Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 03, 2021 | Nov. 09, 2021 | |
Entity Central Index Key | 0001172706 | |
Current Fiscal Year End Date | --01-02 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Oct. 3, 2021 | |
Entity File Number | 000-50081 | |
Entity Registrant Name | UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC. | |
Entity Incorporation State or Country Code | NV | |
Entity Tax Identification Number | 65-1005398 | |
Entity Address, Address Line One | 1800 2nd Street | |
Entity Address, Address Line Two | Suite 970 | |
Entity Address, City or Town | Sarasota | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 34236 | |
City Area Code | 941 | |
Local Phone Number | 906-8580 | |
Title of 12(b) Security | None | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Ordinary Common Stock [Member] | ||
Entity Common Stock, Shares Outstanding | 3,412,186 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 323,820 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 633,833 | $ 1,656,882 |
Accounts receivable, net | 10,102,981 | 10,114,819 |
Inventories, net | 20,257,905 | 17,952,850 |
Other current assets | 2,359,596 | 1,841,153 |
Related party receivable | 41,263 | 907 |
Total Current Assets | 33,395,578 | 31,566,611 |
PROPERTY AND EQUIPMENT, NET | 17,191,409 | 18,491,122 |
OPERATING LEASE RIGHT-OF-USE ASSETS, NET | 5,781,541 | 6,242,736 |
OTHER ASSETS | ||
Intangible assets | 3,352,407 | 3,388,357 |
Goodwill | 1,079,175 | 1,079,175 |
Other long-term assets | 5,394,829 | 4,679,990 |
Total Other Assets | 9,826,411 | 9,147,522 |
TOTAL ASSETS | 66,194,939 | 65,447,991 |
CURRENT LIABILITIES | ||
Checks issued in excess of bank balance | 96,921 | 275,297 |
Lines of credit | 17,807,174 | 17,760,583 |
Current maturities of long-term debt | 2,915,352 | 1,432,301 |
Current maturities of finance lease liabilities | 240,257 | 257,298 |
Accounts payable | 7,621,352 | 7,344,785 |
Accrued expenses and other liabilities | 4,753,242 | 7,987,333 |
Current maturities of related party finance lease liabilities | 162,662 | 149,366 |
Current portion of postretirement benefit liability - health and life | 162,977 | 162,977 |
Total Current Liabilities | 33,759,937 | 35,369,940 |
LONG-TERM LIABILITIES | ||
Long-term debt, less current portion | 6,188,313 | 7,338,762 |
Finance lease liabilities, less current portion | 66,649 | 235,116 |
Operating lease liabilities, less current portion | 5,518,920 | 5,893,268 |
Related party finance lease liabilities, less current portion | 2,385,925 | 2,504,404 |
Long-term debt to related parties | 4,216,566 | 4,216,566 |
Postretirement benefit liability - health and life, less current portion | 2,672,936 | 2,713,585 |
Other long-term liabilities | 681,391 | 807,190 |
Total Long-Term Liabilities | 21,730,700 | 23,708,891 |
Total Liabilities | 55,490,637 | 59,078,831 |
STOCKHOLDERS' EQUITY | ||
Preferred units, Series A UEP Holdings, LLC, 20,000,000 units authorized; 200,000 units issued and outstanding ($100 issue price) | 617,571 | 617,571 |
Preferred units, Series B UEP Holdings, LLC, 15,000,000 units authorized; 150,000 units issued and outstanding ($100 issue price) | 463,179 | 463,179 |
Preferred stock, Uniroyal Global (Europe) Limited, 50 shares issued and outstanding ($1.51 stated value) | 75 | 75 |
Common stock, 95,000,000 shares authorized ($.001 par value) 3,736,006 shares issued and outstanding as of October 3, 2021 and January 3, 2021 | 3,736 | 3,736 |
Additional paid-in capital | 35,290,590 | 35,290,590 |
Accumulated deficit | (24,340,546) | (28,734,670) |
Accumulated other comprehensive loss | (1,330,303) | (1,271,321) |
Total Stockholders' Equity | 10,704,302 | 6,369,160 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 66,194,939 | $ 65,447,991 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 03, 2021 | Jan. 03, 2021 |
ASSETS | ||
Series A UEP Holdings LLC par value | $ 100 | $ 100 |
Series A UEP Holdings LLC shares issued | 200,000 | 200,000 |
Series A UEP Holdings LLC shares outstanding | 200,000 | 200,000 |
Series A UEP Holdings LLC shares authorized | 20,000,000 | 20,000,000 |
Series B UEP Holdings LLC par value | $ 100 | $ 100 |
Series B UEP Holdings LLC shares issued | 150,000 | 150,000 |
Series B UEP Holdings LLC shares outstanding | 150,000 | 150,000 |
Series B UEP Holdings LLC shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, Uniroyal Global (Europe) Limited shares Par value | $ 1.51 | $ 1.51 |
Preferred stock, Uniroyal Global (Europe) Limited shares issued | 50 | 50 |
Preferred stock, Uniroyal Global (Europe) Limited shares outstanding | 50 | 50 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 95,000,000 | 95,000,000 |
Common Stock, shares issued | 3,736,006 | 3,736,006 |
Common Stock, shares outstanding | 3,736,006 | 3,736,006 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Income Statement [Abstract] | ||||
NET SALES | $ 16,385,914 | $ 15,171,898 | $ 56,031,150 | $ 43,528,393 |
COST OF GOODS SOLD | 14,430,915 | 13,114,967 | 49,017,021 | 37,931,227 |
Gross Profit | 1,954,999 | 2,056,931 | 7,014,129 | 5,597,166 |
OPERATING EXPENSES: | ||||
Selling | 681,397 | 778,699 | 2,414,847 | 2,278,279 |
General and administrative | 1,555,660 | 1,957,486 | 4,574,175 | 4,834,011 |
Research and development | 307,283 | 198,182 | 966,706 | 704,239 |
OPERATING EXPENSES | 2,544,340 | 2,934,367 | 7,955,728 | 7,816,529 |
Operating Loss | (589,341) | (877,436) | (941,599) | (2,219,363) |
OTHER INCOME (EXPENSE): | ||||
Interest expense | (430,177) | (367,454) | (1,217,861) | (1,215,771) |
Funding from Paycheck Protection Program | 33,824 | 2,000,000 | 2,217,500 | |
Other (expense) income | (7,381) | 85,753 | 157,978 | (185,417) |
Net Other (Expense) Income | (437,558) | (247,877) | 940,117 | 816,312 |
LOSS BEFORE TAX BENEFIT | (1,026,899) | (1,125,313) | (1,482) | (1,403,051) |
TAX BENEFIT | (202,925) | (111,318) | (409,548) | (404,141) |
NET (LOSS) INCOME | (823,974) | (1,013,995) | 408,066 | (998,910) |
Extinguishment of preferred stock dividend payable | 6,158,311 | 6,158,311 | ||
Preferred stock dividend | (539,866) | (808,638) | (2,172,253) | (2,396,479) |
NET INCOME (LOSS) ALLOCABLE TO COMMON SHAREHOLDERS | $ 4,794,471 | $ (1,822,633) | $ 4,394,124 | $ (3,395,389) |
EARNINGS (LOSS) PER COMMON SHARE: | ||||
Basic and Diluted | $ 1.28 | $ (0.49) | $ 1.18 | $ (0.91) |
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||
Basic and Diluted | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,006 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
NET (LOSS) INCOME | $ (823,974) | $ (1,013,995) | $ 408,066 | $ (998,910) |
OTHER COMPREHENSIVE (LOSS) INCOME: | ||||
Foreign currency translation adjustment | (103,348) | 235,736 | (58,982) | (112,180) |
OTHER COMPREHENSIVE (LOSS) INCOME | (103,348) | 235,736 | (58,982) | (112,180) |
COMPREHENSIVE (LOSS) INCOME | (927,322) | (778,259) | 349,084 | (1,111,090) |
Extinguishment of preferred stock dividend payable | 6,158,311 | 6,158,311 | ||
Preferred stock dividend | (539,866) | (808,638) | (2,172,253) | (2,396,479) |
COMPREHENSIVE INCOME (LOSS) TO COMMON SHAREHOLDERS | $ 4,691,123 | $ (1,586,897) | $ 4,335,142 | $ (3,507,569) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | UEPH Series A Units [Member] | UEPH Series B Units [Member] | UGEL Preferred Shares [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accmulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at Dec. 29, 2019 | $ 617,571 | $ 463,179 | $ 75 | $ 18,680 | $ 35,275,646 | $ (24,301,203) | $ (1,297,439) | $ 10,776,509 |
Balance, shares at Dec. 29, 2019 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Net income (loss) | (998,910) | (998,910) | ||||||
Other comprehensive income (loss) | (112,180) | (112,180) | ||||||
Extinguishment of preferred stock dividend payable | ||||||||
Adjustment for a 1-for-5 reverse stock split | $ (14,944) | 14,944 | ||||||
Preferred stock dividend | (2,396,479) | (2,396,479) | ||||||
Balance at Oct. 04, 2020 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (27,696,592) | (1,409,619) | 7,268,940 |
Balance, shares at Oct. 04, 2020 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Balance at Jul. 05, 2020 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (25,873,959) | (1,645,355) | 8,855,837 |
Balance, shares at Jul. 05, 2020 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Net income (loss) | (1,013,995) | (1,013,995) | ||||||
Other comprehensive income (loss) | 235,736 | 235,736 | ||||||
Extinguishment of preferred stock dividend payable | ||||||||
Preferred stock dividend | (808,638) | (808,638) | ||||||
Balance at Oct. 04, 2020 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (27,696,592) | (1,409,619) | 7,268,940 |
Balance, shares at Oct. 04, 2020 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Balance at Jan. 03, 2021 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (28,734,670) | (1,271,321) | 6,369,160 |
Balance, shares at Jan. 03, 2021 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Net income (loss) | 408,066 | 408,066 | ||||||
Other comprehensive income (loss) | (58,982) | (58,982) | ||||||
Extinguishment of preferred stock dividend payable | 6,158,311 | 6,158,311 | ||||||
Preferred stock dividend | (2,172,253) | (2,172,253) | ||||||
Balance at Oct. 03, 2021 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (24,340,546) | (1,330,303) | 10,704,302 |
Balance, shares at Oct. 03, 2021 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Balance at Jul. 04, 2021 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (29,135,017) | (1,226,955) | 6,013,179 |
Balance, shares at Jul. 04, 2021 | 200,000 | 150,000 | 50 | 3,736,006 | ||||
Net income (loss) | (823,974) | (823,974) | ||||||
Other comprehensive income (loss) | (103,348) | (103,348) | ||||||
Extinguishment of preferred stock dividend payable | 6,158,311 | 6,158,311 | ||||||
Preferred stock dividend | (539,866) | (539,866) | ||||||
Balance at Oct. 03, 2021 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | $ 35,290,590 | $ (24,340,546) | $ (1,330,303) | $ 10,704,302 |
Balance, shares at Oct. 03, 2021 | 200,000 | 150,000 | 50 | 3,736,006 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Oct. 03, 2021 | Oct. 04, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ 408,066 | $ (998,910) |
Adjustments to reconcile net income to net cash flows from operating activities: | ||
Depreciation and amortization | 1,814,134 | 1,757,012 |
Deferred tax benefit | (409,548) | (406,113) |
Amortization of debt issuance costs | 29,125 | |
Amortization of intangible assets | 19,899 | 11,250 |
Loss on disposal of property and equipment | 33,404 | 3,871 |
Funding from Paycheck Protection Program recognized as income | (2,000,000) | (2,217,500) |
Deferred interest on loan from Main Street Lending Program | 63,589 | |
Loss on debt extinguishment | 64,768 | |
Noncash lease adjustment | 72,420 | 66,591 |
Changes in assets and liabilities: | ||
Accounts receivable | 6,873 | 1,862,403 |
Inventories | (2,388,568) | 1,029,195 |
Other current assets | (542,098) | (99,857) |
Related party receivable | (40,356) | (37,556) |
Other long-term assets | 18,256 | (5,492) |
Accounts payable | 289,208 | (784,890) |
Accrued expenses and other liabilities | 782,789 | 803,544 |
Postretirement benefit liability - health and life | (40,649) | (16,899) |
Other long-term liabilities | (5,139) | |
Cash (used in) provided by operating activities | (1,823,827) | 966,649 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (609,047) | (1,200,045) |
Payments on life insurance policies, net of proceeds from policy loans | (134,678) | 28,787 |
Cash used in Investing Activities | (743,725) | (1,171,258) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net change in checks issued in excess of bank balance | (178,376) | (184,181) |
Payments on line of credit relating to debt extinguishment | (7,379,356) | |
Advances on line of credit relating to debt extinguishment | 6,565,288 | |
Net advances (payments) on lines of credit - other | 892,278 | (1,913,809) |
Payments on long-term debt relating to debt extinguishment | (1,486,504) | |
Payments on long-term debt - other | (719,957) | (899,690) |
Proceeds from issuance of long-term debt - Paycheck Protection Program | 2,000,000 | 2,217,500 |
Proceeds from issuance of long-term debt - automotive lenders | 137,815 | 1,519,861 |
Proceeds from issuance of long-term debt relating to debt extinguishment | 2,328,520 | |
Payments for capitalized debt issuance costs | (341,895) | |
Payments on finance lease liabilities | (197,579) | (289,948) |
Proceeds from finance lease liabilities | 11,986 | |
Proceeds from related party obligations | 983,958 | |
Payments on related party obligations | (105,183) | (968,801) |
Cash provided by financing activities | 1,527,037 | 464,890 |
Net Change in Cash and Cash equivalents | (1,040,515) | 260,281 |
Cash and Cash equivalents - beginning of Period | 1,656,882 | 513,588 |
Effects of currency translation on cash and cash equivalents | 17,466 | (5,995) |
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 633,833 | $ 767,874 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 03, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies Uniroyal Global Engineered Products, Inc. (the “Company,” “Uniroyal Global,” “we,” or “us”) owns all of the ownership interests in Uniroyal Engineered Products, LLC (“Uniroyal”), a U.S. manufacturer of textured coatings, and its holding company, UEP Holdings, LLC (“UEPH”), and all of the ordinary common stock of Uniroyal Global (Europe) Limited (“UGEL”) formerly known as Engineered Products Acquisition Limited (“EPAL”), the holding company for Uniroyal Global Limited (“UGL”) formerly Wardle Storeys (Earby) Limited (“Wardle Storeys”), a European manufacturer of textured coatings. Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. Uniroyal Global filed audited consolidated financial statements as of and for the fiscal years ended January 3, 2021 and December 29, 2019 which included all information and notes necessary for such complete presentation in conjunction with its 2020 Annual Report on Form 10-K. The results of operations for the interim period ended October 3, 2021 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended January 3, 2021, which are contained in the Company’s 2020 Annual Report on Form 10-K. The Company and its subsidiaries use a 52/53-week fiscal year ending on the Sunday nearest to December 31. The current year ending January 2, 2022 is a 52-week year whereas the prior year ended January 3, 2021 was a 53-week year. The Company’s U.K. subsidiaries use the calendar year end of December 31. The activity of the U.K. subsidiaries that occurs on the days that do not coincide with the Company’s year-end is not material. Both the three months ended October 3, 2021 and October 4, 2020 were 13-week periods while the nine months ended October 3, 2021 was a 39-week period and the nine months ended October 4, 2020 was a 40-week period. The accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of October 3, 2021 and the results of operations, comprehensive income (loss) and cash flows for the interim periods ended October 3, 2021 and October 4, 2020. The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British Pound Sterling as the functional currency. See Note 4 – “Foreign Currency Translation” for additional discussion. For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation. Significant Accounting Policies For a discussion of Uniroyal Global’s significant accounting policies, refer to Note 1 – “Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021. 9 Table of Contents Coronavirus The current coronavirus pandemic (“COVID-19”) has had an impact on markets the Company serves and its operations. Since COVID-19 is a continually evolving situation, the Company cannot predict the long-term impact it will have on the economy or the Company’s business. The impact could have a material adverse effect on the Company’s financial position, results of operations and cash flows, which may require the Company to obtain additional financing. The Company continues to pursue supplementary cash flow opportunities, as discussed briefly below and in more detail in Notes 8 – 10. Through the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”), the Company’s U.S. operations received $2,000,000 (“Second Draw PPP Loan”) and $2,217,500 (“First Draw PPP Loan”) in March 2021 April 2020 For the U.K. operations, during the third quarter of 2021 and 2020, the Company recorded reimbursed costs of approximately $49,000 and $474,000, respectively, and during the first nine months of 2021 and 2020 the Company recorded reimbursed costs of approximately $150,000 and $1,560,000, respectively, under the Coronavirus Job Retention Scheme (“CJRS”) set up by the U.K. government to help employers pay the salaries of those employees who would otherwise have been laid off during the coronavirus outbreak but under the CJRS were furloughed instead. The much lower reimbursed costs for the third quarter and first nine months of 2021 reflected that employees were furloughed significantly less than in the same periods of 2020. This program reimbursed the Company for up to 80% of the compensation expense plus national insurance and certain benefits paid to the furloughed employees, resulting in lower salary expense for the Company. While the employees were on furlough, the compensation paid to them was limited to the amount reimbursed by the CJRS. The Company recorded the reimbursed amounts as reductions to the associated expenses. Also for the U.K. operations, in June 2021 its bank lending facilities with Lloyds Bank Commercial Finance Limited (“Lloyds”) were refinanced with PNC Business Credit (“PNC”). PNC provided the Company additional availability by expanding its borrowing base to include eligible equipment. See Notes 8 and 9 for further discussion. Additionally, quarterly preferred dividend payments on UEPH Series A and Series B preferred units and UGEL preferred stock (collectively “preferred shares”) were deferred beginning with the three months ended December 29, 2019 through the three months ended October 3, 2021. During the third quarter of 2021, the owners of these preferred shares (“preferred shareholders”) agreed to an amendment to the documents that govern the dividends (“amended documents”) whereby the accrued dividends were forgiven. In addition, under the amended documents the preferred shareholders are no longer entitled to a quarterly dividend until such time as the Company declares a dividend payable. The Company accounted for the dividend forgiveness as an extinguishment of debt between related parties per Accounting Standards Codification (“ASC”) 470, “Debt”. As a result, the total balance of accrued dividends of approximately $6,100,000 was derecognized as of October 3, 2021. The amendments to remove the entitlement of a quarterly 5%, 8% and €221,241 (approximately $265,000) dividend (“entitlement amendments”) relating to the preferred shares were considered not significant and, therefore, were considered a modification rather than an extinguishment per ASC 470. The entitlement amendments were considered not significant since the change in the fair values of the preferred shares after the amendments compared to the fair values of the preferred shares immediately before the amendments was less than 10% as management determined that the entitlement amendments resulted in a reduction of fair value of the preferred shares. Per ASC 718, “Compensation – Stock Compensation”, the reduction of fair value of the preferred shares in this modification had no accounting impact (i.e., recognition of a gain). 10 Table of Contents Legal Proceedings On October 1, 2020, the Health and Safety Executive (“HSE”), the government agency responsible for the enforcement of health and safety law in the U.K., charged our U.K. subsidiary, Uniroyal Global Limited, with an offense under the Health and Safety at Work etc. Act 1974 arising from an August 2019 incident in which an employee was injured in the course of his employment. The Company fully cooperated with the HSE investigation and negotiated a plea based on legal advice provided to it. Per this legal advice, the Company believed that £150,000 ($193,000) was a reasonable estimate of the fine to be imposed and, accordingly, recorded an accrual for this charge in 2020. In April 2021, a fine of £120,000 ($166,026) was imposed on the Company related to this matter. At the end of the second quarter of 2021, the Company began making monthly payments for this fine in order to have it paid in full by the October 2022 due date. The accrual related to the fine was £91,856 ($124,401) and £150,000 ($204,737) as of October 3, 2021 and January 3, 2021, respectively, and was included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. In addition, a fee of £5,463 ($7,558) to reimburse the HSE for legal expenses was paid in May 2021. |
Noncash Transactions and Supple
Noncash Transactions and Supplemental Disclosure of Cash Flow Information | 9 Months Ended |
Oct. 03, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Noncash Transactions and Supplemental Disclosure of Cash Flow Information | 2. Noncash Transactions and Supplemental Disclosure of Cash Flow Information Quarterly preferred dividend payments on UEPH Series A and Series B preferred units and UGEL preferred stock (collectively “preferred shares”) were deferred beginning with the three months ended December 29, 2019 through the three months ended October 3, 2021. During the third quarter of 2021, the owners of these preferred shares agreed to an amendment to the documents that govern the dividends whereby the accrued dividends were forgiven. As a result, the total balance of accrued dividends of approximately $6,100,000 was derecognized as of October 3, 2021. For the nine months 2021, the Company made payments of $134,678 on its company owned life insurance policies. During the third quarter of 2020, the Company obtained $ 130,000 The following is supplemental disclosure of cash paid for the nine months ended: October 3, 2021 October 4, 2020 Interest $ 1,138,425 $ 1,272,124 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Oct. 03, 2021 | |
Fair Value Of Financial Instruments | |
Fair Value of Financial Instruments | 3. Fair Value of Financial Instruments The Company’s short-term financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and lines of credit. The Company adjusts the carrying value of financial instruments denominated in other currencies such as cash, accounts receivable, accounts payable and lines of credit using the appropriate exchange rates at the balance sheet date. The Company believes that the carrying values of these short-term financial instruments approximate their estimated fair values. The fair value of the Company’s long-term debt is estimated based on current rates for similar instruments with the same remaining maturities. In determining the current interest rates for similar instruments, the Company takes into account its risk of nonperformance. The Company believes that the carrying value of its long-term debt approximates its estimated fair value. The Company uses foreign currency exchange contracts which are recorded at their estimated fair values in the accompanying consolidated balance sheets. The fair values of the currency exchange contracts are based upon observable market transactions of spot and forward rates. For the nine months ended October 3, 2021, there have been no changes in the application of valuation methods applied to similar assets and liabilities. |
Foreign Currency Translation
Foreign Currency Translation | 9 Months Ended |
Oct. 03, 2021 | |
Foreign Currency Translation [Abstract] | |
Foreign Currency Translation | 4. Foreign Currency Translation The financial position and results of operations of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of operations denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while the capital accounts are translated at the historical rate for the date they were recognized. Revenues and expenses are translated at the weighted average exchange rates during the reporting period. The resulting translation gains and losses on assets and liabilities are recorded in accumulated other comprehensive loss and are excluded from net income until realized through a sale or liquidation of the investment. Transaction gains and losses generated from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of the Company’s foreign operations are included in other income (expense) in the accompanying consolidated statements of operations. |
Inventories
Inventories | 9 Months Ended |
Oct. 03, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories consist of the following: October 3, 2021 January 3, 2021 Raw materials $ 7,436,695 $ 5,193,919 Work-in-process 5,017,046 4,281,035 Finished goods 10,113,997 10,594,088 22,567,738 20,069,042 Less: Allowance for inventory obsolescence (2,309,833 ) (2,116,192 ) Total Inventories, net $ 20,257,905 $ 17,952,850 |
Other Long-term Assets
Other Long-term Assets | 9 Months Ended |
Oct. 03, 2021 | |
Other Assets, Noncurrent [Abstract] | |
Other Long-term Assets | 6. Other Long-term Assets Other long-term assets consist of the following: October 3, 2021 January 3, 2021 Deferred tax asset, net $ 4,364,830 $ 4,072,184 Life insurance policies, net of policy loans 320,160 185,482 Debt issuance costs 306,157 - Other 403,682 422,324 Total Other Long-term Assets $ 5,394,829 $ 4,679,990 |
Other Long-term Liabilities
Other Long-term Liabilities | 9 Months Ended |
Oct. 03, 2021 | |
Other Liabilities, Noncurrent [Abstract] | |
Other Long-term Liabilities | 7. Other Long-term Liabilities Other long-term liabilities consist of the following: October 3, 2021 January 3, 2021 Deferred tax liability $ 680,476 $ 801,136 Other 915 6,054 Total Other Long-term Liabilities $ 681,391 $ 807,190 |
Lines of Credit
Lines of Credit | 9 Months Ended |
Oct. 03, 2021 | |
Line of Credit Facility [Abstract] | |
Lines of Credit | 8. Lines of Credit The Company's Uniroyal subsidiary has available a $15,000,000 revolving line of credit financing agreement with Wells Fargo Capital Finance, LLC (“Uniroyal Line of Credit”), which matures on June 15, 2023. Interest is payable monthly at the Eurodollar rate plus 2.25% or Wells Fargo Capital Finance, LLC's prime rate (“WF Prime”) at the Company's election on outstanding balances up to $6,000,000 and WF Prime on amounts in excess of $6,000,000. The effective interest rate including unused facility fees was 3.25% as of October 3, 2021. Borrowings on the line of credit are subject to the underlying borrowing base specified in the agreement. The underlying borrowing base is currently determined based upon eligible accounts receivable, inventories and equipment. The line of credit is secured by substantially all of Uniroyal's assets and includes certain financial and restrictive covenants. The Company was in compliance with these covenants as of October 3, 2021. The outstanding balance on the Uniroyal Line of Credit was $10,934,201 and $9,204,572 as of October 3, 2021 and January 3, 2021, respectively. The Company has classified the outstanding balance on this line of credit within current liabilities in the accompanying consolidated balance sheets. Based upon eligible accounts receivable, inventories and equipment at October 3, 2021, the Uniroyal Line of Credit provided additional availability of approximately $536,000 and, combined with its total cash balance of $411,928, Uniroyal had liquidity of approximately $948,000 as of October 3, 2021. In June 2021, UGL’s bank lending facilities with Lloyds Bank Commercial Finance Limited (“Lloyds”), including its revolving line of credit (“Old UGL Line of Credit”), were refinanced with PNC Business Credit (“PNC”). PNC provided the Company additional availability by expanding its borrowing base to include eligible equipment. This transaction was accounted for as a debt extinguishment per ASC 470, “Debt”, under which the existing Lloyds debt was derecognized and the new PNC debt was recorded at fair value. A loss of £46,813 ($64,768) was recognized on this transaction and is recorded in general and administrative expenses in the consolidated statement of operations for the nine months ended October 3, 2021. Debt issuance costs of £247,114 ($341,895) related to this transaction were capitalized. These capitalized costs are being amortized over 36 months. The balance of these debt issuance costs was £226,063 ($306,157) as of October 3, 2021. The Company has classified these debt issuance costs within other long-term assets in the accompanying consolidated balance sheet. UGL has available £11,000,000 (approximately $14.9 million) under the revolving line of credit financing agreement with PNC Business Credit (‘‘New UGL Line of Credit”), which is subject to a three-month notice by either party after a minimum term of three years. Interest is payable monthly at the Bank of England Base Rate (“BoE Base”) plus 2.25%-3.00%. The effective interest rate was 2.54% as of October 3, 2021. Borrowings on the New UGL Line of Credit are subject to the underlying borrowing base specified in the agreement. The underlying borrowing base is currently determined based upon eligible accounts receivable, inventories and equipment. The line of credit is secured by substantially all of UGL's assets and includes certain financial and restrictive covenants. The Company was in compliance with these covenants as of October 3, 2021. The outstanding balance on the New UGL Line of Credit was £5,074,919 ($6,872,973) as of October 3, 2021 and on the Old UGL Line of Credit was £6,268,526 ($8,556,011) as of January 3, 2021. The Company has classified the outstanding balance on its line of credit within current liabilities in the accompanying consolidated balance sheets. Based upon eligible accounts receivable, inventories and equipment at October 3, 2021, the New UGL Line of Credit provided additional availability of approximately $227,000 and, combined with its total cash balance of $216,524, UGL had liquidity of approximately $444,000 as of October 3, 2021. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Oct. 03, 2021 | |
Long-term Debt, by Current and Noncurrent [Abstract] | |
Long-term Debt | 9. Long-term Debt Long-term debt consists of the following: Interest Rate October 3, 2021 January 3, 2021 Notes Payable Wells Fargo Capital Finance, LLC WF Prime $ 523,667 $ 785,501 Lloyds Bank Commercial Finance Limited (1) 4.43% - 51,905 Lloyds Bank Commercial Finance Limited (1) 4.87% - 156,422 Automotive lenders (2) 0.0% 3,378,148 3,268,664 Wells Fargo Capital Finance, LLC LIBOR+3.00% 2,495,942 2,432,353 6,397,757 6,694,845 Equipment Financing Obligations Kennet Equipment Leasing Limited 10.90% - 23,960 Regents Capital Corporation 6.20%-7.24% 426,618 678,329 Lloyds Bank Commercial Finance Limited (1) 3.95% - 1,373,929 PNC Business Credit (1) BoE Base + 3.00% 2,279,290 - 2,705,908 2,076,218 Total 9,103,665 8,771,063 Less: Current portion (2,915,352 ) (1,432,301 ) Long-term Portion $ 6,188,313 $ 7,338,762 (1) In June 2021, UGL’s long-term debt with Lloyds Bank Commercial Finance Limited was refinanced with PNC Business Credit. The loan is payable in monthly principal installments of £33,000 ($45,657) beginning January 2022 with the remaining principal due May 2024 (2) In September 2021, the Company received $137,815 related to the second installment of loans from the automotive lenders per the original loan agreement. The remainder of the second installment of loans of approximately $260,000 was received in October 2021. These amounts are due to be repaid in the first quarter of 2023. In addition, the amounts due to be repaid at the end of the third and fourth quarters of 2021 (each approximately $162,500) from the first installment of loans from the automotive lenders were deferred until the third and fourth quarters of 2022, respectively. Paycheck Protection Program Loans In March 2021 and in April 2020, the Company’s U.S. operations received $2,000,000 and $2,217,500, respectively, in funds from One Community Bank through the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”). The $2,000,000 loan (“Second Draw PPP Loan”) matures in March 2026 and the $2,217,500 loan (“First Draw PPP Loan”) matures in April 2022, and each bears an interest rate of 1.0%. The loans may be prepaid at any time prior to maturity with no prepayment penalties. All or a portion of the loans may be forgiven by the SBA for costs the Company incurred for payroll, rent, utilities and all other allowable expenses during the 24-week period that began March 1, 2021 for the Second Draw PPP Loan and April 13, 2020 for the First Draw PPP Loan. The Company used all proceeds from the loans to maintain payroll and make payments for lease, utility and other allowable expenses. In accordance with International Accounting Standards (“IAS”) 20, “Accounting for Government Grants and Disclosure of Government Assistance,” the Company recognized the funding from the PPP as grant income of $2,000,000 for the nine months ended October 3, 2021 and $33,824 and $2,217,500 for the three and nine months ended October 4, 2020, respectively. These amounts are included as a component of net other income (expense) in the consolidated statements of operations. In June 2021 and August 2021, the Company was notified that all of its First and Second Draw PPP Loans, respectively, were forgiven. |
Related Party Obligations
Related Party Obligations | 9 Months Ended |
Oct. 03, 2021 | |
Related Party Obligations | |
Related Party Obligations | 10. Related Party Obligations Long-term debt to related parties consists of the following: Interest Rate October 3, 2021 January 3, 2021 Senior subordinated promissory note 9.25% $ 2,000,000 $ 2,000,000 Senior secured promissory note 10.00% 765,655 765,655 Subordinated secured promissory note 8.00% 225,000 225,000 Subordinated secured promissory note 0.00% 1,225,911 1,225,911 Long-term debt to related parties $ 4,216,566 $ 4,216,566 The above notes were issued to the Company’s majority shareholder. The first three notes above were amended on March 26, 2021 to change the maturity date to January 15, 2023. No other terms of the notes were changed. Interest expense on these notes was $254,894 and $239,982 for the nine months ended October 3, 2021 and October 4, 2020, respectively. Accrued interest related to these notes of $23,786 and $47,573 was included in accrued expenses and other liabilities in the accompanying consolidated balance sheets as of October 3, 2021 and January 3, 2021, respectively. For the nine months 2020, proceeds of $783,958 were received from and payments of $675,000 were made on subordinated secured promissory notes to our majority shareholder. Proceeds of $200,000 were received from a short-term advance from our majority shareholder during the first nine months of 2020 which was repaid in the same period. The Company has finance leases under which it leases its main U.S. manufacturing facility and certain other property from a related party lessor entity that is owned by the Company’s majority shareholder. These related party finance leases expire at various dates from October 2023 through October 2033. The Company has security deposits aggregating $267,500 held by the lessor entity. There were no new right-of-use assets obtained in exchange for related party finance lease obligations for the three and nine months ended October 3, 2021 and October 4, 2020. The components of lease expense for the related party finance leases for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Finance lease expense: Amortization of right-of-use assets $ 41,794 $ 41,794 $ 125,382 $ 125,382 Interest on lease liabilities 100,281 104,685 306,126 315,993 Total finance lease expense $ 142,075 $ 146,479 $ 431,508 $ 441,375 15 Table of Contents Cash paid for amounts included in the measurement of related party finance lease liabilities for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating cash flows from finance leases $ 100,281 $ 104,685 $ 306,126 $ 315,993 Financing cash flows from finance leases $ 35,827 $ 31,914 $ 105,183 $ 93,801 Supplemental balance sheet and other information regarding related party finance leases are as follows: October 3, 2021 January 3, 2021 Finance leases: Property and equipment, net $ 1,915,299 $ 2,040,681 Current maturities of finance lease liabilities $ 162,662 $ 149,366 Finance lease liabilities, less current portion 2,385,925 2,504,404 Total finance lease liabilities $ 2,548,587 $ 2,653,770 Weighted average remaining lease term 10.7 years 11.2 years Weighted average discount rate 16.90% 16.77% Maturities of related party finance lease liabilities as of October 3, 2021 are as follows: Totals Due in one year or less $ 561,911 Due after one year through two years 557,862 Due after two years through three years 478,381 Due after three years through four years 471,228 Due after four years through five years 475,437 Thereafter 3,234,403 Total lease payments 5,779,222 Less: Interest (3,230,635 ) Total related party finance lease liabilities $ 2,548,587 Quarterly preferred dividend payments on preferred units and preferred stock (collectively “preferred shares”) were deferred beginning with the three months ended December 29, 2019 through the three months ended October 3, 2021. During the third quarter of 2021, the owners of the preferred shares (“preferred shareholders”) agreed to an amendment to the documents that govern the dividends (“amended documents”) whereby the accrued dividends were forgiven. As a result, the total balance of accrued dividends of approximately $6,100,000 was derecognized as of October 3, 2021. In addition, under the amended documents the preferred shareholders are no longer entitled to a quarterly dividend until such time as the Company declares a dividend payable. The preferred shares are primarily owned by the Company’s majority shareholder. See Note 1 for further discussion. |
Leases
Leases | 9 Months Ended |
Oct. 03, 2021 | |
Capital Leases | |
Leases | 11. Leases The Company has operating leases for equipment and office facilities and finance leases for equipment. These leases expire at various dates from October 2021 through March 2039. Operating leases are included in operating lease right-of-use assets, accrued expenses and other liabilities, and operating lease liabilities in the accompanying consolidated balance sheets. Finance leases are included in property and equipment, current maturities of finance lease liabilities, and finance lease liabilities, less current portion in the accompanying consolidated balance sheets. For the three and nine months ended October 3, 2021, there were $11,986 of new right-of-use assets obtained in exchange for finance lease obligations and $0 obtained in exchange for operating lease obligations. There were no new right-of-use assets obtained in exchange for lease obligations for the three and nine months ended October 4, 2020. The components of lease expense for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating lease expense $ 256,638 $ 249,069 $ 763,344 $ 746,045 Finance lease expense: Amortization of right-of-use assets $ 18,037 $ 49,803 $ 62,662 $ 158,658 Interest on lease liabilities 3,650 7,090 13,302 24,441 Total finance lease expense $ 21,687 $ 56,893 $ 75,964 $ 183,099 Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating cash flows from operating leases $ 336,853 $ 249,920 $ 815,983 $ 670,267 Operating cash flows from finance leases $ 3,650 $ 7,090 $ 13,302 $ 24,441 Financing cash flows from finance leases $ 60,062 $ 71,720 $ 197,579 $ 289,948 Supplemental balance sheet and other information related to operating leases are as follows: October 3, 2021 January 3, 2021 Operating leases: Operating lease right-of-use assets, net $ 5,781,541 $ 6,242,736 Accrued expenses and other liabilities $ 423,720 $ 440,386 Operating lease liabilities, less current portion 5,518,920 5,893,268 Total operating lease liabilities $ 5,942,640 $ 6,333,654 Weighted average remaining lease term 15.6 years 15.7 years Weighted average discount rate 7.33% 7.26% 17 Table of Contents Supplemental balance sheet and other information related to finance leases are as follows: October 3, 2021 January 3, 2021 Finance leases: Property and equipment, net $ 929,318 $ 1,084,394 Current maturities of finance lease liabilities $ 240,257 $ 257,298 Finance lease liabilities, less current portion 66,649 235,116 Total finance lease liabilities $ 306,906 $ 492,414 Weighted average remaining lease term 1.3 years 1.8 years Weighted average discount rate 4.68 % 4.56 % Maturities of operating and finance lease liabilities as of October 3, 2021 are as follows: Operating Leases Finance Leases Due in one year or less $ 845,016 $ 249,718 Due after one year through two years 730,981 59,096 Due after two years through three years 544,702 4,823 Due after three years through four years 527,972 3,000 Due after four years through five years 527,972 2,752 Thereafter 7,358,883 - Total lease payments 10,535,526 319,389 Less: Interest (4,592,886 ) (12,483 ) Total $ 5,942,640 $ 306,906 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Oct. 03, 2021 | |
AOCI Attributable to Parent [Abstract] | |
Accumulated Other Comprehensive Loss | 12. Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss for the three months ended October 3, 2021 and October 4, 2020 were as follows: Minimum Benefit Liability Adjustments Foreign Currency Translation Adjustment Total Balance at July 5, 2020 $ 5,694 $ (1,651,049 ) $ (1,645,355 ) Other comprehensive income - 235,736 235,736 Balance at October 4, 2020 $ 5,694 $ (1,415,313 ) $ (1,409,619 ) Balance at July 4, 2021 $ (154,662 ) $ (1,072,293 ) $ (1,226,955 ) Other comprehensive loss - (103,348 ) (103,348 ) Balance at October 3, 2021 $ (154,662 ) $ (1,175,641 ) $ (1,330,303 ) The changes in accumulated other comprehensive loss for the nine months ended October 3, 2021 and October 4, 2020 were as follows: Minimum Benefit Liability Adjustments Foreign Currency Translation Adjustment Total Balance at December 29, 2019 $ 5,694 $ (1,303,133 ) $ (1,297,439 ) Other comprehensive loss - (112,180 ) (112,180 ) Balance at October 4, 2020 $ 5,694 $ (1,415,313 ) $ (1,409,619 ) Balance at January 3, 2021 $ (154,662 ) $ (1,116,659 ) $ (1,271,321 ) Other comprehensive loss - (58,982 ) (58,982 ) Balance at October 3, 2021 $ (154,662 ) $ (1,175,641 ) $ (1,330,303 ) |
Income (Loss) per Common Share
Income (Loss) per Common Share | 9 Months Ended |
Oct. 03, 2021 | |
EARNINGS (LOSS) PER COMMON SHARE: | |
Income (Loss) per Common Share | 13. Income (Loss) per Common Share The calculations of diluted earnings per share for the three and nine months ended October 3, 2021 excluded options (as provided under the Company’s 2015 Stock Option Plan) to purchase 133,050 shares of common stock because the options’ weighted average exercise price of $14.04 per share was greater than the average market prices of the common shares. Due to the net loss allocable to common shareholders for the three and nine months ended October 4, 2020, the calculations of basic and diluted loss per share were the same since including options to purchase shares of the Company’s common stock in the calculations of diluted loss per share would have been anti-dilutive. However, if diluted earnings per share had been reported for the three and nine months ended October 4, 2020, the calculations would have excluded options to purchase 151,800 shares of common stock because the options’ weighted average exercise price of $14.02 per share was greater than the average market prices of the common shares. |
Revenue
Revenue | 9 Months Ended |
Oct. 03, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue | 14. Revenue The Company recognizes revenue and related accounts receivable when obligations under the terms of a contract with a customer are satisfied, which includes the control of products transferring to the customer. For Uniroyal, this generally occurs when products are shipped and, for UGL, this generally occurs when the customer accepts delivery either at the Company’s U.K. facility or at a mutually agreed upon location. Revenue is measured as the amount of consideration the Company expects to receive in exchange for products transferred to the customer. The following table sets forth revenue disaggregated by the Company’s automotive and industrial sectors for the three and nine months ended October 3, 2021 and October 4, 2020: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Revenue by sector: Automotive $ 8,710,220 $ 9,064,735 $ 32,867,633 $ 24,866,376 Industrial 7,675,694 6,107,163 23,163,517 18,662,017 Total Revenue $ 16,385,914 $ 15,171,898 $ 56,031,150 $ 43,528,393 The following table sets forth revenue disaggregated by the geographic locations of the Company’s customers for the three and nine months ended October 3, 2021 and October 4, 2020: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Revenue by customer location: North America $ 9,347,903 $ 7,562,196 $ 29,245,296 $ 23,714,242 Europe 6,083,425 6,529,779 23,564,685 17,139,460 Asia 754,881 885,984 2,763,902 2,214,264 Other 199,705 193,939 457,267 460,427 Total Revenue $ 16,385,914 $ 15,171,898 $ 56,031,150 $ 43,528,393 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 03, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events The Company has evaluated subsequent events occurring through November 16, 2021 for events requiring recording or disclosure in the October 3, 2021 consolidated financial statements. As previously stated, in October 2021 the Company received approximately $260,000 as part of the second installment of loans from automotive lenders per the original loan agreement. These amounts are due to be repaid in the first quarter of 2023. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 03, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. Uniroyal Global filed audited consolidated financial statements as of and for the fiscal years ended January 3, 2021 and December 29, 2019 which included all information and notes necessary for such complete presentation in conjunction with its 2020 Annual Report on Form 10-K. The results of operations for the interim period ended October 3, 2021 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended January 3, 2021, which are contained in the Company’s 2020 Annual Report on Form 10-K. The Company and its subsidiaries use a 52/53-week fiscal year ending on the Sunday nearest to December 31. The current year ending January 2, 2022 is a 52-week year whereas the prior year ended January 3, 2021 was a 53-week year. The Company’s U.K. subsidiaries use the calendar year end of December 31. The activity of the U.K. subsidiaries that occurs on the days that do not coincide with the Company’s year-end is not material. Both the three months ended October 3, 2021 and October 4, 2020 were 13-week periods while the nine months ended October 3, 2021 was a 39-week period and the nine months ended October 4, 2020 was a 40-week period. The accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of October 3, 2021 and the results of operations, comprehensive income (loss) and cash flows for the interim periods ended October 3, 2021 and October 4, 2020. The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British Pound Sterling as the functional currency. See Note 4 – “Foreign Currency Translation” for additional discussion. For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation. |
Significant Accounting Policies | Significant Accounting Policies For a discussion of Uniroyal Global’s significant accounting policies, refer to Note 1 – “Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021. |
Coronavirus | Coronavirus The current coronavirus pandemic (“COVID-19”) has had an impact on markets the Company serves and its operations. Since COVID-19 is a continually evolving situation, the Company cannot predict the long-term impact it will have on the economy or the Company’s business. The impact could have a material adverse effect on the Company’s financial position, results of operations and cash flows, which may require the Company to obtain additional financing. The Company continues to pursue supplementary cash flow opportunities, as discussed briefly below and in more detail in Notes 8 – 10. Through the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”), the Company’s U.S. operations received $2,000,000 (“Second Draw PPP Loan”) and $2,217,500 (“First Draw PPP Loan”) in March 2021 April 2020 For the U.K. operations, during the third quarter of 2021 and 2020, the Company recorded reimbursed costs of approximately $49,000 and $474,000, respectively, and during the first nine months of 2021 and 2020 the Company recorded reimbursed costs of approximately $150,000 and $1,560,000, respectively, under the Coronavirus Job Retention Scheme (“CJRS”) set up by the U.K. government to help employers pay the salaries of those employees who would otherwise have been laid off during the coronavirus outbreak but under the CJRS were furloughed instead. The much lower reimbursed costs for the third quarter and first nine months of 2021 reflected that employees were furloughed significantly less than in the same periods of 2020. This program reimbursed the Company for up to 80% of the compensation expense plus national insurance and certain benefits paid to the furloughed employees, resulting in lower salary expense for the Company. While the employees were on furlough, the compensation paid to them was limited to the amount reimbursed by the CJRS. The Company recorded the reimbursed amounts as reductions to the associated expenses. Also for the U.K. operations, in June 2021 its bank lending facilities with Lloyds Bank Commercial Finance Limited (“Lloyds”) were refinanced with PNC Business Credit (“PNC”). PNC provided the Company additional availability by expanding its borrowing base to include eligible equipment. See Notes 8 and 9 for further discussion. Additionally, quarterly preferred dividend payments on UEPH Series A and Series B preferred units and UGEL preferred stock (collectively “preferred shares”) were deferred beginning with the three months ended December 29, 2019 through the three months ended October 3, 2021. During the third quarter of 2021, the owners of these preferred shares (“preferred shareholders”) agreed to an amendment to the documents that govern the dividends (“amended documents”) whereby the accrued dividends were forgiven. In addition, under the amended documents the preferred shareholders are no longer entitled to a quarterly dividend until such time as the Company declares a dividend payable. The Company accounted for the dividend forgiveness as an extinguishment of debt between related parties per Accounting Standards Codification (“ASC”) 470, “Debt”. As a result, the total balance of accrued dividends of approximately $6,100,000 was derecognized as of October 3, 2021. The amendments to remove the entitlement of a quarterly 5%, 8% and €221,241 (approximately $265,000) dividend (“entitlement amendments”) relating to the preferred shares were considered not significant and, therefore, were considered a modification rather than an extinguishment per ASC 470. The entitlement amendments were considered not significant since the change in the fair values of the preferred shares after the amendments compared to the fair values of the preferred shares immediately before the amendments was less than 10% as management determined that the entitlement amendments resulted in a reduction of fair value of the preferred shares. Per ASC 718, “Compensation – Stock Compensation”, the reduction of fair value of the preferred shares in this modification had no accounting impact (i.e., recognition of a gain). |
Legal Proceedings | Legal Proceedings On October 1, 2020, the Health and Safety Executive (“HSE”), the government agency responsible for the enforcement of health and safety law in the U.K., charged our U.K. subsidiary, Uniroyal Global Limited, with an offense under the Health and Safety at Work etc. Act 1974 arising from an August 2019 incident in which an employee was injured in the course of his employment. The Company fully cooperated with the HSE investigation and negotiated a plea based on legal advice provided to it. Per this legal advice, the Company believed that £150,000 ($193,000) was a reasonable estimate of the fine to be imposed and, accordingly, recorded an accrual for this charge in 2020. In April 2021, a fine of £120,000 ($166,026) was imposed on the Company related to this matter. At the end of the second quarter of 2021, the Company began making monthly payments for this fine in order to have it paid in full by the October 2022 due date. The accrual related to the fine was £91,856 ($124,401) and £150,000 ($204,737) as of October 3, 2021 and January 3, 2021, respectively, and was included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. In addition, a fee of £5,463 ($7,558) to reimburse the HSE for legal expenses was paid in May 2021. |
Noncash Transactions and Supp_2
Noncash Transactions and Supplemental Disclosure of Cash Flow Information (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Noncash Transactions and Supplemental Disclosure of Cash Flow Information Text Block | The following is supplemental disclosure of cash paid for the nine months ended: October 3, 2021 October 4, 2020 Interest $ 1,138,425 $ 1,272,124 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following: October 3, 2021 January 3, 2021 Raw materials $ 7,436,695 $ 5,193,919 Work-in-process 5,017,046 4,281,035 Finished goods 10,113,997 10,594,088 22,567,738 20,069,042 Less: Allowance for inventory obsolescence (2,309,833 ) (2,116,192 ) Total Inventories, net $ 20,257,905 $ 17,952,850 |
Other Long-term Assets (Tables)
Other Long-term Assets (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of Other Long-term Assets | Other long-term assets consist of the following: October 3, 2021 January 3, 2021 Deferred tax asset, net $ 4,364,830 $ 4,072,184 Life insurance policies, net of policy loans 320,160 185,482 Debt issuance costs 306,157 - Other 403,682 422,324 Total Other Long-term Assets $ 5,394,829 $ 4,679,990 |
Other Long-term Liabilities (Ta
Other Long-term Liabilities (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Other Liabilities, Noncurrent [Abstract] | |
Schedule of Other Long-term Liabilities | Other long-term liabilities consist of the following: October 3, 2021 January 3, 2021 Deferred tax liability $ 680,476 $ 801,136 Other 915 6,054 Total Other Long-term Liabilities $ 681,391 $ 807,190 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Long-term Debt, by Current and Noncurrent [Abstract] | |
Schedule of Long-term Debt | Long-term debt consists of the following: Interest Rate October 3, 2021 January 3, 2021 Notes Payable Wells Fargo Capital Finance, LLC WF Prime $ 523,667 $ 785,501 Lloyds Bank Commercial Finance Limited (1) 4.43% - 51,905 Lloyds Bank Commercial Finance Limited (1) 4.87% - 156,422 Automotive lenders (2) 0.0% 3,378,148 3,268,664 Wells Fargo Capital Finance, LLC LIBOR+3.00% 2,495,942 2,432,353 6,397,757 6,694,845 Equipment Financing Obligations Kennet Equipment Leasing Limited 10.90% - 23,960 Regents Capital Corporation 6.20%-7.24% 426,618 678,329 Lloyds Bank Commercial Finance Limited (1) 3.95% - 1,373,929 PNC Business Credit (1) BoE Base + 3.00% 2,279,290 - 2,705,908 2,076,218 Total 9,103,665 8,771,063 Less: Current portion (2,915,352 ) (1,432,301 ) Long-term Portion $ 6,188,313 $ 7,338,762 (1) In June 2021, UGL’s long-term debt with Lloyds Bank Commercial Finance Limited was refinanced with PNC Business Credit. The loan is payable in monthly principal installments of £33,000 ($45,657) beginning January 2022 with the remaining principal due May 2024 (2) In September 2021, the Company received $137,815 related to the second installment of loans from the automotive lenders per the original loan agreement. The remainder of the second installment of loans of approximately $260,000 was received in October 2021. These amounts are due to be repaid in the first quarter of 2023. In addition, the amounts due to be repaid at the end of the third and fourth quarters of 2021 (each approximately $162,500) from the first installment of loans from the automotive lenders were deferred until the third and fourth quarters of 2022, respectively. |
Related Party Obligations (Tabl
Related Party Obligations (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Schedule of Components of Lease Expense | The components of lease expense for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating lease expense $ 256,638 $ 249,069 $ 763,344 $ 746,045 Finance lease expense: Amortization of right-of-use assets $ 18,037 $ 49,803 $ 62,662 $ 158,658 Interest on lease liabilities 3,650 7,090 13,302 24,441 Total finance lease expense $ 21,687 $ 56,893 $ 75,964 $ 183,099 |
Related party [Member] | |
Schedule of Long-term Debt to Related Parties | Long-term debt to related parties consists of the following: Interest Rate October 3, 2021 January 3, 2021 Senior subordinated promissory note 9.25% $ 2,000,000 $ 2,000,000 Senior secured promissory note 10.00% 765,655 765,655 Subordinated secured promissory note 8.00% 225,000 225,000 Subordinated secured promissory note 0.00% 1,225,911 1,225,911 Long-term debt to related parties $ 4,216,566 $ 4,216,566 |
Schedule of Components of Lease Expense | Supplemental balance sheet and other information regarding related party finance leases are as follows: October 3, 2021 January 3, 2021 Finance leases: Property and equipment, net $ 1,915,299 $ 2,040,681 Current maturities of finance lease liabilities $ 162,662 $ 149,366 Finance lease liabilities, less current portion 2,385,925 2,504,404 Total finance lease liabilities $ 2,548,587 $ 2,653,770 Weighted average remaining lease term 10.7 years 11.2 years Weighted average discount rate 16.90% 16.77% |
Schedule of Measurement of Related Party Finance Lease Liabilities | The components of lease expense for the related party finance leases for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Finance lease expense: Amortization of right-of-use assets $ 41,794 $ 41,794 $ 125,382 $ 125,382 Interest on lease liabilities 100,281 104,685 306,126 315,993 Total finance lease expense $ 142,075 $ 146,479 $ 431,508 $ 441,375 |
Schedule of Supplemental Information Related to Finance Leases | Maturities of related party finance lease liabilities as of October 3, 2021 are as follows: Totals Due in one year or less $ 561,911 Due after one year through two years 557,862 Due after two years through three years 478,381 Due after three years through four years 471,228 Due after four years through five years 475,437 Thereafter 3,234,403 Total lease payments 5,779,222 Less: Interest (3,230,635 ) Total related party finance lease liabilities $ 2,548,587 |
Schedule of Maturities of Related Party Finance Lease Liabilities | Cash paid for amounts included in the measurement of related party finance lease liabilities for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating cash flows from finance leases $ 100,281 $ 104,685 $ 306,126 $ 315,993 Financing cash flows from finance leases $ 35,827 $ 31,914 $ 105,183 $ 93,801 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Leases [Abstract] | |
Schedule of Operating Lease Expense | The components of lease expense for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating lease expense $ 256,638 $ 249,069 $ 763,344 $ 746,045 Finance lease expense: Amortization of right-of-use assets $ 18,037 $ 49,803 $ 62,662 $ 158,658 Interest on lease liabilities 3,650 7,090 13,302 24,441 Total finance lease expense $ 21,687 $ 56,893 $ 75,964 $ 183,099 |
Schedule of Cash Paid for Lease Liabilities | Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended October 3, 2021 and October 4, 2020 are as follows: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Operating cash flows from operating leases $ 336,853 $ 249,920 $ 815,983 $ 670,267 Operating cash flows from finance leases $ 3,650 $ 7,090 $ 13,302 $ 24,441 Financing cash flows from finance leases $ 60,062 $ 71,720 $ 197,579 $ 289,948 |
Schedule of Supplemental Information Related to Operating Leases | Supplemental balance sheet and other information related to operating leases are as follows: October 3, 2021 January 3, 2021 Operating leases: Operating lease right-of-use assets, net $ 5,781,541 $ 6,242,736 Accrued expenses and other liabilities $ 423,720 $ 440,386 Operating lease liabilities, less current portion 5,518,920 5,893,268 Total operating lease liabilities $ 5,942,640 $ 6,333,654 Weighted average remaining lease term 15.6 years 15.7 years Weighted average discount rate 7.33% 7.26% |
Schedule of Supplemental Information Related to Finance Leases | Supplemental balance sheet and other information related to finance leases are as follows: October 3, 2021 January 3, 2021 Finance leases: Property and equipment, net $ 929,318 $ 1,084,394 Current maturities of finance lease liabilities $ 240,257 $ 257,298 Finance lease liabilities, less current portion 66,649 235,116 Total finance lease liabilities $ 306,906 $ 492,414 Weighted average remaining lease term 1.3 years 1.8 years Weighted average discount rate 4.68 % 4.56 % |
Schedule of Maturities of Lease Liabilities | Maturities of operating and finance lease liabilities as of October 3, 2021 are as follows: Operating Leases Finance Leases Due in one year or less $ 845,016 $ 249,718 Due after one year through two years 730,981 59,096 Due after two years through three years 544,702 4,823 Due after three years through four years 527,972 3,000 Due after four years through five years 527,972 2,752 Thereafter 7,358,883 - Total lease payments 10,535,526 319,389 Less: Interest (4,592,886 ) (12,483 ) Total $ 5,942,640 $ 306,906 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
AOCI Attributable to Parent [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive loss for the three months ended October 3, 2021 and October 4, 2020 were as follows: Minimum Benefit Liability Adjustments Foreign Currency Translation Adjustment Total Balance at July 5, 2020 $ 5,694 $ (1,651,049 ) $ (1,645,355 ) Other comprehensive income - 235,736 235,736 Balance at October 4, 2020 $ 5,694 $ (1,415,313 ) $ (1,409,619 ) Balance at July 4, 2021 $ (154,662 ) $ (1,072,293 ) $ (1,226,955 ) Other comprehensive loss - (103,348 ) (103,348 ) Balance at October 3, 2021 $ (154,662 ) $ (1,175,641 ) $ (1,330,303 ) The changes in accumulated other comprehensive loss for the nine months ended October 3, 2021 and October 4, 2020 were as follows: Minimum Benefit Liability Adjustments Foreign Currency Translation Adjustment Total Balance at December 29, 2019 $ 5,694 $ (1,303,133 ) $ (1,297,439 ) Other comprehensive loss - (112,180 ) (112,180 ) Balance at October 4, 2020 $ 5,694 $ (1,415,313 ) $ (1,409,619 ) Balance at January 3, 2021 $ (154,662 ) $ (1,116,659 ) $ (1,271,321 ) Other comprehensive loss - (58,982 ) (58,982 ) Balance at October 3, 2021 $ (154,662 ) $ (1,175,641 ) $ (1,330,303 ) |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Oct. 03, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of Disaggregated Revenue | The following table sets forth revenue disaggregated by the Company’s automotive and industrial sectors for the three and nine months ended October 3, 2021 and October 4, 2020: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Revenue by sector: Automotive $ 8,710,220 $ 9,064,735 $ 32,867,633 $ 24,866,376 Industrial 7,675,694 6,107,163 23,163,517 18,662,017 Total Revenue $ 16,385,914 $ 15,171,898 $ 56,031,150 $ 43,528,393 The following table sets forth revenue disaggregated by the geographic locations of the Company’s customers for the three and nine months ended October 3, 2021 and October 4, 2020: Three Months Ended Nine Months Ended October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020 Revenue by customer location: North America $ 9,347,903 $ 7,562,196 $ 29,245,296 $ 23,714,242 Europe 6,083,425 6,529,779 23,564,685 17,139,460 Asia 754,881 885,984 2,763,902 2,214,264 Other 199,705 193,939 457,267 460,427 Total Revenue $ 16,385,914 $ 15,171,898 $ 56,031,150 $ 43,528,393 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||
May 31, 2021USD ($) | May 31, 2021GBP (£) | Mar. 31, 2021USD ($) | Apr. 30, 2020USD ($) | Oct. 03, 2021USD ($) | Oct. 04, 2020USD ($) | Oct. 03, 2021USD ($) | Oct. 03, 2021GBP (£) | Oct. 04, 2020USD ($) | Oct. 03, 2021GBP (£) | Jan. 03, 2021USD ($) | Jan. 03, 2021GBP (£) | Oct. 01, 2020USD ($) | Oct. 01, 2020GBP (£) | |
Debt Instrument [Line Items] | ||||||||||||||
Accrued dividends | $ 6,100,000 | $ 6,100,000 | ||||||||||||
Amount received under Coronavirus Job Retention Scheme as reimbursement for compensation expense | 49,000 | $ 474,000 | 150,000 | $ 1,560,000 | ||||||||||
Modification of accrued dividends per entitlement agreement | $ 265,000 | |||||||||||||
Minimum [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Percentage preferred stock dividend rate | 5.00% | 5.00% | ||||||||||||
Maximum [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Percentage preferred stock dividend rate | 8.00% | 8.00% | ||||||||||||
British Pound Sterling [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Modification of accrued dividends per entitlement agreement | £ | £ 221,241 | |||||||||||||
Health and Safety Executive [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Estimated amount of fine to be imposed under legal advice | 124,401 | $ 124,401 | $ 204,737 | $ 193,000 | ||||||||||
Fees imposed | $ 166,026 | $ 166,026 | ||||||||||||
Health and Safety Executive [Member] | British Pound Sterling [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Estimated amount of fine to be imposed under legal advice | £ | £ 91,856 | £ 150,000 | £ 150,000 | |||||||||||
Fees imposed | £ | £ 120,000 | |||||||||||||
HSE for legal expenses [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Fees paid | $ 7,558 | |||||||||||||
HSE for legal expenses [Member] | British Pound Sterling [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Fees paid | £ | £ 5,463 | |||||||||||||
COVID-19 [Member] | Second Draw PPP Loan [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Proceeds from loan | $ 2,000,000 | |||||||||||||
Date of first periodic payment | Mar. 31, 2021 | |||||||||||||
COVID-19 [Member] | First Draw PPP [Member] | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Proceeds from loan | $ 2,217,500 | |||||||||||||
Date of first periodic payment | Apr. 30, 2020 |
Noncash Transactions and Supp_3
Noncash Transactions and Supplemental Disclosure of Cash Flow Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 03, 2021 | Oct. 04, 2020 | Jan. 03, 2021 | |
Supplemental Cash Flow Elements [Abstract] | ||||
Interest | $ 1,138,425 | $ 1,272,124 | ||
Accrued dividends | $ 6,100,000 | 6,100,000 | ||
Payments on life insurance policies | 101,213 | (134,678) | $ 28,787 | |
Insurance policy loans | $ 320,160 | $ 320,160 | $ 185,482 | |
Weighted average interest rate | 3.65% | 3.65% |
Inventories (Schedule of Invent
Inventories (Schedule of Inventories) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,436,695 | $ 5,193,919 |
Work-in-process | 5,017,046 | 4,281,035 |
Finished goods | 10,113,997 | 10,594,088 |
Inventories gross | 22,567,738 | 20,069,042 |
Less: Allowance for inventory obsolescence | (2,309,833) | (2,116,192) |
Total Inventories, net | $ 20,257,905 | $ 17,952,850 |
Other Long-term Assets (Schedul
Other Long-term Assets (Schedule of Other Long-term Assets) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Other Assets, Noncurrent [Abstract] | ||
Deferred tax asset, net | $ 4,364,830 | $ 4,072,184 |
Life insurance policies, net of policy loans | 320,160 | 185,482 |
Debt issuance costs | 306,157 | |
Other | 403,682 | 422,324 |
Total Other Long-term Assets | $ 5,394,829 | $ 4,679,990 |
Other Long-term Liabilities (Sc
Other Long-term Liabilities (Schedule of Other Long-term Liabilities) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Other Liabilities, Noncurrent [Abstract] | ||
Deferred tax liability | $ 680,476 | $ 801,136 |
Other | 915 | 6,054 |
Total Other Long-term Liabilities | $ 681,391 | $ 807,190 |
Lines of Credit (Details)
Lines of Credit (Details) | 9 Months Ended | |||||
Oct. 03, 2021USD ($) | Oct. 03, 2021GBP (£) | Oct. 04, 2020USD ($) | Oct. 03, 2021GBP (£) | Jan. 03, 2021USD ($) | Jan. 03, 2021GBP (£) | |
Loss on debt extinguishment | $ 64,768 | |||||
Debt issuance costs | 306,157 | |||||
British Pound Sterling [Member] | ||||||
Loss on debt extinguishment | £ | £ 46,813 | |||||
Debt issuance costs | £ | £ 226,063 | |||||
Transaction One [Member] | ||||||
Debt issuance costs | 341,895 | |||||
Transaction One [Member] | British Pound Sterling [Member] | ||||||
Debt issuance costs | £ | £ 247,114 | |||||
Wells Fargo Capital Finance, LLC [Member] | ||||||
Line of credit maximum amount | $ 15,000,000 | |||||
Line of credit premium over base rate | 2.25% | 2.25% | ||||
Line of credit interest rate description | Interest is payable monthly at the Eurodollar rate plus 2.25% or Wells Fargo Capital Finance, LLC's prime rate (“WF Prime”) at the Company's election on outstanding balances up to $6,000,000 and WF Prime on amounts in excess of $6,000,000. | Interest is payable monthly at the Eurodollar rate plus 2.25% or Wells Fargo Capital Finance, LLC's prime rate (“WF Prime”) at the Company's election on outstanding balances up to $6,000,000 and WF Prime on amounts in excess of $6,000,000. | ||||
Line of credit interest rate | 3.25% | 3.25% | ||||
Line of credit amount outstanding | $ 10,934,201 | 9,204,572 | ||||
Line of credit amount additional availability | 536,000 | |||||
Line of credit with total cash balance | 411,928 | |||||
Line of credit liquidity amount | $ 948,000 | |||||
Line of credit, maturity date | Jun. 15, 2023 | Jun. 15, 2023 | ||||
Lloyds Bank Commercial Finance Limited [Member] | Wardle Storeys [Member] | ||||||
Line of credit amount outstanding | $ 6,872,973 | $ 8,556,011 | ||||
Line of credit amount additional availability | 227,000 | |||||
Line of credit with total cash balance | 216,524 | |||||
Line of credit liquidity amount | 444,000 | |||||
Lloyds Bank Commercial Finance Limited [Member] | Wardle Storeys [Member] | British Pound Sterling [Member] | ||||||
Line of credit amount outstanding | £ | £ 5,074,919 | £ 6,268,526 | ||||
New UGL Line Of Credit [Member] | UGL [Member] | ||||||
Line of credit maximum amount | $ 14,900,000 | |||||
Line of credit interest rate description | Interest is payable monthly at the Bank of England Base Rate (“BoE Base”) plus 2.25%-3.00%. The effective interest rate was 2.54% as of October 3, 2021. | Interest is payable monthly at the Bank of England Base Rate (“BoE Base”) plus 2.25%-3.00%. The effective interest rate was 2.54% as of October 3, 2021. | ||||
New UGL Line Of Credit [Member] | UGL [Member] | British Pound Sterling [Member] | ||||||
Line of credit maximum amount | £ | £ 11,000,000 | |||||
New UGL Line Of Credit [Member] | UGL [Member] | Minimum [Member] | ||||||
Line of credit term | 3 years | 3 years |
Long-term Debt (Details)
Long-term Debt (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2021USD ($) | Oct. 03, 2021USD ($) | Oct. 04, 2020USD ($) | Oct. 03, 2021USD ($) | Oct. 03, 2021GBP (£) | Oct. 04, 2020USD ($) | Mar. 31, 2021USD ($) | Apr. 30, 2020USD ($) | |
PPP Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Grant income | $ 33,824 | $ 2,000,000 | $ 2,217,500 | |||||
Lloyds Bank Commercial Finance Limited [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly loan installments amount | $ 45,657 | |||||||
Remaining principal due date | May 31, 2024 | May 31, 2024 | ||||||
Lloyds Bank Commercial Finance Limited [Member] | British Pound Sterling [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly loan installments amount | £ | £ 33,000 | |||||||
Second installment loans [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly loan installments amount | $ 137,815 | $ 260,000 | ||||||
COVID-19 [Member] | Second Draw PPP Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from loan | $ 2,000,000 | |||||||
Interest rate | 1.00% | |||||||
COVID-19 [Member] | First Draw PPP [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from loan | $ 2,217,500 | |||||||
Interest rate | 1.00% | |||||||
Automotive lenders [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly loan installments amount | $ 162,500 |
Long-term Debt (Schedule of Lon
Long-term Debt (Schedule of Long-term debt) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 9,103,665 | $ 8,771,063 | |
Less: Current portion | (2,915,352) | (1,432,301) | |
Long-Term Portion | 6,188,313 | 7,338,762 | |
Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 6,397,757 | 6,694,845 | |
Notes Payable [Member] | Wells Fargo Capital Finance, LLC [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 523,667 | 785,501 | |
Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | [1] | 51,905 | |
Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | [1] | 156,422 | |
Notes Payable [Member] | Automotive lenders [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | [2] | 3,378,148 | 3,268,664 |
Notes Payable [Member] | Wells Fargo Capital Finance, LLC [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 2,495,942 | 2,432,353 | |
Equipment Financing Obligations [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 2,705,908 | 2,076,218 | |
Equipment Financing Obligations [Member] | Lloyds Bank Commercial Finance Limited [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | [1] | 1,373,929 | |
Equipment Financing Obligations [Member] | Kennet Equipment Leasing Limited [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 23,960 | ||
Equipment Financing Obligations [Member] | Regents Capital Corporation [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 426,618 | 678,329 | |
Equipment Financing Obligations [Member] | PNC Business Credit [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | [1] | $ 2,279,290 | |
[1] | In June 2021, UGL’s long-term debt with Lloyds Bank Commercial Finance Limited was refinanced with PNC Business Credit. The loan is payable in monthly principal installments of £33,000 ($45,657) beginning January 2022 with the remaining principal due May 2024 | ||
[2] | In September 2021, the Company received $137,815 related to the second installment of loans from the automotive lenders per the original loan agreement. The remainder of the second installment of loans of approximately $260,000 was received in October 2021. These amounts are due to be repaid in the first quarter of 2023. In addition, the amounts due to be repaid at the end of the third and fourth quarters of 2021 (each approximately $162,500) from the first installment of loans from the automotive lenders were deferred until the third and fourth quarters of 2022, respectively. |
Long-term Debt (Schedule of L_2
Long-term Debt (Schedule of Long-term debt Interest Rate) (Details) | 9 Months Ended |
Oct. 03, 2021 | |
Notes Payable [Member] | Wells Fargo Capital Finance, LLC [Member] | |
Debt Instrument [Line Items] | |
Long-term debt, interest rate basis | WF Prime |
Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 4.43% |
Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 4.87% |
Notes Payable [Member] | Automotive lenders [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 0.00% |
Notes Payable [Member] | Wells Fargo Capital Finance, LLC [Member] | |
Debt Instrument [Line Items] | |
Long-term debt, interest rate above basis | 3.00% |
Long-term debt, interest rate basis | LIBOR |
Notes Payable [Member] | PNC Business Credit [Member] | |
Debt Instrument [Line Items] | |
Long-term debt, interest rate above basis | 3.00% |
Long-term debt, interest rate basis | BoE Base |
Equipment Financing Obligations [Member] | Lloyds Bank Commercial Finance Limited [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 3.95% |
Equipment Financing Obligations [Member] | Kennet Equipment Leasing Limited [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 10.90% |
Equipment Financing Obligations [Member] | Regents Capital Corporation [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 6.20% |
Equipment Financing Obligations [Member] | Regents Capital Corporation [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Long term debt, interest rate | 7.24% |
Related Party Obligations (Narr
Related Party Obligations (Narrative) (Details) - USD ($) | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Jan. 03, 2021 | |
Interest expense on notes | $ 254,894 | $ 239,982 | |
Proceeds from related party debt | 983,958 | ||
Accrued dividends | 6,100,000 | ||
Accrued expenses and other liabilities | 23,786 | $ 47,573 | |
Company's Majority Owners [Member] | |||
Related party finance lease, security deposit | $ 267,500 | ||
Promissory notes [Member] | |||
Long-term debt, maturity date | Jan. 15, 2023 | ||
Senior subordinated promissory note [Member] | |||
Proceeds of secured debt | 783,958 | ||
Payment of secured debt | 675,000 | ||
Proceeds from related party debt | $ 200,000 |
Related Party Obligations (Long
Related Party Obligations (Long-term debt to related parties) (Details) - USD ($) | 9 Months Ended | |
Oct. 03, 2021 | Jan. 03, 2021 | |
Total Long-term Debt to Related Parties | $ 4,216,566 | $ 4,216,566 |
Senior subordinated promissory note [Member] | ||
Total Long-term Debt to Related Parties | $ 2,000,000 | 2,000,000 |
Long-term debt, interest rate | 9.25% | |
Senior secured promissory note [Member] | ||
Total Long-term Debt to Related Parties | $ 765,655 | 765,655 |
Long-term debt, interest rate | 10.00% | |
Subordinated secured promissory note [Member] | ||
Total Long-term Debt to Related Parties | $ 225,000 | 225,000 |
Long-term debt, interest rate | 8.00% | |
Subordinated secured promissory note 2 [Member] | ||
Total Long-term Debt to Related Parties | $ 1,225,911 | $ 1,225,911 |
Long-term debt, interest rate | 0.00% |
Related Party Obligations (Sche
Related Party Obligations (Schedule of Components of Lease Expense) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Finance lease expense: | ||||
Amortization of right-of-use assets | $ 41,794 | $ 41,794 | $ 125,382 | $ 125,382 |
Interest on lease liabilities | 100,281 | 104,685 | 306,126 | 315,993 |
Total finance lease expense | $ 142,075 | $ 146,479 | $ 431,508 | $ 441,375 |
Related Party Obligations (Meas
Related Party Obligations (Measurement of Related Party Finance Lease Liabilities) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Principal requirements on all related party obligations | ||||
Operating cash flows from finance leases | $ 100,281 | $ 104,685 | $ 306,126 | $ 315,993 |
Financing cash flows from finance leases | $ 35,827 | $ 31,914 | $ 105,183 | $ 93,801 |
Related Party Obligations (Sc_2
Related Party Obligations (Schedule of Supplemental Information Related to Finance Leases) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Finance leases: | ||
Property and equipment, net | $ 17,191,409 | $ 18,491,122 |
Current maturities of finance lease liabilities | 240,257 | 257,298 |
Finance lease liabilities, less current portion | 66,649 | 235,116 |
Total finance lease liabilities | $ 306,906 | $ 492,414 |
Weighted average remaining lease term | 1 year 3 months 18 days | 1 year 9 months 18 days |
Weighted average discount rate | 4.68% | 4.56% |
Related party [Member] | ||
Finance leases: | ||
Property and equipment, net | $ 1,915,299 | $ 2,040,681 |
Current maturities of finance lease liabilities | 162,662 | 149,366 |
Finance lease liabilities, less current portion | 2,385,925 | 2,504,404 |
Total finance lease liabilities | $ 2,548,587 | $ 2,653,770 |
Weighted average remaining lease term | 10 years 8 months 12 days | 11 years 2 months 12 days |
Weighted average discount rate | 16.90% | 16.77% |
Related Party Obligations (Matu
Related Party Obligations (Maturities of Related Party Finance Lease Liabilities) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Due in one year or less | $ 249,718 | |
Due after one year through two years | 59,096 | |
Due after two years through three years | 4,823 | |
Due after three years through four years | 3,000 | |
Due after four years through five years | 2,752 | |
Thereafter | ||
Total lease payments | 319,389 | |
Total related party finance lease liabilities | 306,906 | $ 492,414 |
Related party [Member] | ||
Due in one year or less | 561,911 | |
Due after one year through two years | 557,862 | |
Due after two years through three years | 478,381 | |
Due after three years through four years | 471,228 | |
Due after four years through five years | 475,437 | |
Thereafter | 3,234,403 | |
Total lease payments | 5,779,222 | |
Less: Interest | (3,230,635) | |
Total related party finance lease liabilities | $ 2,548,587 | $ 2,653,770 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Lessee Disclosure [Abstract] | ||||
Right of use asset obtainedIn exchange for operation lease liability | $ 0 | $ 0 | ||
Right of use asset obtainedIn exchange for finance lease liability | $ 11,986 | $ 11,986 |
Leases (Schedule of Operating L
Leases (Schedule of Operating Lease Expense) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Lessee Disclosure [Abstract] | ||||
Operating lease expense | $ 256,638 | $ 249,069 | $ 763,344 | $ 746,045 |
Finance lease expense: | ||||
Amortization of right-of-use assets | 18,037 | 49,803 | 62,662 | 158,658 |
Interest on lease liabilities | 3,650 | 7,090 | 13,302 | 24,441 |
Total finance lease expense | $ 21,687 | $ 56,893 | $ 75,964 | $ 183,099 |
Leases (Schedule of Cash Paid f
Leases (Schedule of Cash Paid for Lease Liabilities) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Lessee Disclosure [Abstract] | ||||
Operating cash flows from operating leases | $ 336,853 | $ 249,920 | $ 815,983 | $ 670,267 |
Operating cash flows from finance leases | 3,650 | 7,090 | 13,302 | 24,441 |
Financing cash flows from finance leases | $ 60,062 | $ 71,720 | $ 197,579 | $ 289,948 |
Leases (Schedule of Supplementa
Leases (Schedule of Supplemental Information Related to Operating Leases) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Operating leases: | ||
Operating lease right-of-use assets, net | $ 5,781,541 | $ 6,242,736 |
Accrued expenses and other liabilities | 423,720 | 440,386 |
Operating lease liabilities, less current portion | 5,518,920 | 5,893,268 |
Total operating lease liabilities | $ 5,942,640 | $ 6,333,654 |
Weighted average remaining lease term | 15 years 7 months 6 days | 15 years 8 months 12 days |
Weighted average discount rate | 7.33% | 7.26% |
Leases (Schedule of Supplemen_2
Leases (Schedule of Supplemental Information Related to Finance Leases) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Finance leases: | ||
Property and equipment, net | $ 929,318 | $ 1,084,394 |
Current maturities of finance lease liabilities | 240,257 | 257,298 |
Finance lease liabilities, less current portion | 66,649 | 235,116 |
Total finance lease liabilities | $ 306,906 | $ 492,414 |
Weighted average remaining lease term | 1 year 3 months 18 days | 1 year 9 months 18 days |
Weighted average discount rate | 4.68% | 4.56% |
Leases (Schedule of Maturities
Leases (Schedule of Maturities of Lease Liabilities) (Details) - USD ($) | Oct. 03, 2021 | Jan. 03, 2021 |
Operating leases | ||
Due in one year or less | $ 845,016 | |
Due after one year through two years | 730,981 | |
Due after two years through three years | 544,702 | |
Due after three years through four years | 527,972 | |
Due after four years through five years | 527,972 | |
Thereafter | 7,358,883 | |
Total lease payments | 10,535,526 | |
Less: Interest | (4,592,886) | |
Total operating lease liabilities | 5,942,640 | |
Finance Leases | ||
Due in one year or less | 249,718 | |
Due after one year through two years | 59,096 | |
Due after two years through three years | 4,823 | |
Due after three years through four years | 3,000 | |
Due after four years through five years | 2,752 | |
Thereafter | ||
Total lease payments | 319,389 | |
Less: Interest | (12,483) | |
Total finance lease liabilities | $ 306,906 | $ 492,414 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | $ (1,226,955) | $ (1,645,355) | $ (1,271,321) | $ (1,297,439) |
Other comprehensive income (loss) | (103,348) | 235,736 | (58,982) | (112,180) |
Balance | (1,330,303) | (1,409,619) | (1,330,303) | (1,409,619) |
Minimum Benefit Liability Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (154,662) | 5,694 | (154,662) | 5,694 |
Other comprehensive income (loss) | ||||
Balance | (154,662) | 5,694 | (154,662) | 5,694 |
Foreign Currency Translation Adjustment [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (1,072,293) | (1,651,049) | (1,116,659) | (1,303,133) |
Other comprehensive income (loss) | (103,348) | 235,736 | (58,982) | (112,180) |
Balance | $ (1,175,641) | $ (1,415,313) | $ (1,175,641) | $ (1,415,313) |
Income (Loss) per Common Share
Income (Loss) per Common Share (Narrative) (Details) - Stock Option [Member] - $ / shares | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Weighted average effect of dilutive securities | 133,050 | 151,800 | 133,050 | 151,800 |
Option exercise price | $ 14.04 | $ 14.02 | $ 14.04 | $ 14.02 |
Revenue (Schedule of Disaggrega
Revenue (Schedule of Disaggregated Revenue) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2021 | Oct. 04, 2020 | Oct. 03, 2021 | Oct. 04, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 16,385,914 | $ 15,171,898 | $ 56,031,150 | $ 43,528,393 |
Automotive Sector [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 8,710,220 | 9,064,735 | 32,867,633 | 24,866,376 |
Industrial Sector [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 7,675,694 | 6,107,163 | 23,163,517 | 18,662,017 |
North America [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 9,347,903 | 7,562,196 | 29,245,296 | 23,714,242 |
Europe [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 6,083,425 | 6,529,779 | 23,564,685 | 17,139,460 |
Asia [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 754,881 | 885,984 | 2,763,902 | 2,214,264 |
Other [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 199,705 | $ 193,939 | $ 457,267 | $ 460,427 |
Subsequent Events (Details)
Subsequent Events (Details) | 9 Months Ended |
Oct. 03, 2021USD ($) | |
Automotive Lenders [Member] | |
Proceeds from debt | $ 260,000 |