Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 02, 2022 | May 13, 2022 | |
Document and Entity Information | ||
Entity Registrant Name | Summer Infant, Inc. | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 2, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-33346 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-1994619 | |
Entity Address, Address Line One | 1275 Park East Drive | |
Entity Address, City or Town | Woonsocket | |
Entity Address, State or Province | RI | |
Entity Address, Postal Zip Code | 02895 | |
City Area Code | 401 | |
Local Phone Number | 671-6550 | |
Title of 12(b) Security | Common Stock, par value $0.0001 | |
Trading Symbol | SUMR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,167,168 | |
Entity Central Index Key | 0001314772 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 598 | $ 535 |
Trade receivables, net of allowance for doubtful accounts | 28,804 | 30,934 |
Inventory, net | 21,973 | 28,621 |
Prepaid and other current assets | 2,013 | 1,143 |
TOTAL CURRENT ASSETS | 53,388 | 61,233 |
Property and equipment, net | 3,709 | 4,128 |
Other intangible assets, net | 11,284 | 11,382 |
Right of use assets, noncurrent | 13,601 | 14,383 |
Other assets | 105 | 104 |
TOTAL ASSETS | 82,087 | 91,230 |
CURRENT LIABILITIES | ||
Accounts payable | 22,547 | 27,985 |
Accrued expenses | 8,555 | 5,698 |
Lease liabilities, current | 3,171 | 3,133 |
Current portion of long term debt | 2,125 | 2,125 |
Current portion of long term debt - Related parties | 188 | |
TOTAL CURRENT LIABILITIES | 36,586 | 38,941 |
Long-term debt, less current portion and unamortized debt issuance costs | 33,541 | 37,420 |
Long-term debt, less current portion - Related parties | 1,762 | |
Deferred tax liabilities | 152 | 152 |
Lease liabilities, noncurrent | 11,219 | 12,034 |
Other liabilities | 108 | 108 |
TOTAL LIABILITIES | 83,368 | 88,655 |
STOCKHOLDERS' EQUITY | ||
Preferred Stock, $0.0001 par value, 1,000,000 authorized, none issued or outstanding at April 2, 2022 and January 1, 2022, respectively | ||
Common Stock $0.0001 par value, authorized, issued and outstanding of 49,000,000, 2,194,975 and 2,164,791 at April 2, 2022 and 49,000,000, 2,194,892 and 2,164,708 at January 1, 2022, respectively | 2 | 2 |
Treasury Stock at cost (30,184 shares at April 2, 2022 and January 1, 2022) | (1,283) | (1,283) |
Additional paid-in capital | 78,402 | 78,370 |
Accumulated deficit | (77,003) | (73,088) |
Accumulated other comprehensive loss | (1,399) | (1,426) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (1,281) | 2,575 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 82,087 | $ 91,230 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 02, 2022 | Jan. 01, 2022 |
Condensed Consolidated Balance Sheets | ||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, authorized | 1,000,000 | 1,000,000 |
Preferred Stock, issued | 0 | 0 |
Preferred Stock, outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, authorized | 49,000,000 | 49,000,000 |
Common Stock, issued | 2,194,975 | 2,194,892 |
Common Stock, outstanding | 2,164,791 | 2,164,708 |
Treasury Stock at cost, shares | 30,184 | 30,184 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Condensed Consolidated Statements of Operations | ||
Net Sales | $ 34,383 | $ 36,201 |
Cost of goods sold | 27,114 | 25,544 |
Gross profit | 7,269 | 10,657 |
General and administrative expenses | 7,949 | 7,027 |
Selling expense | 2,262 | 2,407 |
Depreciation and amortization | 561 | 560 |
Operating (loss) income | (3,503) | 663 |
Interest expense, net | 412 | 336 |
(Loss) income before income taxes | (3,915) | 327 |
Provision for income taxes | 67 | |
NET (LOSS) INCOME | $ (3,915) | $ 260 |
Net (loss) income per share: | ||
BASIC | $ (1.81) | $ 0.12 |
DILUTED | $ (1.81) | $ 0.12 |
Weighted average shares outstanding: | ||
BASIC | 2,164,746 | 2,133,061 |
DILUTED | 2,164,746 | 2,161,789 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss and Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Condensed Consolidated Statements of Comprehensive Loss and Income | ||
Net (loss) income | $ (3,915) | $ 260 |
Other comprehensive loss: | ||
Changes in foreign currency translation adjustments | 27 | (39) |
Comprehensive (loss) income | $ (3,888) | $ 221 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (3,915) | $ 260 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 561 | 560 |
Stock-based compensation expense, net of forfeitures | 32 | (7) |
Amortization of deferred financing costs | 84 | 58 |
Amortization of right of use assets | 791 | 649 |
Changes in assets and liabilities: | ||
Decrease (increase) in trade receivables | 2,143 | (2,657) |
Decrease in inventory | 6,662 | 8,516 |
Decrease of lease liability | (785) | (639) |
(Increase) decrease in prepaids and other assets | (903) | 386 |
Decrease in accounts payable and accrued expenses | (2,591) | (5,805) |
Net cash provided by operating activities | 2,079 | 1,321 |
Cash flows from investing activities: | ||
Acquisitions of property and equipment | (32) | (191) |
Acquisitions of intangible assets | (12) | |
Net cash used in investing activities | (44) | (191) |
Cash flows from financing activities: | ||
Issuance of common stock upon exercise of options | 9 | |
Payment of financing fees and expenses | (272) | |
Proceeds from New Term Loan Facility | 2,000 | |
Repayments of BofA Term Loan | (375) | (375) |
Repayments of BofA FILO Loan | (156) | (156) |
Repayments of New Term Loan | (50) | |
Net repayment on BofA Asset Based Revolving Credit Facility | (3,160) | (662) |
Net cash used in financing activities | (2,013) | (1,184) |
Effect of exchange rate changes on cash and cash equivalents | 41 | (9) |
Net increase (decrease) in cash and cash equivalents | 63 | (63) |
Cash and cash equivalents, beginning of period | 535 | 510 |
Cash and cash equivalents, end of period | 598 | 447 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 327 | 302 |
Cash paid for income taxes | 1 | |
Supplemental disclosure of non-cash investing and financing activities: | ||
Right of use asset acquired through operating lease | 13,583 | |
Lease liability acquired through operating lease | $ (13,583) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Treasury Stock | Accumulated Deficit | Accumulated Comprehensive Loss | Total |
Balance, beginning of year at Jan. 02, 2021 | $ 2 | $ 77,979 | $ (1,283) | $ (70,190) | $ (1,388) | $ 5,120 |
Balance, beginning of year (in shares) at Jan. 02, 2021 | 2,132,275 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of common stock upon vesting of restricted shares (in shares) | 349 | |||||
Issuance of common stock upon exercise of stock options | 9 | 9 | ||||
Issuance of common stock upon exercise of stock options (in shares) | 985 | |||||
Stock-based compensation, net of forfeitures | (7) | (7) | ||||
Net income for the period | 260 | 260 | ||||
Changes in foreign currency translation adjustments | (39) | (39) | ||||
Balance, end of year at Apr. 03, 2021 | $ 2 | 77,981 | (1,283) | (69,930) | (1,427) | 5,343 |
Balance, end of year (in shares) at Apr. 03, 2021 | 2,133,609 | |||||
Balance, beginning of year at Jan. 01, 2022 | $ 2 | 78,370 | (1,283) | (73,088) | (1,426) | 2,575 |
Balance, beginning of year (in shares) at Jan. 01, 2022 | 2,164,708 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of common stock upon vesting of restricted shares (in shares) | 83 | |||||
Stock-based compensation, net of forfeitures | 32 | 32 | ||||
Net income for the period | (3,915) | (3,915) | ||||
Changes in foreign currency translation adjustments | 27 | 27 | ||||
Balance, end of year at Apr. 02, 2022 | $ 2 | $ 78,402 | $ (1,283) | $ (77,003) | $ (1,399) | $ (1,281) |
Balance, end of year (in shares) at Apr. 02, 2022 | 2,164,791 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Apr. 02, 2022 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Company designs, markets and distributes branded juvenile safety and convenience products that are sold globally to large national retailers as well as independent retailers, primarily in North America. The Company currently markets its products in several product categories including gates, potty, bath, entertainers, specialty blankets, strollers, car seats and travel systems. Most products are sold under our core brand names of Summer™ and SwaddleMe ® Proposed Merger with Kids2, Inc. On March 16, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Kids2, Inc., a Georgia corporation (“Parent”), and Project Abacus Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides, subject to its terms and conditions, for the acquisition of the Company by Parent through the merger of Merger Sub with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Parent (the “Proposed Merger”). Under the terms of the Proposed Merger, each share of common stock of the Company issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares of common stock (i) owned by Parent, Merger Sub, the Company or any subsidiary of Parent, Merger Sub or Company, or (ii) held by a stockholder who is entitled to, and who has perfected, appraisal rights for such shares under Delaware law) automatically will be converted into the right to receive cash in an amount of $12.00 per share (the “Merger Consideration”), without interest, subject to any required withholding of taxes. The completion of the Proposed Merger is subject to closing conditions, including: (i) the approval of the Merger Agreement by the Company’s stockholders; (ii) the absence of any laws or court orders making the Proposed Merger illegal or otherwise prohibiting the Proposed Merger; (iii) other customary closing conditions, including the accuracy of the representations and warranties of each party (subject to certain materiality exceptions) and material compliance by each party with its covenants under the Merger Agreement; and (iv) the closing of a debt financing by Parent to fund the Merger Consideration. 2022 Plan and Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate as a going concern and contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. For the quarter ended April 2, 2022, the Company incurred a net loss of $3,915. Cash provided by operating activities was $2,079, primarily a result of a decline in inventory and accounts receivable. As of April 2, 2022, the Company had $598 of cash, $38,831 of outstanding indebtedness and borrowing availability of $8,859 under its asset-based lending agreement. Due to continuing losses, the Company’s financial position and the challenging supply chain environment, there is no assurance that Company will be able to maintain compliance with the financial covenants under its loan agreements, which would impair its ability to meet its financial obligations as they become due without future amendments to its loan agreements. In addition, the COVID-19 pandemic has significantly increased economic and demand uncertainty across the globe and while sales of many of the Company’s core categories have remained strong, including year over year growth in strollers, specialty blankets, bath, entertainers and boosters, if these challenges continue, the Company may not be able to meet demands of its customers which could result in lost, reduced or cancelled orders from its customers and could materially and adversely affect its business, financial condition, and results of operations. Based on its known cash needs as of May 16, 2022, and the anticipated availability under its loan agreements, the Company has developed plans to extend its liquidity to support its working capital requirements and its ability to meet its financial obligations. The Company’s plans with regard to these matters include the following: (1) continuing to explore price increases where possible, (2) enhancing certain supply chain processes to obtain lower cost containers for its products and reduce demurrage and detention charges through additional new procedures, (3) shifting containers from COVID-19 impacted ports to alternative functioning ports to mitigate potential lost sales, (4) reducing warehouse costs through new processes as it relates to pallets, (5) reducing product costs through re-engineering of certain products, (6) reducing discretionary marketing to the extent that it does not impact revenue performance, and (7) considering additional financing and/or strategic alternatives. However, there can be no assurance the Company’s plans will be achieved and that the Company will be able to meet its financial obligations as they become due without obtaining additional financing or sources of capital. Therefore, in accordance with applicable accounting guidance, and based on the Company’s current financial condition and availability of funds, there is substantial doubt about the Company’s ability to continue as a going concern through twelve months from the date these financial statements were issued. Basis of Presentation and Principles of Consolidation The accompanying interim condensed consolidated financial statements of the Company are unaudited, but in the opinion of management, reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim periods. Accordingly, they do not include all information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year or any other period. The balance sheet at January 1, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes for the year ended January 1, 2022 included in its Annual Report on Form 10-K filed with the SEC on March 17, 2022. It is the Company’s policy to prepare its financial statements on the accrual basis of accounting in conformity with GAAP. The interim condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. All dollar amounts included in the Notes to Condensed Consolidated Financial Statements are in thousands of U.S. dollars, except share and per share amounts. Revenue Recognition The Company applies FASB ASC Topic 606, Revenue from Contracts with Customers The Company’s principal activities from which it generates its revenue is product sales. The Company has one reportable segment of business. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product delivery occurs. Consideration is typically paid approximately 60 days from the time control is transferred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in selling costs. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of primarily juvenile products to its customers. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. A transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company conducts its business with customers through valid purchase or sales orders each of which is considered a separate contract because individual orders are not interdependent on one another. Product transaction prices on a purchase or sale order are discrete and stand-alone. Purchase or sales orders may be issued under either a customer master service agreement or a reseller allowance agreement. Purchase or sales orders, master service agreements, and reseller allowance agreements, which are specific and unique to each customer, may include product price discounts, markdown allowances, return allowances, and/or volume rebates which reduce the consideration due from customers. Variable consideration is estimated using the most likely amount method, which is based on historical experience as well as current information such as sales forecasts. Contracts may also include cooperative advertising arrangements where the Company allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company’s products. These allowances are generally based upon product purchases or specific advertising campaigns. Such allowances are accrued when the related revenue is recognized. These cooperative advertising arrangements provide a distinct benefit and fair value and are accounted for as direct selling expenses. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts of revenues, expenses, assets, liabilities and related disclosures. These estimates are based on management’s best knowledge as of the date the financial statements are published of current events and actions the Company may undertake in the future. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include money market accounts and investments with an original maturity of three months or less. At times, the Company possesses cash balances in excess of federally-insured limits. Trade Receivables Trade receivables are carried at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Amounts are considered to be uncollectable based upon historical experience and management’s evaluation of outstanding accounts receivable. Changes in the allowance for doubtful accounts are as follows: For the three months ended April 2, 2022 April 3, 2021 Allowance for doubtful accounts, beginning of period $ 14 $ 197 Charges to costs and expenses, net 4 6 Account write-offs — — Allowance for doubtful accounts, end of period $ 18 $ 203 Inventory Valuation Inventory is comprised mostly of finished goods and some component parts and is stated at the lower of cost using the first-in, first-out (“FIFO”) method, or net realizable value. The Company regularly reviews slow-moving and excess inventories and writes down inventories to net realizable value if the expected net proceeds from the disposals of excess inventory are less than the carrying cost of the merchandise. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Company’s condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components to which the Company has elected to apply the practical expedient and account for each lease component and related non-lease component as one single component. The lease component results in a ROU asset being recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Income Taxes Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, that it is more likely than not that such benefits will be realized. Deferred income tax assets are recorded on a net basis as a long term asset. The Company utilized the full year forecast method of accounting for income taxes in the U.S. for the three months ended April 2, 2022 and April 3, 2021. The Company follows the applicable guidance relative to uncertain tax positions. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Uncertain tax positions must meet a recognition threshold of more-likely-than-not in order for those tax positions to be recognized in the financial statements. On March 27, 2020, the U.S. CARES Act was enacted, which provided a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. The U.S. CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. No discrete items are being recognized for the three months ended April 2, 2022 and April 3, 2021. The tax rate for the three months ended April 2, 2022 includes an expected increase in valuation allowance of $599 for the increase in U.S. and foreign net operating losses and nondeductible interest expense. As of year ended January 1, 2022 and quarter ended April 2, 2022, the Company has uncertain tax positions of $7,543. Net Loss/Income Per Share Basic loss or income per share for the Company is computed by dividing net loss or income by the weighted-average number of shares of common stock outstanding during the period. Diluted loss or income per share includes the dilutive impact of outstanding stock options and unvested restricted shares. Translation of Foreign Currencies Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is its local currency, are translated into U.S. dollars at the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been translated at average rates prevailing during each respective quarter. Resulting translation adjustments are made to a separate component of stockholders’ equity within accumulated other comprehensive loss. Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is the U.S. dollar are remeasured into U.S. dollars at their historical rates or the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been remeasured at average rates prevailing during each respective quarter. Resulting remeasurement adjustments are made to the consolidated statement of operations. Foreign exchange transaction gains and losses are included in the accompanying interim, condensed consolidated statement of operations. |
REVENUE
REVENUE | 3 Months Ended |
Apr. 02, 2022 | |
REVENUE | |
REVENUE | 2. REVENUE Disaggregation of Revenue The Company’s revenue is primarily from distinct fixed-price product sales in the juvenile product market, to similar customers and channels utilizing similar types of contracts that are short term in nature (less than one year). The Company does not sell service agreements or goods over a period of time and does not sell or utilize customer financing arrangements or time-and-material contracts. The following is a table that presents net sales by geographical area: For the three months ended April 2, 2022 April 3, 2021 United States $ 32,371 $ 33,096 All Other 2,012 3,105 Net Sales $ 34,383 $ 36,201 All Other consists of Canada, Europe, South America, Mexico, Asia, and the Middle East. Contract Balances The Company does not have any contract assets such as work-in-process or contract liabilities such as customer advances. All trade receivables on the Company’s condensed consolidated balance sheets are from contracts with customers. Contract Costs Costs incurred to obtain a contract are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. All contract costs incurred in the three months ended April 2, 2022 and three months ended April 3, 2021 fall under the provisions of the practical expedient and have therefore been expensed. |
DEBT
DEBT | 3 Months Ended |
Apr. 02, 2022 | |
DEBT | |
DEBT | 3. DEBT Loan Agreement with Bank of America. The Company and its wholly owned subsidiary, Summer Infant (USA), Inc., are parties to a Third Amended and Restated Loan and Security Agreement with Bank of America, N.A., as agent, originally entered into on October 15, 2020 and amended on January 28, 2022 and March 16, 2022 (the “BofA Loan Agreement”) that provides for (i) a $40,000 asset-based revolving credit facility, with a $5,000 unused letter of credit sub-line facility, (ii) a $7,500 term loan and (iii) a $2,500 FILO (first-in, last-out) loan. Pursuant to the BofA Loan Agreement, total borrowing capacity under the revolving credit facility is based on a borrowing base, which is generally defined as 85% of eligible receivables plus the lesser of (i) 70% of the value of eligible inventory (subject to certain limitations) or (ii) 85% of the net orderly liquidation value of eligible inventory, less applicable reserves. The scheduled maturity date of the loans under the revolving credit facility is October 15, 2025 (subject to customary early termination provisions). Loans under the revolving credit facility provided prior to January 28, 2022 bore interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins based on average quarterly availability, and loans provided beginning January 28, 2022 bear interest, at the Company’s option, at a base rate or at the Bloomberg Short-Term Bank Yield Index (“BSBY”) rate administered by Bloomberg. Interest payments are due monthly, payable in arrears. The Company is also required to pay an annual non-use fee on unused amounts under the revolving credit facility, as well as other customary fees as are set forth in the BofA Loan Agreement. As of April 2, 2022, the interest rates on BSBY based revolver loans and on base rate revolver loans were approximately 3.00% and 5.25%, respectively. At April 2, 2022, the amount outstanding on the revolving credit facility was $30,068, the total borrowing base was $38,927 and borrowing availability was $8,859. The total amount outstanding on the revolving credit facility agreement at January 1, 2022 was $33,228. Total borrowing base at January 1, 2022 was $36,177 and borrowing availability was $2,949. The principal of the term loan is to be repaid, on a quarterly basis, in installments of $375, until paid in full on termination and subject to mandatory repayment in certain circumstances. The scheduled maturity date of the term loan is October 15, 2025 or earlier, if the revolving credit facility is terminated.Prior to January 28, 2022, the term loan bore interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins, and beginning January 28, 2022 bears interest, at the Company’s option, at a base rate or at the BSBY rate. Interest payments are due monthly, in arrears. As of April 2, 2022, the interest rates on BSBY based term loans and on base rate term loans were approximately 4.53% and 6.50%, respectively. The amount outstanding on the term loan was $5,250 at April 2, 2022. The amount outstanding on the term loan was $5,625 at January 1, 2022. The total borrowing capacity under the FILO loan is the lesser of (i) the then applicable aggregate FILO commitment amount and (ii) a borrowing base, generally defined as a specific percentage of the value of eligible accounts, plus a specified percentage of the value of eligible inventory. The aggregate FILO commitment amount as of April 2, 2022 was $1,563 with no further availability, and such amount will be proportionately reduced each quarter until the FILO loan is terminated at maturity on October 15, 2024. There can be no voluntary repayment on the FILO loan as long as there are loans outstanding under the revolving credit facility, unless (i) there is an overadvance under the FILO loan, or (ii) such prepayment is accompanied by a permanent dollar for dollar reduction in the aggregate FILO commitment amount such that, after giving effect to such prepayment and reduction, the outstanding principal amount of the FILO loan is equal to but does not exceed the lesser of (A) the aggregate FILO commitment amount and (B) the FILO borrowing base. Prior to January 28, 2022, the FILO loan bore interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins, and beginning January 28, 2022 bear interest, at the Company’s option, at a base rate or at the BSBY rate. Interest payments are due monthly, in arrears. As of April 2, 2022, the interest rates on the BSBY based FILO loans and on base rate FILO loans were approximately 4.28% and 6.25%, respectively. The aggregate FILO commitment amount of as of January 1, 2022 was $1,719. All obligations under the BofA Loan Agreement are secured by substantially all the assets of the Company, and the Company’s subsidiaries, Summer Infant Canada Limited and Summer Infant Europe Limited, are guarantors under the BofA Loan Agreement. The BofA Loan Agreement contains customary affirmative and negative covenants. Among other restrictions, the Company is restricted in its ability to incur additional debt, make acquisitions or investments, dispose of assets, or make distributions unless in each case certain conditions are satisfied. As long as any obligations remain outstanding under the BofA Loan Agreement, the Company must maintain minimum availability of $3,500 and must meet a specified minimum EBITDA requirement on a rolling monthly basis beginning on April 2, 2022. Beginning on the last day of each fiscal month commencing January 28, 2023, the Company must maintain a fixed charge coverage ratio at the end of each fiscal month of at least 1.00 to 1.00 for the twelve-month period then ended. In connection with the March 2022 amendment to the BofA Loan Agreement, the lender also waived the requirement that the Company’s audit and certification with respect to its fiscal year 2021 financial statements be without qualification. The BofA Loan Agreement also contains customary events of default, including if the Company fails to comply with any required financial covenants and the occurrence of a change of control without the consent of the lender. In the event of a default, all of the obligations under the BofA Loan Agreement may be declared immediately due and payable. For certain events of default relating to insolvency and receivership, all outstanding obligations become due and payable. Second-Lien, Subordinated Term Loan On January 28, 2022, we and our subsidiary, Summer Infant (USA), Inc., as borrowers, entered into a Loan and Security Agreement with certain financial institutions as lenders, and Wynnefield Capital, Inc., as agent for the lenders, which was amended on March 16, 2022 (as amended, the “New Term Loan Agreement”). The lenders, Wynnefield Partners Small Cap Value, L.P. and Wynnefield Partners Small Cap Value, L.P. I, are existing stockholders of the Company and, together with affiliates, beneficially own approximately 36% of the Company’s outstanding common stock, and an employee of Wynnefield Capital, Inc., Stephen Zelkowicz, serves on the Company’s Board of Directors (the “Board”). Because the New Term Loan Agreement is a related party transaction, it was reviewed and approved by the Audit Committee of the Board. Subsequent to quarter end, on April 18, 2022, the New Term Loan Agreement was subsequently amended as set forth in Note 8. The New Term Loan Agreement, as amended, provides for a second lien, subordinated term loan in an amount up to $5,000, with requests for the funding of tranches limited to every 5 days (previously 30 days) (the “New Term Loan”). At the time of a funding request, availability (as defined in the BofA Loan Agreement) must be either (i) equal or less than $6,000 in the 30 days immediately preceding the request date or (ii) on the date of request and on the date of borrowing, equal or less than $5,500 (previously $3,000). An initial funding tranche was made in the amount of $2,000. Subsequent tranches may not exceed $1,000. As of April 2, 2022, the amount outstanding on the New Term Loan Agreement was $1,950. A $50 payment was paid on the new subordinated term loan prematurely to the first due date and was subsequently returned to the Company in April 2022. Borrowings under the New Term Loan Agreement bear interest at a rate of 5.0% per annum until January 27, 2024, and thereafter at a rate of 9.0% per annum, payable in arrears on a quarterly basis. The principal amount of any borrowing will be repaid quarterly in installments equal to 2.5% of the highest amount of borrowings outstanding under the New Term Loan Agreement during the applicable quarter, commencing on July 1, 2022 and continuing until the maturity date of April 19, 2026. In addition, we will be required to make prepayments on any outstanding borrowings under the New Term Loan Agreement in an amount equal to 50% of the average excess amount of availability (as defined in the BofA Loan Agreement) for the prior 30 days in excess of $10,000 and so long as (i) before and after giving effect to such mandatory prepayment, no default or event of default has occurred or will occur as a result of the payment, and (ii) before and after giving effect to the payment there is at least $10,000 of availability (as defined in the BofA Loan Agreement). Borrowings under the New Term Loan Agreement are secured by a second lien on substantially all of the assets of the Company and are subordinated to the Company’s obligations under the BofA Agreement. The New Term Loan Agreement contains customary affirmative and negative covenants and events of default substantially the same as the BofA Agreement. PPP Loan On August 3, 2020, the Company received loan proceeds of $1,956 (the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the U.S. CARES Act. The PPP Loan, which was in the form of a promissory note (the “PPP Note”), between the Company and BofA, as the lender, had a maturity date of July 27, 2025 and would bear interest at a fixed rate of 1% per annum. Monthly principal and interest payments were deferred until (i) the date on which the amount of forgiveness was remitted to the Company’s lender, (ii) the date on which the Company’s lender provided notice that the Company was not entitled to loan forgiveness, and (iii) if a borrower did not apply for loan forgiveness, 10 months after the date of the loan forgiveness covered period. The Company was permitted to voluntarily prepay the borrowings in full with no associated penalty or premium. Under the terms of the PPP, the principal and interest could be forgiven if the PPP Loan proceeds were used for qualifying expenses, including payroll costs, rent and utility costs. The PPP Note contained customary representations, warranties, and covenants for this type of transaction, including customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the PPP Note. The occurrence of an event of default could have resulted in, among other things, the Company becoming obligated to repay all amounts outstanding under the PPP Note. On February 18, 2021, the Company applied for full forgiveness of the PPP loan through Bank of America. In May 2021, the SBA determined that the PPP Loan was fully approved for forgiveness and on May 23, 2021, the PPP Loan was repaid in full by the SBA to BofA. The forgiveness amount remitted was $1,956 in principal and $16 in interest. Aggregate maturities of bank debt related to the BofA Loan Agreement and New Term Loan Agreement are as follows: Fiscal Year ending: 2022 1,113 2023 2,325 2024 2,325 2025 31,768 2026 and beyond 1,300 Total $ 38,831 Unamortized debt issuance costs were $1,215 at April 2, 2022 and $1,027 at January 1, 2022, and are presented as a direct deduction of long-term debt on the consolidated balance sheets. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Apr. 02, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 4. INTANGIBLE ASSETS Intangible assets consisted of the following: April 2, January 1, 2022 2022 Brand names $ 10,900 $ 10,900 Patents and licenses 4,220 4,208 Customer relationships 6,946 6,946 Other intangibles 1,886 1,886 23,952 23,940 Less: Accumulated amortization (12,668) (12,558) Intangible assets, net $ 11,284 $ 11,382 The amortization period for the majority of the intangible assets ranges from 5 to 18 years for those assets that have an estimated life; certain of the assets have indefinite lives (brand names). Total of intangibles not subject to amortization amounted to $8,400 as of April 2, 2022 and January 1, 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Apr. 02, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 5. COMMITMENTS AND CONTINGENCIES Leases The Company leases office space and distribution centers primarily related to its United States, Canada, United Kingdom, and Hong Kong operations. In connection with these leases, there were no cash incentives from the landlord to be used for the construction of leasehold improvements within the facility. In April 2020, the Company entered into a twelve-month sublease agreement for a portion of the distribution warehouse located in Riverside, California. In February 2021, the Company entered into a six-month extension from April 1, 2021 through September 30, 2021. On October 1, 2021, the Company entered into a new twelve-month sublease agreement for a portion of the distribution warehouse located in Riverside, California. Fixed sublease payments received are recognized on a straight-line basis over the sublease term in general and administrative expenses. In February 2021, Summer USA extended its lease at its Riverside, California distribution center. The existing lease was set to expire on September 30, 2021 and has been extended for 61 months through October 31, 2026. In addition, the amended lease grants a 60-month extension option. The company concluded that this is a modification to the existing lease and continues to be classified as operating. Upon the execution of the lease extension, the Company recorded an increase in ROU asset and lease liability of $13,583 , respectively. The Company did not include the extension option in the calculation of the ROU asset and lease liability. In October 2021, the Company renewed its lease in Hong Kong for an additional two years beginning in November 2021 and terminating in November 2023. No options to renew were stipulated in the lease. Upon execution of the lease, the Company recorded an ROU asset The Company identified and assessed the following significant assumptions in recognizing the right-of-use asset and corresponding liabilities: ● Expected lease term – The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. As of April 2, 2022, these leases had remaining lease terms between 1.25 and 4.58 years. The Woonsocket lease has two 5 -year extension options, and the Canada lease has one 5 -year extension option that have not been included in the lease term. ● Incremental borrowing rate – The Company’s lease agreements do not provide an implicit rate. As the Company does not have any external borrowings for comparable terms of its leases, the Company estimated the incremental borrowing rate based on secured borrowings available to the Company for the next 5 years . This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. ● Lease and non - lease components – In certain cases the Company is required to pay for certain additional charges for operating costs, including insurance, maintenance, taxes, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage. The Company determined that these costs are non-lease components and they are not included in the calculation of the lease liabilities because they are variable. Payments for these variable, non-lease components are considered variable lease costs and are recognized in the period in which the costs are incurred. The components of the Company’s lease expense for the three months ended April 2, 2022 and April 3, 2021 were as follows: For the three months ended April 2, 2022 April 3, 2021 Operating lease cost $ 913 $ 782 Variable lease cost 140 56 Less: sublease income (449) (250) Total lease cost $ 604 $ 588 Weighted-average remaining lease term 4.37 years Weighted Average discount rate: 3.3 % Cash paid for amounts included in the measurement of the Company’s lease liabilities were $904 and $765 for the three months ended April 2, 2022 and April 3, 2021 respectively. As of April 2, 2022, the present value of maturities of the Company’s operating lease liabilities were as follows: Fiscal Year Ending: 2022 $ 2,690 2023 3,499 2024 3,347 2025 3,284 2026 2,672 Thereafter — Less imputed interest (1,101) Total $ 14,391 The future fixed sublease receipts under non-cancelable operating sublease agreements as of April 2, 2022 are as follows: Fiscal Year Ending: 2022 (899) Total $ (899) Litigation The Company is a party to various routine claims, litigation and administrative complaints incidental to its business, including claims involving product liability, employee matters and other general liability claims, most of which are covered by insurance. We are not aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, results of operations or financial condition. |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 3 Months Ended |
Apr. 02, 2022 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | 6. SHARE BASED COMPENSATION The Company is currently authorized to issue up to 374,889 shares for equity awards under the Company’s Amended and Restated 2012 Incentive Compensation Plan (“2012 Plan”). In May 2021, the Company’s stockholders approved an increase in the number of shares available for issuance under the 2012 Plan from 188,889 to 374,889. Periodically, the Company may also grant equity awards outside of its 2012 Plan as inducement grants for new hires. Under the 2012 Plan, awards may be granted to participants in the form of non-qualified stock options, incentive stock options, restricted stock, deferred stock, restricted stock units and other stock-based awards. Subject to the provisions of the plans, awards may be granted to employees, officers, directors, advisors and consultants who are deemed to have rendered or are able to render significant services to the Company or its subsidiaries and who are deemed to have contributed or to have the potential to contribute to the Company’s success. The Company accounts for options under the fair value recognition standard. The application of this standard resulted in share-based compensation expense, net of forfeitures for the three months ended April 2, 2022 of $32 and a credit of $7 for the three months ended April 3, 2021. Share based compensation expense is included in selling, general and administrative expenses. The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the table below. The Company uses the simplified method to estimate the expected term of the options, but used an estimate for grants of “plain vanilla” stock options based on a formula prescribed by the Securities and Exchange Commission. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Share-based compensation expense recognized in the consolidated financial statements is based on awards that are ultimately expected to vest. As of April 2, 2022, there were 69,912 stock options outstanding and 5,989 unvested restricted shares outstanding. During the three months ended April 2, 2022, the Company granted 3,000 stock options and did not grant any shares of restricted stock. The following table summarizes the weighted average assumptions used for stock options granted during the three months ended April 2, 2022. For the Three Months Ended April 2, 2022 Expected life (in years) 4.6 Risk-free interest rate 1.8 % Volatility 110.4 % Dividend yield 0 % Forfeiture rate 52.1 % As of April 2, 2022, there were 203,076 shares available to grant under the 2012 Plan. |
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES | 3 Months Ended |
Apr. 02, 2022 | |
WEIGHTED AVERAGE COMMON SHARES | |
WEIGHTED AVERAGE COMMON SHARES | 7. WEIGHTED AVERAGE COMMON SHARES Basic and diluted earnings or loss per share (“EPS”) is based upon the weighted average number of common shares outstanding during the period. Diluted weighted average number of common shares outstanding also included common stock equivalents such as stock options and restricted shares. The Company does not include the anti-dilutive effect of common stock equivalents in the calculation of dilutive common shares outstanding. A reconciliation of basic and diluted net income (loss) attributable to common stockholders is as follows: For the Three For the Three Months Ended Months Ended Calculation of Basic and Diluted EPS April 2, 2022 April 3, 2021 Weighted-average common shares outstanding – basic 2,164,746 2,133,061 Dilutive effect of restricted shares — 8,306 Dilutive effect of stock options — 20,422 Weighted-average common shares outstanding – diluted 2,164,746 2,161,789 (Loss) earnings per share – basic $ (1.81) $ 0.12 (Loss) earnings per share – diluted $ (1.81) $ 0.12 The computation of diluted common shares for the three months ended April 2, 2022 excluded 69,912 stock options and 5,989 shares of restricted stock outstanding because to include them would have been anti-dilutive. The computation of diluted common shares for the three months ended April 3, 2021 excluded 69,845 stock options and 2,850 shares of restricted stock outstanding because to include them would have been anti-dilutive. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Apr. 02, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 8. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing date of this Quarterly Report on Form 10-Q and determined that no subsequent events occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto except as described below: On April 18, 2022, the Company entered into an amendment to the New Term Loan that modified the borrowing terms under the New Term Loan to (i) permit the Company to request a standby term loan if, on the date of notice of borrowing and the date of the borrowing, the borrowing base certificate delivered pursuant to the BofA Loan Agreement reflects availability (as defined in the BofA Loan Agreement) equal to or less than $5,500 and (ii) reduce the period of time between borrowing requests from 30 days to 5 days , provided that, at all times prior to May 15, 2022, the aggregate principal amount of standby term loans shall not exceed $4,000 . |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Apr. 02, 2022 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Operations | Nature of Operations The Company designs, markets and distributes branded juvenile safety and convenience products that are sold globally to large national retailers as well as independent retailers, primarily in North America. The Company currently markets its products in several product categories including gates, potty, bath, entertainers, specialty blankets, strollers, car seats and travel systems. Most products are sold under our core brand names of Summer™ and SwaddleMe ® |
Proposed Merger with Kids2, Inc. | Proposed Merger with Kids2, Inc. On March 16, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Kids2, Inc., a Georgia corporation (“Parent”), and Project Abacus Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides, subject to its terms and conditions, for the acquisition of the Company by Parent through the merger of Merger Sub with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Parent (the “Proposed Merger”). Under the terms of the Proposed Merger, each share of common stock of the Company issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares of common stock (i) owned by Parent, Merger Sub, the Company or any subsidiary of Parent, Merger Sub or Company, or (ii) held by a stockholder who is entitled to, and who has perfected, appraisal rights for such shares under Delaware law) automatically will be converted into the right to receive cash in an amount of $12.00 per share (the “Merger Consideration”), without interest, subject to any required withholding of taxes. The completion of the Proposed Merger is subject to closing conditions, including: (i) the approval of the Merger Agreement by the Company’s stockholders; (ii) the absence of any laws or court orders making the Proposed Merger illegal or otherwise prohibiting the Proposed Merger; (iii) other customary closing conditions, including the accuracy of the representations and warranties of each party (subject to certain materiality exceptions) and material compliance by each party with its covenants under the Merger Agreement; and (iv) the closing of a debt financing by Parent to fund the Merger Consideration. |
2022 Plan and Going Concern | 2022 Plan and Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate as a going concern and contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. For the quarter ended April 2, 2022, the Company incurred a net loss of $3,915. Cash provided by operating activities was $2,079, primarily a result of a decline in inventory and accounts receivable. As of April 2, 2022, the Company had $598 of cash, $38,831 of outstanding indebtedness and borrowing availability of $8,859 under its asset-based lending agreement. Due to continuing losses, the Company’s financial position and the challenging supply chain environment, there is no assurance that Company will be able to maintain compliance with the financial covenants under its loan agreements, which would impair its ability to meet its financial obligations as they become due without future amendments to its loan agreements. In addition, the COVID-19 pandemic has significantly increased economic and demand uncertainty across the globe and while sales of many of the Company’s core categories have remained strong, including year over year growth in strollers, specialty blankets, bath, entertainers and boosters, if these challenges continue, the Company may not be able to meet demands of its customers which could result in lost, reduced or cancelled orders from its customers and could materially and adversely affect its business, financial condition, and results of operations. Based on its known cash needs as of May 16, 2022, and the anticipated availability under its loan agreements, the Company has developed plans to extend its liquidity to support its working capital requirements and its ability to meet its financial obligations. The Company’s plans with regard to these matters include the following: (1) continuing to explore price increases where possible, (2) enhancing certain supply chain processes to obtain lower cost containers for its products and reduce demurrage and detention charges through additional new procedures, (3) shifting containers from COVID-19 impacted ports to alternative functioning ports to mitigate potential lost sales, (4) reducing warehouse costs through new processes as it relates to pallets, (5) reducing product costs through re-engineering of certain products, (6) reducing discretionary marketing to the extent that it does not impact revenue performance, and (7) considering additional financing and/or strategic alternatives. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying interim condensed consolidated financial statements of the Company are unaudited, but in the opinion of management, reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim periods. Accordingly, they do not include all information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year or any other period. The balance sheet at January 1, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes for the year ended January 1, 2022 included in its Annual Report on Form 10-K filed with the SEC on March 17, 2022. It is the Company’s policy to prepare its financial statements on the accrual basis of accounting in conformity with GAAP. The interim condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. All dollar amounts included in the Notes to Condensed Consolidated Financial Statements are in thousands of U.S. dollars, except share and per share amounts. |
Revenue Recognition | Revenue Recognition The Company applies FASB ASC Topic 606, Revenue from Contracts with Customers The Company’s principal activities from which it generates its revenue is product sales. The Company has one reportable segment of business. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product delivery occurs. Consideration is typically paid approximately 60 days from the time control is transferred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in selling costs. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of primarily juvenile products to its customers. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. A transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company conducts its business with customers through valid purchase or sales orders each of which is considered a separate contract because individual orders are not interdependent on one another. Product transaction prices on a purchase or sale order are discrete and stand-alone. Purchase or sales orders may be issued under either a customer master service agreement or a reseller allowance agreement. Purchase or sales orders, master service agreements, and reseller allowance agreements, which are specific and unique to each customer, may include product price discounts, markdown allowances, return allowances, and/or volume rebates which reduce the consideration due from customers. Variable consideration is estimated using the most likely amount method, which is based on historical experience as well as current information such as sales forecasts. Contracts may also include cooperative advertising arrangements where the Company allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company’s products. These allowances are generally based upon product purchases or specific advertising campaigns. Such allowances are accrued when the related revenue is recognized. These cooperative advertising arrangements provide a distinct benefit and fair value and are accounted for as direct selling expenses. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts of revenues, expenses, assets, liabilities and related disclosures. These estimates are based on management’s best knowledge as of the date the financial statements are published of current events and actions the Company may undertake in the future. Accordingly, actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include money market accounts and investments with an original maturity of three months or less. At times, the Company possesses cash balances in excess of federally-insured limits. |
Trade Receivables | Trade Receivables Trade receivables are carried at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Amounts are considered to be uncollectable based upon historical experience and management’s evaluation of outstanding accounts receivable. Changes in the allowance for doubtful accounts are as follows: For the three months ended April 2, 2022 April 3, 2021 Allowance for doubtful accounts, beginning of period $ 14 $ 197 Charges to costs and expenses, net 4 6 Account write-offs — — Allowance for doubtful accounts, end of period $ 18 $ 203 |
Inventory Valuation | Inventory Valuation Inventory is comprised mostly of finished goods and some component parts and is stated at the lower of cost using the first-in, first-out (“FIFO”) method, or net realizable value. The Company regularly reviews slow-moving and excess inventories and writes down inventories to net realizable value if the expected net proceeds from the disposals of excess inventory are less than the carrying cost of the merchandise. |
Leases | Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Company’s condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components to which the Company has elected to apply the practical expedient and account for each lease component and related non-lease component as one single component. The lease component results in a ROU asset being recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Income Taxes | Income Taxes Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, that it is more likely than not that such benefits will be realized. Deferred income tax assets are recorded on a net basis as a long term asset. The Company utilized the full year forecast method of accounting for income taxes in the U.S. for the three months ended April 2, 2022 and April 3, 2021. The Company follows the applicable guidance relative to uncertain tax positions. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Uncertain tax positions must meet a recognition threshold of more-likely-than-not in order for those tax positions to be recognized in the financial statements. On March 27, 2020, the U.S. CARES Act was enacted, which provided a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. The U.S. CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. No discrete items are being recognized for the three months ended April 2, 2022 and April 3, 2021. The tax rate for the three months ended April 2, 2022 includes an expected increase in valuation allowance of $599 for the increase in U.S. and foreign net operating losses and nondeductible interest expense. As of year ended January 1, 2022 and quarter ended April 2, 2022, the Company has uncertain tax positions of $7,543. |
Net Loss Per Share | Net Loss/Income Per Share Basic loss or income per share for the Company is computed by dividing net loss or income by the weighted-average number of shares of common stock outstanding during the period. Diluted loss or income per share includes the dilutive impact of outstanding stock options and unvested restricted shares. |
Translation of Foreign Currencies | Translation of Foreign Currencies Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is its local currency, are translated into U.S. dollars at the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been translated at average rates prevailing during each respective quarter. Resulting translation adjustments are made to a separate component of stockholders’ equity within accumulated other comprehensive loss. Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is the U.S. dollar are remeasured into U.S. dollars at their historical rates or the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been remeasured at average rates prevailing during each respective quarter. Resulting remeasurement adjustments are made to the consolidated statement of operations. Foreign exchange transaction gains and losses are included in the accompanying interim, condensed consolidated statement of operations. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of changes in the allowance for doubtful accounts | For the three months ended April 2, 2022 April 3, 2021 Allowance for doubtful accounts, beginning of period $ 14 $ 197 Charges to costs and expenses, net 4 6 Account write-offs — — Allowance for doubtful accounts, end of period $ 18 $ 203 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
REVENUE | |
Schedule of net sales by geographical area | For the three months ended April 2, 2022 April 3, 2021 United States $ 32,371 $ 33,096 All Other 2,012 3,105 Net Sales $ 34,383 $ 36,201 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
DEBT | |
Schedule of aggregate maturities of the Loan Agreement | Fiscal Year ending: 2022 1,113 2023 2,325 2024 2,325 2025 31,768 2026 and beyond 1,300 Total $ 38,831 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | April 2, January 1, 2022 2022 Brand names $ 10,900 $ 10,900 Patents and licenses 4,220 4,208 Customer relationships 6,946 6,946 Other intangibles 1,886 1,886 23,952 23,940 Less: Accumulated amortization (12,668) (12,558) Intangible assets, net $ 11,284 $ 11,382 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of lease expense | For the three months ended April 2, 2022 April 3, 2021 Operating lease cost $ 913 $ 782 Variable lease cost 140 56 Less: sublease income (449) (250) Total lease cost $ 604 $ 588 Weighted-average remaining lease term 4.37 years Weighted Average discount rate: 3.3 % |
Schedule of present value of maturities of operating lease liabilities | As of April 2, 2022, the present value of maturities of the Company’s operating lease liabilities were as follows: Fiscal Year Ending: 2022 $ 2,690 2023 3,499 2024 3,347 2025 3,284 2026 2,672 Thereafter — Less imputed interest (1,101) Total $ 14,391 |
Schedule of future fixed sublease receipts under non-cancelable operating lease agreements | The future fixed sublease receipts under non-cancelable operating sublease agreements as of April 2, 2022 are as follows: Fiscal Year Ending: 2022 (899) Total $ (899) |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
SHARE BASED COMPENSATION | |
Summary of weighted average assumptions used for stock options granted | For the Three Months Ended April 2, 2022 Expected life (in years) 4.6 Risk-free interest rate 1.8 % Volatility 110.4 % Dividend yield 0 % Forfeiture rate 52.1 % |
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
WEIGHTED AVERAGE COMMON SHARES | |
Schedule of reconciliation of basic and diluted net income (loss) attributable to common stockholders | For the Three For the Three Months Ended Months Ended Calculation of Basic and Diluted EPS April 2, 2022 April 3, 2021 Weighted-average common shares outstanding – basic 2,164,746 2,133,061 Dilutive effect of restricted shares — 8,306 Dilutive effect of stock options — 20,422 Weighted-average common shares outstanding – diluted 2,164,746 2,161,789 (Loss) earnings per share – basic $ (1.81) $ 0.12 (Loss) earnings per share – diluted $ (1.81) $ 0.12 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 3 Months Ended | ||
Apr. 02, 2022USD ($)segment | Apr. 03, 2021USD ($) | Jan. 01, 2022USD ($) | |
2022 Plan and Going Concern | |||
Net (loss) income | $ (3,915) | $ 260 | |
Cash in operating activities | 2,079 | 1,321 | |
Cash | 598 | $ 535 | |
Outstanding indebtedness | 38,831 | ||
Reclassification | |||
Amortization of deferred financing costs | $ 84 | 58 | |
Revenue Recognition | |||
Number of reportable segments | segment | 1 | ||
Days in accounts receivable | P60D | ||
Changes in the allowance for doubtful accounts | |||
Allowance for doubtful accounts, beginning of period | $ 14 | 197 | |
(Reversals of) charges to costs and expenses, net | 4 | 6 | |
Allowance for doubtful accounts, end of period | 18 | $ 203 | |
Income Taxes | |||
Tax benefit recognized related to increase in interest deduction from tax law changes | 599 | ||
Uncertain tax positions | 7,543 | $ 7,543 | |
Merger Agreement | |||
2022 Plan and Going Concern | |||
Net (loss) income | (3,915) | ||
Cash in operating activities | 2,079 | ||
Cash | 598 | ||
Outstanding indebtedness | 38,831 | ||
Borrowing availability | $ 8,859 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Net sales by geographical area | ||
Net Sales | $ 34,383 | $ 36,201 |
Election of practical expedient, incremental cost of obtaining contracts | true | true |
United States | ||
Net sales by geographical area | ||
Net Sales | $ 32,371 | $ 33,096 |
All Other | ||
Net sales by geographical area | ||
Net Sales | $ 2,012 | $ 3,105 |
DEBT - Summary of Loans (Detail
DEBT - Summary of Loans (Details) $ in Thousands | Jan. 28, 2022USD ($) | May 23, 2021USD ($) | Mar. 30, 2021 | Aug. 03, 2020USD ($) | Apr. 02, 2022USD ($) | Apr. 03, 2021USD ($) | Jul. 31, 2021 | Jan. 01, 2022USD ($) | Oct. 15, 2020USD ($) |
DEBT | |||||||||
Term Loan | $ 375 | $ 375 | |||||||
Repayment of Prior Term Loan Facility | $ 50 | ||||||||
New Term Loan Agreement | |||||||||
DEBT | |||||||||
Ownership percentage | 36.00% | ||||||||
Minimum Credit availability | $ 10,000 | ||||||||
Loan agreement, Interest percentage | 5.00% | 9.00% | |||||||
Percentage of highest amount of borrowings outstanding than Principal outstanding under New Loan Agreement | 2.50% | ||||||||
Percentage Of Prepayments To Be Made On Average Excess Amount Of Availability Of Debt | 50.00% | ||||||||
Term Loan | New Term Loan Agreement | |||||||||
DEBT | |||||||||
Subordinated Debt | $ 5,000 | ||||||||
Revolving credit facility | |||||||||
DEBT | |||||||||
Borrowing availability | $ 8,859 | $ 2,949 | |||||||
BofA Agreement | |||||||||
DEBT | |||||||||
Borrowing base as a percentage of eligible accounts under loan agreements | 5.25% | ||||||||
Amount outstanding | $ 38,927 | 36,177 | |||||||
BofA Agreement | Walmart | |||||||||
DEBT | |||||||||
Borrowing base as a percentage of eligible accounts under loan agreements | 85.00% | 70.00% | |||||||
BofA Agreement | Amazon | |||||||||
DEBT | |||||||||
Borrowing base as a percentage of eligible accounts under loan agreements | 85.00% | 3.00% | |||||||
BofA Agreement | Financial Covenant | |||||||||
DEBT | |||||||||
Debt Instrument, Threshold Availability To Maintain Minimum Fixed Charge Coverage Ratio | $ 3,500 | ||||||||
BofA Agreement | Financial Covenant | Minimum | |||||||||
DEBT | |||||||||
Fixed charge coverage ratio at the end of each fiscal month | 1 | ||||||||
BofA Agreement | Term Loan | |||||||||
DEBT | |||||||||
Maximum borrowing capacity | $ 7,500 | ||||||||
Amount outstanding | $ 5,250 | 5,625 | |||||||
Quarterly basis installment amount | $ 375 | ||||||||
BofA Agreement | Term Loan | LIBOR | |||||||||
DEBT | |||||||||
Interest rate during the period | 4.53% | ||||||||
BofA Agreement | Term Loan | Base rate | |||||||||
DEBT | |||||||||
Interest rate during the period | 6.50% | ||||||||
BofA Agreement | FILO Loan | |||||||||
DEBT | |||||||||
Maximum borrowing capacity | 2,500 | ||||||||
Amount outstanding | 1,719 | ||||||||
Borrowing capacity | $ 1,563 | ||||||||
BofA Agreement | FILO Loan | LIBOR | |||||||||
DEBT | |||||||||
Interest rate during the period | 4.28% | ||||||||
BofA Agreement | FILO Loan | Base rate | |||||||||
DEBT | |||||||||
Interest rate during the period | 6.25% | ||||||||
BofA Agreement | Revolving credit facility | |||||||||
DEBT | |||||||||
Maximum borrowing capacity | 40,000 | ||||||||
Amount outstanding | $ 30,068 | $ 33,228 | |||||||
BofA Agreement | Letter of credit sub-line facility | |||||||||
DEBT | |||||||||
Maximum borrowing capacity | $ 5,000 | ||||||||
Term Loan and Security Agreement | New Term Loan Agreement | |||||||||
DEBT | |||||||||
Amount outstanding | $ 1,950 | ||||||||
Period for funding of Tranches | 30 days | 5 days | |||||||
Minimum Credit availability | $ 6,000 | ||||||||
Subordinated debt as on Date Of Request and Borrowing | 3,000 | $ 5,500 | |||||||
Initial Funding Tranche | 2,000 | ||||||||
Subsequent Tranche | $ 1,000 | ||||||||
Repayment of Prior Term Loan Facility | $ 50 | ||||||||
PPP Loan | |||||||||
DEBT | |||||||||
Loan proceeds | $ 1,956 | ||||||||
Amount of principal forgiven | $ 1,956 | ||||||||
Amount of interest forgiven | $ 16 |
DEBT - Aggregate maturities (De
DEBT - Aggregate maturities (Details) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Aggregate maturities of bank debt related to the Loan Agreement | ||
Remainder 2022 | $ 1,113 | |
2022 | 2,325 | |
2023 | 2,325 | |
2024 | 31,768 | |
2026 and beyond | 1,300 | |
Total | 38,831 | |
Long-term debt | ||
Aggregate maturities of bank debt related to the Loan Agreement | ||
Unamortized debt issuance costs | $ 1,215 | $ 1,027 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 02, 2022 | Jan. 01, 2022 | |
INTANGIBLE ASSETS | ||
Intangible assets, gross | $ 23,952 | $ 23,940 |
Less: Accumulated amortization | (12,668) | (12,558) |
Intangible assets, net | 11,284 | 11,382 |
Intangibles not subject to amortization | $ 8,400 | $ 8,400 |
Minimum | ||
INTANGIBLE ASSETS | ||
Amortization period of intangible assets | 5 years | 5 years |
Maximum | ||
INTANGIBLE ASSETS | ||
Amortization period of intangible assets | 18 years | 18 years |
Patents and licenses | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | $ 4,220 | $ 4,208 |
Customer relationships | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | 6,946 | 6,946 |
Other intangibles | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | 1,886 | 1,886 |
Brand names | ||
INTANGIBLE ASSETS | ||
Intangible assets, gross | $ 10,900 | $ 10,900 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Summary of Leases (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Feb. 28, 2021USD ($) | Apr. 30, 2020 | Apr. 02, 2022USD ($)item | Jan. 01, 2022USD ($) | Oct. 31, 2021USD ($) | |
Leases | |||||
Cash incentives from the landlord | $ 0 | ||||
Term of secured borrowings used to estimate incremental borrowing rate | 5 years | ||||
ROU asset | $ 13,601 | $ 14,383 | |||
Operating lease liability | $ 11,219 | $ 12,034 | |||
Minimum | |||||
Leases | |||||
Remaining lease term | 1 year 3 months | ||||
Maximum | |||||
Leases | |||||
Remaining lease term | 4 years 6 months 29 days | ||||
Woonsocket, RI | |||||
Leases | |||||
Number of options to extend | item | 2 | ||||
Extension term | 5 years | ||||
Riverside, CA | |||||
Leases | |||||
Extension term | 61 months | ||||
Sublease term | 12 months | ||||
Canada | |||||
Leases | |||||
Number of options to extend | item | 1 | ||||
Extension term | 5 years | ||||
Hong Kong | |||||
Leases | |||||
Extension term | 2 years | ||||
ROU asset | $ 291 | ||||
Operating lease liability | $ 291 | ||||
Lease Amendment | Riverside, CA | |||||
Leases | |||||
Extension term | 60 months | ||||
Increase to ROU Assets due to lease modification | $ 13,583 | ||||
Increase to lease liabilities due to lease modification | $ 13,583 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Components of lease expense | ||
Operating lease cost | $ 913 | $ 782 |
Variable lease cost | 140 | 56 |
Less: sublease income | (449) | (250) |
Total lease cost | $ 604 | 588 |
Weighted-average remaining lease term (in years) | 4 years 4 months 13 days | |
Weighted Average discount rate: | 3.30% | |
Cash paid for amounts included in the measurement of the Company's lease liabilities | $ 904 | $ 765 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Lease maturities (Details) $ in Thousands | Apr. 02, 2022USD ($) |
Maturities of the operating lease liabilities | |
2022 | $ 2,690 |
2023 | 3,499 |
2024 | 3,347 |
2025 | 3,284 |
2026 | 2,672 |
Less imputed interest | (1,101) |
Total | 14,391 |
Future fixed sublease receipts under non-cancelable operating lease agreements | |
2022 | (899) |
Total | $ (899) |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Apr. 02, 2022 | Apr. 03, 2021 | May 31, 2021 | Apr. 30, 2021 | |
Selling, general and administrative expenses | ||||
SHARE BASED COMPENSATION | ||||
Share-based compensation expense, net of forfeitures | $ 32 | $ 7 | ||
Stock Options | ||||
SHARE BASED COMPENSATION | ||||
Stock options granted during the period (in shares) | 3,000 | |||
Weighted average assumptions | ||||
Expected life (in years) | 4 years 7 months 6 days | |||
Risk-free interest rate | 1.80% | |||
Volatility | 110.40% | |||
Dividend yield | 0.00% | |||
Forfeiture rate | 52.10% | |||
2012 Plan | ||||
SHARE BASED COMPENSATION | ||||
Number of shares authorized under the plan | 374,889 | 374,889 | 188,889 | |
Shares available to grant | 203,076 | |||
2012 Plan | Stock Options | ||||
SHARE BASED COMPENSATION | ||||
Stock options outstanding (in shares) | 69,912 | |||
2012 Plan | Restricted shares | ||||
SHARE BASED COMPENSATION | ||||
Unvested restricted shares outstanding | 5,989 |
WEIGHTED AVERAGE COMMON SHARE_2
WEIGHTED AVERAGE COMMON SHARES - Reconciliation of Basic and Diluted Net Income (Loss) Attributable to Common Stockholders (Details) - $ / shares | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Calculation of Basic and Diluted EPS | ||
Weighted-average common shares outstanding - basic | 2,164,746 | 2,133,061 |
Dilutive effect of restricted shares | 8,306 | |
Dilutive effect of stock options | 20,422 | |
Weighted-average common shares outstanding - diluted | 2,164,746 | 2,161,789 |
(Loss) earnings per share - basic | $ (1.81) | $ 0.12 |
(Loss) earnings per share - diluted | $ (1.81) | $ 0.12 |
WEIGHTED AVERAGE COMMON SHARE_3
WEIGHTED AVERAGE COMMON SHARES - Anti-dilutive securities (Details) - shares | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Stock Options | ||
WEIGHTED AVERAGE COMMON SHARES | ||
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares) | 69,912 | 69,845 |
Restricted shares | ||
WEIGHTED AVERAGE COMMON SHARES | ||
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares) | 5,989 | 2,850 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands | Apr. 18, 2022 | Jan. 28, 2022 | Mar. 30, 2021 | Apr. 02, 2022 |
BofA Agreement | ||||
Subsequent events | ||||
Borrowing base as a percentage of eligible accounts under loan agreements | 5.25% | |||
BofA Agreement | Amazon | ||||
Subsequent events | ||||
Borrowing base as a percentage of eligible accounts under loan agreements | 85.00% | 3.00% | ||
New Term Loan Agreement | Term Loan and Security Agreement | ||||
Subsequent events | ||||
Period for funding of Tranches | 30 days | 5 days | ||
Subordinated debt as on Date Of Request and Borrowing | $ 3,000 | $ 5,500 | ||
Subsequent Event | Amended New Term loan | ||||
Subsequent events | ||||
Subordinated Debt | $ 5,500 | |||
Subordinated debt as on Date Of Request and Borrowing | $ 4,000 | |||
Subsequent Event | Amended New Term loan | Minimum | ||||
Subsequent events | ||||
Period for funding of Tranches | 30 days | |||
Subsequent Event | Amended New Term loan | Maximum | ||||
Subsequent events | ||||
Period for funding of Tranches | 5 days |