cash equivalents, and restricted cash $ 4,146 $ 9,491 $34.0$5.8 million for the thirty-nine weeks ended October 28, 2017 primarily due to a net loss of $10.1 million, adding back depreciation and amortization of $10.5$4.5 million, and non-cash compensation of $2.3a $3.0 million less seasonable increase in merchandise inventory of $18.7 million, the adjustment to the contingent consideration liability ofpartially offset by a $1.4 million the gain on insurance proceeds of $8.7 million, and reductionsincrease in accounts payable and deferred revenue of $6.9 million and $2.9 million respectively.providedused by investing activities was $6.0$0.4 million for the thirty-ninethirteen weeks ended October 28, 2017,April 30, 2022, which consisted entirely of Company owned life insurance and SERP benefits proceedscapital expenditures. Cash used by investing activities was $0.4 million for the thirteen weeks ended May 1, 2021, which consisted entirely of $14.4 million, less $6.4 million in capital expenditures, and a $2.6 million investment in a joint venture.comprised$5.5 million for the thirteen weeks ended April 30, 2022. The primary source of cash was $5.0 million proceedsraised from short-term borrowings. the issuance of subordinated debt.used inprovided by financing activities was comprised$5.9 million for the thirteen weeks ended May 1, 2021. The primary source of $5.0 million payment to the etailz shareholders in connection with the amendment to the share purchase agreement.In January 2017, the Company entered into a $50 million asset based credit facility (“Credit Facility”) which amended the previous credit facility. The availability under the Credit Facility is subject to limitations based on inventory levels. The principal amountcash was an underwritten offering of all outstanding loans under the Credit Facility, together with any accrued but unpaid interest, are due and payable in January 2022, unless otherwise paid earlier pursuant to the terms416,600 shares of the Credit Facility. Payments of amounts due under the Credit Facility are secured by the assets of the Company. The Credit Facility contains a provision to increase availability to $75 million during October to December of each year, as needed. During the third quarter of fiscal 2017, the Company exercised the right to increase its borrowing base to $60 million, subject to the same limitations noted above.Interest under the Credit Facility will accrue, at the electioncommon stock of the Company, at a Base Rate or LIBO Rate, plus, in each case, an Applicable Margin, which is determined by referenceprice to the levelpublic of availability, with$32.50 per share. The net proceeds of the Applicable Margin for LIBO Rate loans ranging from 2.25%offering were approximately $12.2 million. The Company used $6.3 million of the proceeds to 2.75% and the Applicable Margin for Prime Rate loans ranging from 0.75% to 1.25%. In addition, a commitment fee ranging from 0.375% to 0.50% is also payable on unused commitments.Thepay down its Credit Facility contains customary affirmative and negative covenants, including restrictions on dividends and share repurchases, incurrence of additional indebtedness and acquisitions, covenants around the net
Facility.27number of store closings, and restrictions related to the payment of cash dividends, including limiting the amount of dividends and share repurchases to $5.0 million annually and not allowing borrowings under the amended facility for the six months before or six months after the dividend payment.Refer to footnote 9 in the interim condensed consolidated financial statements for further information regarding the Company’s Credit Facility.and thirty-nine weeks ended October 28, 2017,April 30, 2022, the Company made capital expenditures of $2.2$0.2 million. The Company currently plans to spend approximately $1.0 million and $6.4 million, respectively. The Company’s planned annual fiscal 2017for capital expenditures is approximately $8.0 million.POLICIES AND ESTIMATES28, 201729, 2022 includes a summary of the critical accounting policies and methods used by the Company in the preparation of its interim condensed consolidated financial statements. There have been no material changes or modificationsThe Company’s significant accounting policies are the same as those described in Note 1 to the policies sinceCompany’s Consolidated Financial Statements on Form 10-K for the fiscal year ended January 28, 2017.32, Recently Adopted Accounting Pronouncements section contained in Item 1, “Notes to Interim Condensed Consolidated Financial Statements”, is incorporated herein by reference.Non-GAAP Measures:This Form 10-Q contains certain non-GAAP metrics, including: adjusted operating income for the etailz segment and SG&A excluding depreciation, amortization, and acquisition related transaction and compensation expenses for each reporting segment. A non-GAAP measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings from continuing operations or cash flows from operating activities, as determined in accordance with GAAP. Non-GAAP items are provided because management believes that, when reconciled from the GAAP items to which they relate, they provide additional useful information to investors regarding the Company’s operational performance.The Company calculates etailz adjusted income from operations to evaluate its own operating performance and as an integral part of its planning process. The Company presents etailz adjusted income from operations as a supplemental measure because it believes such a measure provides management and investors with a more complete understanding of its business operating results, including underlying trends, by excluding the effects of certain charges.The Company calculates SG&A, excluding depreciation, amortization, and acquisition related compensation expenses to evaluate its own operating performance and as an integral part of its planning process. The Company presents SG&A, excluding depreciation, amortization, and acquisition related compensation expenses as a supplemental measure because it believes such a measure provides management and investors with a more complete understanding of its business operating results, including underlying trends, by excluding the effects of certain charges.28TRANS WORLD ENTERTAINMENT CORPORATIONCredit Facility,revolving credit facility, the Company is subject to risk resulting from interest rate fluctuations since interest on the Company’s borrowings under its Credit Facilitycredit facility can be variable.Interest under the Credit Facility will accrue, at the election of the Company, at a Base Rate or LIBO Rate, plus, in each case, an Applicable Margin, which is determined by reference to the level of availability as defined in the Credit Agreement, with the Applicable Margin for LIBO Rate loans ranging from 2.25% to 2.75% and the Applicable Margin for Base Rate loans ranging from 0.75% to 1.25%.variable. If interest rates on the Company’s Credit Facilityrevolving credit facility were to increase by 25 basis points, and to the extent borrowings were outstanding, for every $1,000,000 outstanding on the facility, income before income taxesinterest expense would be reducedincreased by $2,500 per year. For a discussion of the Company’s accounting policies for financial instruments and further disclosures relating to financial instruments, see “Nature of Operations and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended January 28, 2017. The Company does not currently hold any derivative instruments.ChiefPrincipal Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of October 28, 2017,April 30, 2022, have concluded that as of such date the Company’s disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The acquisition of etailz was significant to There have been no changes in the Company and was consummated effective October 17, 2016. Upon consummation of the acquisition, etailz became a consolidated subsidiary of the Company. As of October 28, 2017 etailz operations are fully incorporated within the Company, includingCompany’s internal controls over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.29TRANS WORLD ENTERTAINMENT CORPORATIONStore Manager Class ActionsTwo former Store Managers filed actions alleging claims of entitlement to unpaid compensation As a result, the liability for overtime. In one action, the plaintiff seeks to represent a class of allegedly similarly situated employees who performed the same position (Store Manager and Senior Assistant Manager) while the other plaintiff seeks to represent a class of allegedly similarly situated employees who performed the same position (Store Manager).Specifically, Carol Spackcases listed below is remote.complaintlawsuit against Trans World Entertainment Corporation (Trans World)Kaspien Inc. in the United States District Court for the Eastern District of New Jersey,Washington (Case No. 2:21-cv-00192-SAB) concerning a Retailer Agreement that the parties entered into in September of 2020. Vijuve manufactures skin care products and face massagers. The parties agreed that Kaspien would sell Vijuve’s products on April 20, 2017 (Case No.: 3:17-cv-02687-BRM-LHG) allegingAmazon. The complaint alleged that sheKaspien breached the Retailer Agreement when it declined to acquiesce to Vijuve’s demand that Kaspien purchase over $700,000 of products. In total, Vijuve is entitledseeking $774,000 in damages. Kaspien denies that it breached the agreement. Moreover, on July 19, 2021, Kaspien filed counterclaims and alleged that Vijuve breached the contract, including by refusing to unpaid compensationbuy back inventory from Kaspien upon termination of the Retailer Agreement. Kaspien is seeking at least $229,000 from Vijuve for overtime underbreach of contract and/or specific performance. A trial on all of the federal Fair Labor Standards Act (FLSA). She brings a nationwide collective action underparties’ claims is scheduled for February 21, 2023. There is no determination of outcome, thus no contingencies are recognized as of the FLSA on behalf of all Store Managers and Senior Assistant Managers. She also brings class action claims under New Jersey and Pennsylvania law on behalf of all persons who worked as Store Managers in New Jersey or Senior Assistant Managers in Pennsylvania.On May 19, 2017, Natasha Roper filed a complaint against Trans World in the U.S. District Court for the Northern District of New York (Case No.: 1:17-cv-0553-TJM-CFH) in which she also alleges that she is entitled to unpaid compensation for overtime under the FLSA. Ms. Roper brings a nationwide collective action under the FLSA on behalf of all similarly situated Store Managers.28, 2017.
None.Description Description31.1 31TRANS WORLD ENTERTAINMENT CORPORATIONDecember 7, 2017By: /s/ Michael FeurerBrock Kowalchuk Michael Feurer Chief December 7, 2017By: /s/ John AndersonEdwin Sapienza John Anderson Chief Financial Officer 32