Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Transition Report | false | ||
Entity File Number | 1-12368 | ||
Entity Registrant Name | TANDY LEATHER FACTORY, INC | ||
Entity Central Index Key | 0000909724 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 75-2543540 | ||
Entity Address, Address Line One | 1900 Southeast Loop 820 | ||
Entity Address, City or Town | Fort Worth | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 76140 | ||
City Area Code | 817 | ||
Local Phone Number | 872-3200 | ||
Title of 12(b) Security | Common Stock, par value $0.0024 | ||
Trading Symbol | TLF | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Public Float | $ 18,217,065 | ||
Entity Common Stock, Shares Outstanding | 8,300,627 | ||
Auditor Firm ID | 410 | ||
Auditor Name | WEAVER AND TIDWELL, L.L.P | ||
Auditor Location | Oklahoma City, Oklahoma |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 7,975 | $ 10,155 |
Accounts receivable-trade, net of allowance for doubtful accounts of $56 and $24 at December 31, 2022 and 2021, respectively | 370 | 614 |
Inventory | 38,227 | 38,084 |
Income tax receivable | 302 | 972 |
Prepaid expenses | 272 | 483 |
Other current assets | 106 | 141 |
Total current assets | 47,252 | 50,449 |
Property and equipment, at cost | 28,124 | 27,750 |
Less accumulated depreciation | (16,962) | (15,989) |
Property and equipment, net | 11,162 | 11,761 |
Operating lease assets | 9,742 | 10,438 |
Financing lease assets | 31 | 37 |
Other intangibles, net of accumulated amortization of $549 and $548 at December 31, 2022 and 2021, respectively | 5 | 6 |
Other assets | 387 | 394 |
TOTAL ASSETS | 68,579 | 73,085 |
CURRENT LIABILITIES: | ||
Accounts payable-trade | 3,082 | 4,786 |
Accrued expenses and other liabilities | 2,681 | 4,302 |
Income taxes payable | 211 | 0 |
Current portion of operating lease liabilities | 2,881 | 3,025 |
Current portion of finance lease liabilities | 15 | 15 |
Current maturities of long-term debt | 0 | 79 |
Total current liabilities | 8,870 | 12,207 |
Uncertain tax positions | 450 | 415 |
Other non-current liabilities | 326 | 417 |
Operating lease liabilities, non-current | 7,469 | 8,194 |
Finance lease liabilities, non-current | 1 | 15 |
Long-term debt, net of current maturities | 0 | 336 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, $0.0024 par value; 25,000,000 shares authorized; 9,717,525 and 9,971,711 shares issued at December 31, 2022 and 2021, respectively; 8,293,149 and 8,547,335 shares outstanding at December 31, 2022 and 2021, respectively | 23 | 24 |
Paid-in capital | 3,222 | 3,959 |
Retained earnings | 59,891 | 58,664 |
Treasury stock at cost (1,424,376 shares at December 31, 2022 and 2021) | (9,773) | (9,773) |
Accumulated other comprehensive loss, net of tax | (1,900) | (1,373) |
Total stockholders' equity | 51,463 | 51,501 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 68,579 | $ 73,085 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Allowance for doubtful accounts | $ 56 | $ 24 |
Accumulated amortization | $ 549 | $ 548 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.0024 | $ 0.0024 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 9,717,525 | 9,971,711 |
Common stock, shares outstanding (in shares) | 8,293,149 | 8,547,335 |
Treasury stock, shares (in shares) | 1,424,376 | 1,424,376 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Consolidated Statements of Operations and Comprehensive Income [Abstract] | |||
Net sales | $ 80,335 | $ 82,661 | |
Cost of sales | 33,838 | 35,662 | |
Gross profit | 46,497 | 46,999 | |
Operating expenses | 45,109 | 44,699 | |
Income from operations | 1,388 | 2,300 | |
Other (income) expense: | |||
Interest (income) expense | (9) | 16 | |
Other, net | (11) | 91 | |
Total other (income) expense | (20) | 107 | |
Income before income taxes | 1,408 | 2,193 | |
Income tax provision | 181 | 839 | |
Net income | [1] | 1,227 | 1,354 |
Foreign currency translation adjustments, net of tax | (527) | (81) | |
Comprehensive income | $ 700 | $ 1,273 | |
Net income per common share: | |||
Basic (in dollars per share) | $ 0.15 | $ 0.16 | |
Diluted (in dollars per share) | $ 0.15 | $ 0.16 | |
Weighted average number of shares outstanding: | |||
Basic (in shares) | [1] | 8,363,390 | 8,709,866 |
Diluted (in shares) | [1] | 8,394,567 | 8,720,469 |
[1]For the years ended December 31, 2022 and 2021, there were 90,748 and 168,735, respectively, shares excluded from the diluted EPS calculation because the impact of their assumed vesting would be anti-dilutive. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Cash flows from operating activities: | |||
Net income | [1] | $ 1,227 | $ 1,354 |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 1,201 | 1,105 | |
Operating lease asset amortization | 3,230 | 3,202 | |
Loss (gain) on disposal of assets | 9 | (8) | |
Stock-based compensation | 1,060 | 797 | |
Deferred income taxes | (10) | 83 | |
Exchange loss | 0 | 23 | |
Changes in operating assets and liabilities: | |||
Accounts receivable-trade | 244 | (325) | |
Inventory | (328) | (2,777) | |
Prepaid expenses | 210 | 83 | |
Other current assets | 34 | (8) | |
Accounts payable-trade | (1,739) | 1,143 | |
Accrued expenses and other liabilities | (1,527) | 743 | |
Income taxes, net | 905 | 1,775 | |
Other assets | 0 | (52) | |
Operating lease liabilities | (3,362) | (3,422) | |
Total adjustments | (73) | 2,362 | |
Net cash from operating activities | 1,154 | 3,716 | |
Cash flows from investing activities: | |||
Purchase of property and equipment | (635) | (1,001) | |
Proceeds from sales of assets | 10 | 0 | |
Net cash used in investing activities | (625) | (1,001) | |
Cash flows from financing activities: | |||
Payments on long-term debt | (359) | 0 | |
Payments of capital lease obligations | (14) | (14) | |
Repurchase of common stock | (1,798) | (2,738) | |
Purchase of vested stock for employee payroll tax | 0 | (25) | |
Net cash used in financing activities | (2,171) | (2,777) | |
Effect of exchange rate changes on cash and cash equivalents | (538) | (112) | |
Net decrease in cash and cash equivalents | (2,180) | (174) | |
Cash and cash equivalents, beginning of period | 10,155 | 10,329 | |
Cash and cash equivalents, end of period | 7,975 | 10,155 | |
Supplemental disclosures of cash flow information: | |||
Interest paid during the period | 15 | 16 | |
Income tax paid (refunded) during the period, net | (430) | (994) | |
Supplemental disclosures of non-cash activity: | |||
Operating lease assets obtained in exchange for lease liabilities, net | $ 3,884 | $ 1,853 | |
[1]For the years ended December 31, 2022 and 2021, there were 90,748 and 168,735, respectively, shares excluded from the diluted EPS calculation because the impact of their assumed vesting would be anti-dilutive. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total | |
Balance at Dec. 31, 2020 | $ 25 | $ 5,924 | $ (9,773) | $ 57,310 | $ (1,292) | $ 52,194 | |
Balance (in shares) at Dec. 31, 2020 | 9,150,806 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 0 | 797 | 0 | 0 | 0 | $ 797 | |
Issuance of restricted stock | $ 0 | 0 | 0 | 0 | 0 | 0 | |
Issuance of restricted stock (in shares) | 114,075 | ||||||
Purchase of vested stock for employee payroll tax | $ 0 | (25) | 0 | 0 | 0 | (25) | |
Purchase of vested stock for employee payroll tax (in shares) | (4,856) | ||||||
Repurchase of common stock | $ (1) | (2,737) | 0 | 0 | 0 | (2,738) | |
Repurchase of common stock (in shares) | (712,690) | ||||||
Net income | $ 0 | 0 | 0 | 1,354 | 0 | 1,354 | [1] |
Foreign currency translation adjustments, net of tax | 0 | 0 | 0 | 0 | (81) | (81) | |
Balance at Dec. 31, 2021 | 24 | 3,959 | (9,773) | 58,664 | (1,373) | $ 51,501 | |
Balance (in shares) at Dec. 31, 2021 | 8,547,335 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 0 | 1,060 | 0 | 0 | 0 | $ 1,060 | |
Issuance of restricted stock | $ 0 | 0 | 0 | 0 | 0 | 0 | |
Issuance of restricted stock (in shares) | 140,277 | ||||||
Purchase of vested stock for employee payroll tax | $ 0 | 0 | 0 | 0 | 0 | 0 | |
Purchase of vested stock for employee payroll tax (in shares) | (34,362) | ||||||
Repurchase of common stock | $ (1) | (1,797) | 0 | 0 | 0 | (1,798) | |
Repurchase of common stock (in shares) | (360,100) | ||||||
Net income | $ 0 | 0 | 0 | 1,227 | 0 | 1,227 | [1] |
Foreign currency translation adjustments, net of tax | 0 | 0 | 0 | 0 | (527) | (527) | |
Balance at Dec. 31, 2022 | $ 23 | $ 3,222 | $ (9,773) | $ 59,891 | $ (1,900) | $ 51,463 | |
Balance (in shares) at Dec. 31, 2022 | 8,293,150 | ||||||
[1]For the years ended December 31, 2022 and 2021, there were 90,748 and 168,735, respectively, shares excluded from the diluted EPS calculation because the impact of their assumed vesting would be anti-dilutive. |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS Tandy Leather Factory, Inc. (“TLF,” “we,” “our,” “us,” the “Company,” “Tandy,” or “Tandy Leather” mean Tandy Leather Factory, Inc., together with its subsidiaries) is one of the world’s largest specialty retailers of leather and leathercraft-related items. Founded in 1919 in Fort Worth, Texas, the Company introduced leathercrafting to millions of American and later Canadian and other international customers and has built a track record as the trusted source of quality leather, tools, hardware, supplies, kits and teaching materials for leatherworkers everywhere. Today, our mission remains to build on our legacy of inspiring the timeless art and trade of leatherworking. What differentiates Tandy from the competition is our high brand awareness and strong brand equity and loyalty, our network of retail stores that provides convenience, a high-touch customer service experience, and a hub for the local leathercrafting community, and our 100-year heritage. We believe that this combination of qualities is unique to Tandy and gives the brand competitive advantages that are difficult for others to replicate. We sell our products primarily through company-owned stores and through orders generated from our global websites, and through direct account representatives in our commercial division. We also manufacture leather lace, cut leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”), splitting, and some assembly. We maintain our principal offices at 1900 Southeast Loop 820, Fort Worth, Texas 76140. The Company currently operates a total of 103 retail stores. There are 92 stores in the United States (“U.S.”), ten stores in Canada and one store in Spain. The Company’s common shares currently trade on the Nasdaq Capital Market under the symbol “TLF.” We operate as a single |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Management estimates and reporting The preparation of the Company’s Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for the Company’s conclusions. The Company continually evaluates the information used to make these estimates as the business and the economic environment changes. Actual results may differ from these estimates, and estimates are subject to change due to modifications in the underlying conditions or assumptions. The policies discussed below require estimates that contain a significant degree of judgement. The use of estimates is pervasive throughout the Consolidated Financial Statements, but the accounting policies and estimates considered most significant are as follows. Principles of consolidation Our Consolidated Financial Statements include the accounts of Tandy Leather Factory, Inc. and its active wholly-owned subsidiaries, The Leather Factory, L.P. (a Texas limited partnership), Tandy Leather Company, L.P. (a Texas limited partnership), The Leather Factory of Canada, Ltd. (a Canadian corporation), Tandy Leather Factory UK Limited (a UK corporation), Tandy Leather Factory Australia Pty. Limited (an Australian corporation), and Tandy Leather Factory España, S.L. (a Spanish corporation). All intercompany accounts and transactions have been eliminated in consolidation. Correction of an error in previously issued financial statements The consolidated financial statements include an out of period adjustment that is the result of unreconciled inventory receipts for in-transit inventory, which were identified in the fourth quarter of 2022. To correct misstatements in the first three quarters of fiscal year 2022, we reduced inventory and accounts payable balances by approximately $0.9 million, and adjusted changes to inventory and accounts payable in the operating activities section of the consolidated statements of cash flows by the same amount. There is no impact of this adjustment to the consolidated statements of operations and comprehensive income or retained earnings. Cash and cash equivalents The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. Accounts Receivable and Expected Credit Losses Our receivables primarily arise from the sale of merchandise to customers that have applied for and been granted credit. Accounts receivable are stated at amounts due, net of an allowance for doubtful accounts. Accounts receivable are generally due within 30 days of invoicing. Our accounts receivable balance as of December 31, 2022, December 31, 2021 and January 1, 2021 was $0.4 million, $0.6 million, and $0.4 million, respectively. We estimate expected credit losses based on factors such as the composition of accounts receivable, the age of the accounts, historical bad debt experience, and our evaluation of the financial condition and past collection history of each customer. Management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at December 31, 2022, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time). Accordingly, the allowance for expected credit losses at December 31, 2022, December 31, 2021, and January 1, 2021 each totaled less than $0.1 million. Foreign currency translation and transactions Foreign currency translation adjustments arise from activities of our foreign subsidiaries. Results of operations are translated into U.S. dollars using the average exchange rates during the period, while assets and liabilities are translated using period-end exchange rates. Foreign currency translation adjustments are recorded in stockholders’ equity, net of tax. For the years ended December 31, 2022 and 2021, we recorded foreign currency translation loss adjustments of less than $0.5 million and $0.1 million, respectively. Gains and losses resulting from foreign currency transactions are recorded in other, net within the statements of operations and comprehensive income (loss). We did not recognize a foreign currency transaction gain or (loss) in the years ended December 31, 2022 and 2021. Revenue recognition Our revenue is earned from sales of merchandise and generally occurs via three methods: (1) at the store counter, (2) shipment of product generally via web sales, and (3) sales of product directly to commercial customers. We recognize revenue when we satisfy the performance obligation of transferring control of product merchandise over to a customer. At the store counter, our performance obligation is met and revenue is recognized when a sales transaction occurs with a customer. When merchandise is shipped to a customer, our performance obligation is met and revenue is recognized when control passes to the customer. Shipping terms are normally free on board (“FOB”) shipping point and control passes when the merchandise is shipped to the customer. Sales tax and comparable foreign tax is excluded from net sales, while shipping charged to our customers is included in net sales. Net sales is based on the amount of consideration that we expect to receive, reduced by estimates for future merchandise returns. As of December 31, 2022, we had received approximately $0.2 million in credit card payments that had not shipped as of the end of the year. The sales return allowance included in accrued expense and other liabilities was The estimated value of merchandise expected to be returned included in other current assets was less than $0.1 million We record a gift card liability for the unfulfilled performance obligation on the date we issue a gift card to a customer. We record revenue and reduce the gift card liability as the customer redeems the gift card. In addition, for gift card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period, which is one year. We include our gift card liability in accrued expenses and other liabilities. On January 1, 2022, the opening balance of the gift card liability was $0.4 million. During 2022, we issued $0.5 million of gift cards, and $0.6 million of gift cards were redeemed and recognized as revenue. At December 31, 2022, our gift card liability balance was $0.3 million. On January 1, 2021, the opening balance of the gift card liability was $0.2 million; we issued $0.4 million of gift cards, and $0.2 million of gift cards were redeemed and recognized as revenue. At December 31, 2021, the ending balance of the gift card liability was $0.4 million Disaggregated revenue In the following table, revenue for the years ended December 31, 2022 and 2021 is disaggregated by geographic areas as follows: (in thousands) 2022 2021 United States $ 71,665 $ 73,546 Canada 7,393 7,470 Other 1,277 1,645 Net sales $ 80,335 $ 82,661 Geographic sales information is based on the location of where the order was fulfilled. Discounts We offer a single retail price level, plus three volume-based levels for commercial customers. Discounts from those price levels are offered to business, military/first responder and employee customers. Such discounts do not convey a material right to these customers since the discounted pricing they receive at the point of sale is not dependent upon any previous or subsequent purchases. As a result, sales are reported after deduction of discounts at the point of sale. We do not pay slotting fees or make other payments to resellers. Operating expense Operating expenses include all selling, general and administrative costs, including wages and benefits, rent and occupancy costs, depreciation, advertising, store operating expenses, outbound freight charges (to ship merchandise to customers), and corporate office costs. Property and equipment, net of accumulated depreciation Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are three seven Inventory Inventory is stated at the lower of first-in, first-out (“FIFO”) cost or net realizable value, and the FIFO layers are maintained at the location level. Finished goods held for sale include the cost of merchandise purchases, the costs to bring the merchandise to our Texas distribution center, warehousing and handling expenditures, and distributing and delivering merchandise to our stores. These costs include depreciation of long-lived assets utilized in acquiring, warehousing and distributing inventory. Manufacturing inventory including raw materials and work-in-process is valued on a first-in, first-out basis using full absorption accounting which includes material, labor, and other applicable manufacturing overhead. Carrying values of inventory are analyzed and, to the extent that the cost of inventory exceeds the net realizable value, provisions are made to reduce the carrying amount of the inventory. We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light), (ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to be taken to adequately value our inventory at the lower of cost or net realizable value. Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell, differences in these estimates could result in ultimate valuations that differ from the recorded asset. The majority of inventory purchases and commitments are made in U.S. dollars in order to limit the Company’s exposure to foreign currency fluctuations. Goods shipped to us are recorded as inventory owned by us when the risk of loss shifts to us from the supplier. Inventory is physically counted twice annually in the Texas distribution center. At the store level, inventory is physically counted each quarter. Inventory is then adjusted in our accounting system to reflect actual count results. Leases We lease certain real estate for our retail store locations and warehouse equipment for our Texas distribution center, both under long-term lease agreements. We determine if an arrangement is a lease at inception and recognize right-of-use (“ROU”) assets and lease liabilities at commencement date based on the present value of the lease payments over the lease term. We elected not to record leases with an initial term of 12 months or less on the balance sheet for all our asset classes. For operating leases, the present value of our lease payments may include: (1) rental payments adjusted for inflation or market rates, and (2) lease terms with options to renew the lease or options to purchase leased equipment, when it is reasonably certain we will exercise such an option. The exercise of lease renewal or purchase option is generally at our discretion. Payments based on a change in an index or market rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. We discount lease payments using our incremental borrowing rate based on information available as of the measurement date. We recognize rent expense related to our operating leases on a straight-line basis over the lease term. Rent expense is recorded in operating expenses. The net adjustment between rent expense and the actual cash paid during the fiscal year has been recorded as accrued expense and other liabilities in the accompanying consolidated balance sheets. For finance leases, our right-of-use assets are amortized on a straight-line basis over the earlier of the useful life of the right-of-use asset or the end of the lease term with rent expense recorded to operating expenses. We adjust the lease liability to reflect lease payments made during the period and interest incurred on the lease liability using the effective interest method. The incurred interest expense is recorded in interest expense on the consolidated statements of comprehensive income (loss). None of our lease agreements contain material residual value guarantees or material restrictive covenants. We do not have any contingent rental payment agreements. On September 8, 2022, we entered into a short-term concession agreement for our store on the Fort Bragg military base, in which the concession payment is based on a sliding scale percentage of sales. We have no sublease agreements and no lease agreements in which we are named as a lessor. Refer to Note 4, Leases for further discussion of the Company’s leases. Impairment of long-lived assets We evaluate long-lived assets on a quarterly basis to identify events or changes in circumstances (“triggering events”) that indicate the carrying value of certain assets may not be recoverable. Upon the occurrence of a triggering event, right-of-use (“ROU”) lease assets, property and equipment and definite-lived intangible assets are reviewed for impairment and an impairment loss is recorded in the period in which it is determined that the carrying amount of the assets is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset within the asset group. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be primarily at the individual store level. If the estimated undiscounted future net cash flows for a given store are less than the carrying amount of the related store assets, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related assets. The impairment loss is then allocated across the asset group’s major classifications which in this case are operating lease assets and property and equipment. Triggering events at the store level could include material declines in operational and financial performance or planned changes in the use of assets, such as store relocation or store closure. This evaluation requires management to make judgements relating to future cash flows, growth rates and economic and market conditions. The fair value of an asset group is estimated using a discounted cash flow valuation method. For the years ended December 31, 2022 and 2021, no impairment expense was recognized. Earnings per share Basic earnings per share (“EPS”) are computed based on the weighted average number of common shares outstanding during the period. Diluted EPS includes additional common shares that would have been outstanding if potential common shares with a dilutive effect, such as stock awards from the Company’s restricted stock plan, had been issued. Anti-dilutive securities represent potentially dilutive securities which are excluded from the computation of diluted EPS as their impact would be anti-dilutive. Diluted EPS is computed using the treasury stock method. (in thousands, except share data) 2022 (1) 2021 (1) Numerator: Net income (loss) $ 1,227 $ 1,354 Denominator: Basic weighted-average common shares ouststanding 8,363,390 8,709,866 Dilutive effect of service-based restricted stock awards granted to Board of Directors under the Plan 8,735 10,603 Dilutive effect of service-based restricted stock awards granted to employees under the Plan 22,442 - Diluted weighted-average common shares outstanding 8,394,567 8,720,469 For additional disclosures regarding restricted stock awards and employee stock options, see Note 10, Stockholders’ Equity – Equity Compensation Plans Other intangible assets Our intangible assets and related accumulated amortization relate to trademarks and copyrights that are definite-lived intangibles and are subject to amortization. The weighted average amortization period is 15 years for trademarks and copyrights. Amortization expense related to other intangible assets was less than $0.01 million in each of 2022 and 2021 and was recorded in operating expenses. Based on the current amount of intangible assets subject to amortization, we estimate amortization expense to be less than $0.01 million annually over the next five years. Fair value of financial instruments We measure fair value as an exit price, which is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, accounting standards establish a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 – observable inputs that reflect quoted prices in active markets for identical assets or liabilities. Level 2 – significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. Classification of the financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Our principal financial instruments held consist of accounts receivable, accounts payable, and the long-term debt reported in 2021. As of December 31, 2022 and 2021, the carrying values of our financial instruments, included in our Consolidated Balance Sheets, approximated their fair values. There were no transfers into or out of Levels 1, 2 and 3 during the years ended December 31, 2022 and 2021. Income taxes Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable income. To the extent it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized, a valuation allowance is recorded. Our evaluation regarding whether a valuation allowance is required or should be adjusted also considers, among other things, the nature, frequency, and severity of recent losses, forecasts of future profitability and the duration of statutory carryforward periods. Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those temporary differences are expected to reverse. The effect on deferred taxes from a change in tax rate is recognized through continuing operations in the period that includes the enactment date of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. A tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgement changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense and the effective tax rate in the period in which new information becomes available. We recognize interest and/or penalties related to all tax positions in income tax expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as the timing and amount of deductions and allocation of taxable income to the various jurisdictions. Stock-based compensation The Company’s stock-based compensation relates primarily to restricted stock unit (“RSU”) awards. Accounting guidance requires measurement and recognition of compensation expense at an amount equal to the grant date fair value. Compensation expense is recognized for service-based stock awards on a straight-line basis or ratably over the requisite service period, based on the closing price of the Company’s stock on the date of grant. The service-based awards typically vest ratably over the requisite service period, provided that the participant is employed on the vesting date. Compensation expense is reduced by actual forfeitures as they occur over the requisite service period of the awards. Performance-based RSUs vest, if at all, upon the Company satisfying certain performance targets. The Company records compensation expense for awards with a performance condition when it is probable that the condition will be achieved. If the Company determines it is not probable a performance condition will be achieved, no compensation expense is recognized. If the Company changes its assessment in a subsequent period and concludes it is probable a performance condition will be achieved, the Company will recognize compensation expense ratably between the period of the change in assessment through the expected date of satisfying the performance condition for vesting. If the Company subsequently assesses that it is no longer probable that a performance condition will be achieved, the accumulated expense that has been previously recognized will be reversed. The compensation expense ultimately recognized, if any, related to performance-based awards will equal the grant date fair value based on the number of shares for which the performance condition has been satisfied. We issue shares from authorized shares upon the lapsing of vesting restrictions on RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards. Comprehensive income (loss) Comprehensive income (loss) includes net income (loss) and certain other items that are recorded directly to stockholders’ equity. The Company’s only source of other comprehensive income (loss) is foreign currency translation adjustments, and those adjustments are presented net of tax. Shipping and handling costs Costs to ship products from our stores to our customers are included in operating expenses on the Consolidated Statements of Operations and Comprehensive Income. Total costs were $3.5 million and $3.4 million for the years ended December 31, 2022 and 2021, respectively. Advertising Advertising costs include the cost of print, digital, direct mail, community events, trade shows, and our e-commerce platform. Advertising costs are expensed as incurred. Total advertising expense was $1.2 million and $1.0 million in 2022 and 2021, respectively. Recently Adopted Accounting Pronouncements The Company did not adopt any new accounting guidance that was applicable for the year ended December 31, 2022. |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 12 Months Ended |
Dec. 31, 2022 | |
BALANCE SHEET COMPONENTS [Abstract] | |
BALANCE SHEET COMPONENTS | 3. BALANCE SHEET COMPONENTS Inventory (in thousands) December 31, 2022 December 31, 2021 On hand: Finished goods held for sale $ 35,234 $ 34,928 Raw materials and work in process 925 828 Inventory in transit 2,068 2,328 TOTAL $ 38,227 $ 38,084 Property and Equipment (in thousands) December 31, 2022 December 31, 2021 Building $ 9,266 $ 9,257 Land 1,451 1,451 Leasehold improvements 1,870 1,833 Equipment and machinery 7,931 7,704 Furniture and fixtures 7,471 7,350 Vehicles 135 155 28,124 27,750 Less: accumulated depreciation (16,962 ) (15,989 ) TOTAL $ 11,162 $ 11,761 Our property and equipment, net, was located in the following countries: (in thousands) December 31, 2022 December 31, 2021 United States $ 10,989 $ 11,508 Canada 173 252 Spain - 1 $ 11,162 $ 11,761 Depreciation expense was $1.2 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively. Short-term Liabilities Accrued Expenses and Other Liabilities December 31, 2022 December 31, 2021 (in thousands) Accrued employee related costs 1,432 2,508 Unearned gift card revenue 256 351 Estimated returns 72 242 Sales and payroll taxes payable 693 987 Accrued vendor payables 228 214 TOTAL $ 2,681 $ 4,302 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES [Abstract] | |
LEASES | 4. LEASES The Company leases certain real estate and warehouse equipment under long-term lease agreements. The Company performs interim reviews of its operating and finance lease assets for impairment when evidence exists that the carrying value of an asset group, including a lease asset, may not be recoverable. The Company recognized no impairment expense related to its operating lease assets during the year ended December 31, 2022 or December 31, 2021. Additional information regarding the Company’s operating and finance leases is as follows (in thousands, except for lease term and discount rate information): Leases Balance Sheet Classification December 31, 2022 December 31, 2021 (in thousands) Assets: Operating Operating lease assets $ 9,742 $ 10,438 Finance Financing lease assets 31 37 Total assets $ 9,773 $ 10,475 Liabilities: Current Operating Current portion of operating lease liabilities $ 2,881 $ 3,025 Finance Current portion of finance lease liabilities 15 15 Non-current Operating Operating lease liabilities, non-current 7,469 8,194 Finance Finance lease liabilities, non-current 1 15 Total lease liabilities $ 10,366 $ 11,249 Lease Cost Income Statement Classification December 31, 2022 December 31, 2021 (in thousands) Operating lease cost Operating expenses $ 3,737 $ 3,664 Operating lease cost Impairment expense - - Short-term lease cost Operating expenses 38 45 Variable lease cost (1) Operating expenses 797 946 Finance: (2) Amortization of lease assets Operating expenses 7 7 Interest on lease liabilities Interest expense 1 2 Total lease cost $ 4,580 $ 4,664 (1) Variable lease cost includes payment for certain real estate taxes, insurance, common area maintenance, and other charges related to lease agreements, which are not included in the measurement of the operating lease liabilities. (2) Finance lease costs were less than $1,000 during the 2020 year. December 31, 2022 Maturity of Lease Liabilities Operating Leases Finance Leases (in thousands) 2022 $ 3,482 $ 16 2023 2,821 - 2024 1,930 - 2025 1,499 - 2026 1,080 - Thereafter 1,357 - Total lease payments $ 12,169 $ 16 Less: Interest (1,819 ) - Present value of lease liabilities $ 10,350 $ 16 Other Information December 31, 2022 December 31, 2021 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 3,871 $ 3,876 Operating cash flows used in finance leases 1 2 Financing cash flows used in finance leases 14 14 Operating lease assets obtained in exchange for lease obligations Operating leases, initial recognition 3,122 1,653 Operating leases, modifications and remeasurements 762 200 Lease Term and Discount Rate December 31, 2022 December 31, 2021 Weighted-average remaining lease term (years): Operating leases 4.8 5.3 Finance leases 0.9 1.9 Weighted-average discount rate: Operating leases 5.0 % 4.5 % Finance leases 6.0 % 6.5 % |
NOTES PAYABLE AND LONG-TERM DEB
NOTES PAYABLE AND LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE AND LONG-TERM DEBT [Abstract] | |
NOTES PAYABLE AND LONG-TERM DEBT | 5. NOTES PAYABLE AND LONG-TERM DEBT During the second quarter of 2020, the Company borrowed $0.4 million from Banco Santander S.A. under the Institute of Official Credit Guarantee for Small and Medium-sized Enterprises in order to facilitate the continuation of employment and to attenuate the economic effects of the coronavirus (“COVID-19”) virus. This loan was provided for by the Spanish government as part of a COVID-19 relief program and on June 6, 2022, the Company repaid this loan in full. December 31, (in thousands) 2022 2021 Institute of Official Credit (“ICO”) Guarantee for Small and Medium-sized Enterprises with Banco Santander S.A. (Spain) as described more fully above - interest due monthly at 1.50 June 4, 2025 $ - $ 336 $ - $ 336 Less current maturities - 79 TOTAL $ - $ 415 |
EMPLOYEE BENEFIT AND SAVINGS PL
EMPLOYEE BENEFIT AND SAVINGS PLANS | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFIT AND SAVINGS PLANS [Abstract] | |
EMPLOYEE BENEFIT AND SAVINGS PLANS | 6. EMPLOYEE BENEFIT AND SAVINGS PLANS We have a 401(k) plan to provide retirement benefits for our employees. As allowed under Section 401(k) of the Internal Revenue Code, the plan provides tax-deferred salary contributions for eligible employees and allows employees to contribute a percentage of their annual compensation to the plan on a pretax basis. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. In 2022 and 2021, we matched 100% of the pretax employee contributions on the first 3% of eligible earnings and 50% of the pretax employee contributions on the next 2% of eligible earnings that are contributed by employees. For the years ended December 31, 2022 and 2021, we recorded employer match expense of $0.3 million and $0.3 million, respectively. The plan allows employees who meet the age requirements and reach the plan contribution limits to make a catch-up contribution. The catch-up contributions are not eligible for matching contributions. In addition, the plan provides for discretionary matching contributions as determined by the Board of Directors. There were no discretionary matching contributions made in 2022 or 2021. We offer no postretirement or postemployment benefits to our employees. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 7. INCOME TAXES The provision for income taxes consists of the following: (in thousands) Year Ended December 31, Income Tax Provision 2022 2021 Current provision: Federal $ 16 $ 640 State 41 98 Foreign 96 - Related to UTP 28 19 181 757 Deferred provision: Federal - - State - - Foreign - 82 - 82 Total tax provision $ 181 $ 839 Earnings occurring outside the U.S. are deemed to be indefinitely reinvested outside of the U.S. to support the Company’s foreign operations. As a result, if the Company accumulates earnings overseas, they will be used for investment in the Company’s businesses outside the U.S. The Company will use cash generated from U.S. operations and short- and long-term borrowings to meet the Company’s U.S. cash needs. The determination of unrecognized deferred tax liabilities for temporary differences in investments in foreign subsidiaries is not practicable. The Company has received $1.4 million in tax refund in 2022 as a result of the CARES Act NOL carryback provision and estimates that we will receive an additional $0.2 million in the future. We have $3.7 million of state tax net operating loss (“NOL”) carryovers which will begin to expire in 2025. We also have a full valuation allowance on $0.5 million of foreign tax NOL carryovers that do not expire and therefore no deferred tax assets. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss (“NOL”) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. Income (loss) before income taxes was earned in the following tax jurisdictions: (in thousands) Year Ended December 31, Income (Loss) Before Income Taxes 2022 2021 United States $ 733 $ 2,552 Spain (83 ) (135 ) Canada 758 (229 ) Australia - (1 ) United Kingdom - 6 TOTAL $ 1,408 $ 2,193 The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows: Deferred income tax assets: 2022 2021 (in thousands) Inventory $ 471 $ 464 Stock-based compensation 93 59 Accounts receivable 14 4 Sales returns 47 125 Foreign currency translation gain/loss in OCI 689 342 Goodwill and other intangible assets amortization - - Net operating loss 261 646 Accrued expenses 63 359 Leases 152 195 Other - 2 Total deferred income tax assets 1,790 2,196 Less: valuation allowance (1,151 ) (1,489 ) Total deferred income tax assets, net of valuation allowance $ 639 $ 707 Property and equipment depreciation $ 639 $ 707 Total deferred income tax liabilities 639 707 Net deferred tax asset (liability) $ - $ - We are required to reduce deferred tax assets by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. We determined a $0.3 million decrease to the valuation allowance for deferred income tax assets was necessary as of December 31, 2022, as compared to 2021. Our evaluation considered, among other things, the nature, frequency, and severity of losses, forecasts of future profitability and the duration of statutory carryforward periods. Our effective tax rate differs from the federal statutory rate primarily due to U.S. state income tax expense, foreign income/loss positions, expenses that are nondeductible for tax purposes, the change in our valuation allowance associated with our deferred tax assets, and differences in tax rates. Below is a reconciliation of our effective tax rate from the statutory rate: Year Ended December 31, 2022 2021 Statutory rate – Federal U.S. income tax 21.0 % 21.0 % State and local taxes (0.6 )% 9.0 % Permanent book/tax differences 11.3 % 3.0 % Difference in tax rates in loss carryback periods 0.0 % 0.0 % Change in valuation allowance (20.3 )% 6.0 % Rate differential on UTP reversals 2.0 % 1.0 % Other, net (0.5 )% (1.7 )% Effective rate 12.9 % 38.3 % We file a consolidated U.S. income tax return as well as state tax returns on a consolidated, combined, or stand-alone basis, depending on the jurisdiction. We are no longer subject to U.S. federal income tax examinations by tax authorities for years prior to the tax year ended December 2017. Depending on the jurisdiction, we are no longer subject to state examinations by tax authorities for years prior to the December 2016 and December 2017 tax years. We file tax returns in a limited number of foreign jurisdictions. With few exceptions, we are no longer subject to non-U.S. income tax examinations for years before 2016. A reconciliation of the beginning and ending amount of uncertain tax positions (“UTP”) is as follows: 2022 2021 UTP at beginning of the year $ 415 $ 393 Gross increase to tax positions in current period 7 3 Interest expense 28 19 UTP at end of year $ 450 $ 415 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Legal Proceedings We are periodically involved in various litigation that arises in the ordinary course of business and operations. There are no such matters pending that we expect to have a material impact on our financial position or operating results. Legal costs associated with the resolution of claims, lawsuits, and other contingencies are expensed as incurred. SEC Investigation In 2019, the Company self-reported to the SEC information concerning the internal investigation of previously disclosed accounting matters resulting in the restatement for the full year 2017 and full year 2018, including interim quarters in 2018, and the first quarter of 2019. In response, the Division of Enforcement of the SEC initiated an investigation into the Company’s historical accounting practices. In July 2021, the Company entered into a settlement agreement with the SEC to conclude this investigation. Under the terms of the settlement, in addition to other non-monetary settlement terms, (1) the Company paid a civil monetary penalty of $200,000, and (2) the Company’s former Chief Financial Officer and Chief Executive Officer agreed to pay a civil monetary penalty of $25,000. In accepting the Company’s settlement offer, the SEC took into account remedial actions the Company took promptly after learning of the issues detailed in the SEC’s order. Delisting of the Company’s Common Stock After discovery of the accounting matters described in the previous paragraph and during our resulting financial restatement, the Company did not file its periodic financial reports with the Securities and Exchange Commission. As a result, Nasdaq suspended trading of the Company’s stock in August 2020 and formally de-listed the stock from the Nasdaq markets in February 2021. After being de-listed from Nasdaq, the Company’s stock traded in the Over The Counter Markets until September l, 2022, when Nasdaq again approved it for listing. The Company’s stock currently trades on the Nasdaq Capital Market under the symbol TLF. |
SIGNIFICANT BUSINESS CONCENTRAT
SIGNIFICANT BUSINESS CONCENTRATIONS AND RISK | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT BUSINESS CONCENTRATIONS AND RISK [Abstract] | |
SIGNIFICANT BUSINESS CONCENTRATIONS AND RISK | 9. SIGNIFICANT BUSINESS CONCENTRATIONS AND RISK Major Customers Our revenues are derived from a diverse group of customers, from hobbyist crafters to small and large businesses across a wide variety of industries. No single customer accounted for more than 0.4% of our consolidated revenues in 2022 or 2021, and sales to our five largest customers represented less than 2.0% of consolidated revenues in each of those years. While we do not believe the loss of one of these customers would have a significant negative impact on our operations, we do believe the loss of several of these customers simultaneously or a substantial reduction in sales generated by them could temporarily affect our operating results. Major Suppliers We purchase merchandise and raw materials from over 130 vendors from the United States and approximately 20 foreign countries. In general, our 10 largest vendors account for approximately 30% of our inventory purchases. Credit Risk Due to the large number of customers comprising our customer base, concentrations of credit risk with respect to customer receivables are limited. The top 2 customers of December 31, 2022 and 2021, represented 10.0% and 23.7% of net accounts receivable balance, respectively. These top two customers were also current as of these same dates. We do not generally require collateral for accounts receivable, but we do perform periodic credit evaluations of our customers and believe the allowance for doubtful accounts is adequate. It is our opinion that if any one or a group of customer receivable balances should be deemed uncollectable, it would not have a material adverse effect on our results of operations or financial condition. We maintain a majority of our cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk on our cash and cash equivalents. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | 10. STOCKHOLDERS’ EQUITY Equity Compensation Plans Restricted Stock Plan The Tandy Leather Factory, Inc. 2013 Restricted Stock Plan (the “2013 Plan”) was adopted by our Board of Directors in January 2013 and approved by our stockholders in June 2013. The 2013 Plan initially reserved up to 300,000 shares of our common stock for restricted stock and restricted stock unit (“RSU”) awards to our executive officers, non-employee directors and other key employees. In June 2020, our stockholders approved an increase to the plan reserve to 800,000 shares of our common stock and extended the 2013 Plan through June 2023. Awards granted under the 2013 Plan may be service-based awards or performance-based awards and may be subject to a graded vesting schedule with a minimum vesting period of four years, unless otherwise determined by the Compensation Committee of the Board of Directors that administers the plan. In June 2022, as part of their annual director compensation, certain of our non-employee directors were granted a total of 14,000 service-based RSUs under the 2013 Plan, which will vest ratably over the next four years provided that the participant is still on the board on the vesting date. In addition to grants under the Company’s 2013 Restricted Stock Plan, in October 2018 we granted a total of 644,000 RSUs to the Company’s Chief Executive Officer (“CEO”), of which (i) 460,000 are service-based RSUs that vest ratably over a period of five years from the grant date based on our CEO’s continued employment in her role, (ii) 92,000 are performance-based RSUs that will vest if the Company’s operating income exceeds $12 million dollars two fiscal years in a row, and (iii) 92,000 are performance-based RSUs that will vest if the Company’s operating income exceeds $14 million dollars in one fiscal year. A summary of the activity for non-vested restricted stock and RSU awards is as follows: Shares Weighted Average (in thousands) Share Price Balance, January 1, 2022 423 $ 7.03 Granted 161 5.01 Forfeited - - Vested (143 ) 6.56 Balance, December 31 2022 441 $ 6.46 The Company’s stock-based compensation relates to restricted stock and RSU awards. For these service-based awards, our stock-based compensation expense, included in operating expenses, was $1.1 million and $0.8 million in 2022 and 2021, respectively. As of December 31, 2022, the Company has concluded it is not probable that the performance conditions related to performance-based RSUs will be achieved, and as a result no compensation expense related to performance-based RSUs has been recorded. As of December 31, 2022, there was unrecognized compensation cost related to non-vested, service-based awards of $1.1 million which will be recognized over 1.1 weighted average years in each of the following years: Unrecognized Expense 2023 $ 752 2024 239 2025 89 2026 7 $ 1,087 We issue shares from authorized shares upon the lapsing of vesting restrictions on restricted stock and RSUs. In 2022 and 2021, we issued 140,277 and 114,075 shares, respectively net of shares withheld to pay participants’ income taxes, resulting from the vesting of restricted stock and RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards. Share Repurchase Program On August 9, 2020, the Board of Directors approved a new program to repurchase up to $5.0 million of its common stock between August 9, 2020 and July 31, 2022. This program expired in July 2022. As of December 31, 2021, the full $5.0 million of our common stock remained available for repurchase under this program. On August 8, 2022, the Board of Directors approved a new program to repurchase up to $5.0 million of the Company’s common stock between that date and August 31, 2024. As of December 31, 2022, $5.0 million remained available for repurchase under this new program. On April 11, 2022, we entered into an agreement with two institutional shareholders of the Company to repurchase 359,500 shares of our common stock, par value $0.0024 in a private transaction. The purchase price was $5.00 per share for a total of $1.8 million. The closing of the repurchases took place on April 22, 2022, and these shares were subsequently cancelled. Prior to the repurchase, the shares represented approximately 4.2% of our outstanding common stock. On December 8, 2021, we entered into an agreement with an institutional shareholder of the Company, to repurchase 212,690 shares of our common stock, par value $0.0024 in a private transaction. The purchase price was $5.00 per share for a total of $1.1 million. The closing of the repurchase took place on December 16, 2021, and these shares were subsequently cancelled. Prior to the repurchase, the shares represented approximately 2.4% of our outstanding common stock. These share repurchases were separately authorized by our Board of Directors and did not reduce the remaining amount authorized to be repurchased under the plan described in the previous paragraph . On January 28, 2021, we entered into an agreement with an institutional shareholder of the Company, to repurchase 500,000 shares of our common stock, par value $0.0024 in a private transaction. The purchase price was $3.35 per share for a total of $1.7 million. The closing of the repurchase of these shares took place on February 1, 2021, and these shares were subsequently cancelled. Prior to the repurchase, the shares represented approximately 5.5% of our outstanding common stock. The direct share repurchase transactions were separately authorized by our Board of Directors and did not reduce the remaining amount authorized to be repurchased under the plans described above. In July 2022, the Company repurchased 600 shares of stock under the open market plan. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENT [Abstract] | |
SUBSEQUENT EVENT | 11. SUBSEQUENT EVENT On January 3, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. Under the Credit Agreement, the bank will provide the Company a credit facility of up to $5,000,000 on standard terms and conditions, including affirmative and negative covenants set forth in the Credit Agreement. As security for the credit facility, the Company has pledged as collateral certain of its assets, including the Company’s cash in deposit accounts, inventory and equipment. As of the date of this filing, no funds had been borrowed under this facility. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Management estimates and reporting | Management estimates and reporting The preparation of the Company’s Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for the Company’s conclusions. The Company continually evaluates the information used to make these estimates as the business and the economic environment changes. Actual results may differ from these estimates, and estimates are subject to change due to modifications in the underlying conditions or assumptions. The policies discussed below require estimates that contain a significant degree of judgement. The use of estimates is pervasive throughout the Consolidated Financial Statements, but the accounting policies and estimates considered most significant are as follows. |
Principles of consolidation | Principles of consolidation Our Consolidated Financial Statements include the accounts of Tandy Leather Factory, Inc. and its active wholly-owned subsidiaries, The Leather Factory, L.P. (a Texas limited partnership), Tandy Leather Company, L.P. (a Texas limited partnership), The Leather Factory of Canada, Ltd. (a Canadian corporation), Tandy Leather Factory UK Limited (a UK corporation), Tandy Leather Factory Australia Pty. Limited (an Australian corporation), and Tandy Leather Factory España, S.L. (a Spanish corporation). All intercompany accounts and transactions have been eliminated in consolidation. |
Correction of an error in previously issued financial statements | Correction of an error in previously issued financial statements The consolidated financial statements include an out of period adjustment that is the result of unreconciled inventory receipts for in-transit inventory, which were identified in the fourth quarter of 2022. To correct misstatements in the first three quarters of fiscal year 2022, we reduced inventory and accounts payable balances by approximately $0.9 million, and adjusted changes to inventory and accounts payable in the operating activities section of the consolidated statements of cash flows by the same amount. There is no impact of this adjustment to the consolidated statements of operations and comprehensive income or retained earnings. |
Cash and cash equivalents | Cash and cash equivalents The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. |
Accounts Receivable and Expected Credit Losses | Accounts Receivable and Expected Credit Losses Our receivables primarily arise from the sale of merchandise to customers that have applied for and been granted credit. Accounts receivable are stated at amounts due, net of an allowance for doubtful accounts. Accounts receivable are generally due within 30 days of invoicing. Our accounts receivable balance as of December 31, 2022, December 31, 2021 and January 1, 2021 was $0.4 million, $0.6 million, and $0.4 million, respectively. We estimate expected credit losses based on factors such as the composition of accounts receivable, the age of the accounts, historical bad debt experience, and our evaluation of the financial condition and past collection history of each customer. Management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at December 31, 2022, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time). Accordingly, the allowance for expected credit losses at December 31, 2022, December 31, 2021, and January 1, 2021 each totaled less than $0.1 million. |
Foreign currency translation and transactions | Foreign currency translation and transactions Foreign currency translation adjustments arise from activities of our foreign subsidiaries. Results of operations are translated into U.S. dollars using the average exchange rates during the period, while assets and liabilities are translated using period-end exchange rates. Foreign currency translation adjustments are recorded in stockholders’ equity, net of tax. For the years ended December 31, 2022 and 2021, we recorded foreign currency translation loss adjustments of less than $0.5 million and $0.1 million, respectively. Gains and losses resulting from foreign currency transactions are recorded in other, net within the statements of operations and comprehensive income (loss). We did not recognize a foreign currency transaction gain or (loss) in the years ended December 31, 2022 and 2021. |
Revenue recognition | Revenue recognition Our revenue is earned from sales of merchandise and generally occurs via three methods: (1) at the store counter, (2) shipment of product generally via web sales, and (3) sales of product directly to commercial customers. We recognize revenue when we satisfy the performance obligation of transferring control of product merchandise over to a customer. At the store counter, our performance obligation is met and revenue is recognized when a sales transaction occurs with a customer. When merchandise is shipped to a customer, our performance obligation is met and revenue is recognized when control passes to the customer. Shipping terms are normally free on board (“FOB”) shipping point and control passes when the merchandise is shipped to the customer. Sales tax and comparable foreign tax is excluded from net sales, while shipping charged to our customers is included in net sales. Net sales is based on the amount of consideration that we expect to receive, reduced by estimates for future merchandise returns. As of December 31, 2022, we had received approximately $0.2 million in credit card payments that had not shipped as of the end of the year. The sales return allowance included in accrued expense and other liabilities was The estimated value of merchandise expected to be returned included in other current assets was less than $0.1 million We record a gift card liability for the unfulfilled performance obligation on the date we issue a gift card to a customer. We record revenue and reduce the gift card liability as the customer redeems the gift card. In addition, for gift card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period, which is one year. We include our gift card liability in accrued expenses and other liabilities. On January 1, 2022, the opening balance of the gift card liability was $0.4 million. During 2022, we issued $0.5 million of gift cards, and $0.6 million of gift cards were redeemed and recognized as revenue. At December 31, 2022, our gift card liability balance was $0.3 million. On January 1, 2021, the opening balance of the gift card liability was $0.2 million; we issued $0.4 million of gift cards, and $0.2 million of gift cards were redeemed and recognized as revenue. At December 31, 2021, the ending balance of the gift card liability was $0.4 million Disaggregated revenue In the following table, revenue for the years ended December 31, 2022 and 2021 is disaggregated by geographic areas as follows: (in thousands) 2022 2021 United States $ 71,665 $ 73,546 Canada 7,393 7,470 Other 1,277 1,645 Net sales $ 80,335 $ 82,661 Geographic sales information is based on the location of where the order was fulfilled. |
Discounts | Discounts We offer a single retail price level, plus three volume-based levels for commercial customers. Discounts from those price levels are offered to business, military/first responder and employee customers. Such discounts do not convey a material right to these customers since the discounted pricing they receive at the point of sale is not dependent upon any previous or subsequent purchases. As a result, sales are reported after deduction of discounts at the point of sale. We do not pay slotting fees or make other payments to resellers. |
Operating expense | Operating expense Operating expenses include all selling, general and administrative costs, including wages and benefits, rent and occupancy costs, depreciation, advertising, store operating expenses, outbound freight charges (to ship merchandise to customers), and corporate office costs. |
Property and equipment, net of accumulated depreciation | Property and equipment, net of accumulated depreciation Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are three seven |
Inventory | Inventory Inventory is stated at the lower of first-in, first-out (“FIFO”) cost or net realizable value, and the FIFO layers are maintained at the location level. Finished goods held for sale include the cost of merchandise purchases, the costs to bring the merchandise to our Texas distribution center, warehousing and handling expenditures, and distributing and delivering merchandise to our stores. These costs include depreciation of long-lived assets utilized in acquiring, warehousing and distributing inventory. Manufacturing inventory including raw materials and work-in-process is valued on a first-in, first-out basis using full absorption accounting which includes material, labor, and other applicable manufacturing overhead. Carrying values of inventory are analyzed and, to the extent that the cost of inventory exceeds the net realizable value, provisions are made to reduce the carrying amount of the inventory. We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light), (ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to be taken to adequately value our inventory at the lower of cost or net realizable value. Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell, differences in these estimates could result in ultimate valuations that differ from the recorded asset. The majority of inventory purchases and commitments are made in U.S. dollars in order to limit the Company’s exposure to foreign currency fluctuations. Goods shipped to us are recorded as inventory owned by us when the risk of loss shifts to us from the supplier. Inventory is physically counted twice annually in the Texas distribution center. At the store level, inventory is physically counted each quarter. Inventory is then adjusted in our accounting system to reflect actual count results. |
Leases | Leases We lease certain real estate for our retail store locations and warehouse equipment for our Texas distribution center, both under long-term lease agreements. We determine if an arrangement is a lease at inception and recognize right-of-use (“ROU”) assets and lease liabilities at commencement date based on the present value of the lease payments over the lease term. We elected not to record leases with an initial term of 12 months or less on the balance sheet for all our asset classes. For operating leases, the present value of our lease payments may include: (1) rental payments adjusted for inflation or market rates, and (2) lease terms with options to renew the lease or options to purchase leased equipment, when it is reasonably certain we will exercise such an option. The exercise of lease renewal or purchase option is generally at our discretion. Payments based on a change in an index or market rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. We discount lease payments using our incremental borrowing rate based on information available as of the measurement date. We recognize rent expense related to our operating leases on a straight-line basis over the lease term. Rent expense is recorded in operating expenses. The net adjustment between rent expense and the actual cash paid during the fiscal year has been recorded as accrued expense and other liabilities in the accompanying consolidated balance sheets. For finance leases, our right-of-use assets are amortized on a straight-line basis over the earlier of the useful life of the right-of-use asset or the end of the lease term with rent expense recorded to operating expenses. We adjust the lease liability to reflect lease payments made during the period and interest incurred on the lease liability using the effective interest method. The incurred interest expense is recorded in interest expense on the consolidated statements of comprehensive income (loss). None of our lease agreements contain material residual value guarantees or material restrictive covenants. We do not have any contingent rental payment agreements. On September 8, 2022, we entered into a short-term concession agreement for our store on the Fort Bragg military base, in which the concession payment is based on a sliding scale percentage of sales. We have no sublease agreements and no lease agreements in which we are named as a lessor. Refer to Note 4, Leases for further discussion of the Company’s leases. |
Impairment of long-lived assets | Impairment of long-lived assets We evaluate long-lived assets on a quarterly basis to identify events or changes in circumstances (“triggering events”) that indicate the carrying value of certain assets may not be recoverable. Upon the occurrence of a triggering event, right-of-use (“ROU”) lease assets, property and equipment and definite-lived intangible assets are reviewed for impairment and an impairment loss is recorded in the period in which it is determined that the carrying amount of the assets is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset within the asset group. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be primarily at the individual store level. If the estimated undiscounted future net cash flows for a given store are less than the carrying amount of the related store assets, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related assets. The impairment loss is then allocated across the asset group’s major classifications which in this case are operating lease assets and property and equipment. Triggering events at the store level could include material declines in operational and financial performance or planned changes in the use of assets, such as store relocation or store closure. This evaluation requires management to make judgements relating to future cash flows, growth rates and economic and market conditions. The fair value of an asset group is estimated using a discounted cash flow valuation method. For the years ended December 31, 2022 and 2021, no impairment expense was recognized. |
Earnings per share | Earnings per share Basic earnings per share (“EPS”) are computed based on the weighted average number of common shares outstanding during the period. Diluted EPS includes additional common shares that would have been outstanding if potential common shares with a dilutive effect, such as stock awards from the Company’s restricted stock plan, had been issued. Anti-dilutive securities represent potentially dilutive securities which are excluded from the computation of diluted EPS as their impact would be anti-dilutive. Diluted EPS is computed using the treasury stock method. (in thousands, except share data) 2022 (1) 2021 (1) Numerator: Net income (loss) $ 1,227 $ 1,354 Denominator: Basic weighted-average common shares ouststanding 8,363,390 8,709,866 Dilutive effect of service-based restricted stock awards granted to Board of Directors under the Plan 8,735 10,603 Dilutive effect of service-based restricted stock awards granted to employees under the Plan 22,442 - Diluted weighted-average common shares outstanding 8,394,567 8,720,469 For additional disclosures regarding restricted stock awards and employee stock options, see Note 10, Stockholders’ Equity – Equity Compensation Plans |
Other intangible assets | Other intangible assets Our intangible assets and related accumulated amortization relate to trademarks and copyrights that are definite-lived intangibles and are subject to amortization. The weighted average amortization period is 15 years for trademarks and copyrights. Amortization expense related to other intangible assets was less than $0.01 million in each of 2022 and 2021 and was recorded in operating expenses. Based on the current amount of intangible assets subject to amortization, we estimate amortization expense to be less than $0.01 million annually over the next five years. |
Fair value of financial instruments | Fair value of financial instruments We measure fair value as an exit price, which is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, accounting standards establish a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 – observable inputs that reflect quoted prices in active markets for identical assets or liabilities. Level 2 – significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. Classification of the financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Our principal financial instruments held consist of accounts receivable, accounts payable, and the long-term debt reported in 2021. As of December 31, 2022 and 2021, the carrying values of our financial instruments, included in our Consolidated Balance Sheets, approximated their fair values. There were no transfers into or out of Levels 1, 2 and 3 during the years ended December 31, 2022 and 2021. |
Income taxes | Income taxes Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable income. To the extent it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized, a valuation allowance is recorded. Our evaluation regarding whether a valuation allowance is required or should be adjusted also considers, among other things, the nature, frequency, and severity of recent losses, forecasts of future profitability and the duration of statutory carryforward periods. Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those temporary differences are expected to reverse. The effect on deferred taxes from a change in tax rate is recognized through continuing operations in the period that includes the enactment date of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. A tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgement changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense and the effective tax rate in the period in which new information becomes available. We recognize interest and/or penalties related to all tax positions in income tax expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as the timing and amount of deductions and allocation of taxable income to the various jurisdictions. |
Stock-based compensation | Stock-based compensation The Company’s stock-based compensation relates primarily to restricted stock unit (“RSU”) awards. Accounting guidance requires measurement and recognition of compensation expense at an amount equal to the grant date fair value. Compensation expense is recognized for service-based stock awards on a straight-line basis or ratably over the requisite service period, based on the closing price of the Company’s stock on the date of grant. The service-based awards typically vest ratably over the requisite service period, provided that the participant is employed on the vesting date. Compensation expense is reduced by actual forfeitures as they occur over the requisite service period of the awards. Performance-based RSUs vest, if at all, upon the Company satisfying certain performance targets. The Company records compensation expense for awards with a performance condition when it is probable that the condition will be achieved. If the Company determines it is not probable a performance condition will be achieved, no compensation expense is recognized. If the Company changes its assessment in a subsequent period and concludes it is probable a performance condition will be achieved, the Company will recognize compensation expense ratably between the period of the change in assessment through the expected date of satisfying the performance condition for vesting. If the Company subsequently assesses that it is no longer probable that a performance condition will be achieved, the accumulated expense that has been previously recognized will be reversed. The compensation expense ultimately recognized, if any, related to performance-based awards will equal the grant date fair value based on the number of shares for which the performance condition has been satisfied. We issue shares from authorized shares upon the lapsing of vesting restrictions on RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income (loss) includes net income (loss) and certain other items that are recorded directly to stockholders’ equity. The Company’s only source of other comprehensive income (loss) is foreign currency translation adjustments, and those adjustments are presented net of tax. |
Shipping and handling costs | Shipping and handling costs Costs to ship products from our stores to our customers are included in operating expenses on the Consolidated Statements of Operations and Comprehensive Income. Total costs were $3.5 million and $3.4 million for the years ended December 31, 2022 and 2021, respectively. |
Advertising | Advertising Advertising costs include the cost of print, digital, direct mail, community events, trade shows, and our e-commerce platform. Advertising costs are expensed as incurred. Total advertising expense was $1.2 million and $1.0 million in 2022 and 2021, respectively. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements The Company did not adopt any new accounting guidance that was applicable for the year ended December 31, 2022. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Disaggregated Revenue | In the following table, revenue for the years ended December 31, 2022 and 2021 is disaggregated by geographic areas as follows: (in thousands) 2022 2021 United States $ 71,665 $ 73,546 Canada 7,393 7,470 Other 1,277 1,645 Net sales $ 80,335 $ 82,661 |
Computation of Basic and Diluted Earnings Per Share | Diluted EPS is computed using the treasury stock method. (in thousands, except share data) 2022 (1) 2021 (1) Numerator: Net income (loss) $ 1,227 $ 1,354 Denominator: Basic weighted-average common shares ouststanding 8,363,390 8,709,866 Dilutive effect of service-based restricted stock awards granted to Board of Directors under the Plan 8,735 10,603 Dilutive effect of service-based restricted stock awards granted to employees under the Plan 22,442 - Diluted weighted-average common shares outstanding 8,394,567 8,720,469 |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BALANCE SHEET COMPONENTS [Abstract] | |
Inventory, Property and Equipment and Short-term Liabilities | Inventory (in thousands) December 31, 2022 December 31, 2021 On hand: Finished goods held for sale $ 35,234 $ 34,928 Raw materials and work in process 925 828 Inventory in transit 2,068 2,328 TOTAL $ 38,227 $ 38,084 Property and Equipment (in thousands) December 31, 2022 December 31, 2021 Building $ 9,266 $ 9,257 Land 1,451 1,451 Leasehold improvements 1,870 1,833 Equipment and machinery 7,931 7,704 Furniture and fixtures 7,471 7,350 Vehicles 135 155 28,124 27,750 Less: accumulated depreciation (16,962 ) (15,989 ) TOTAL $ 11,162 $ 11,761 Our property and equipment, net, was located in the following countries: (in thousands) December 31, 2022 December 31, 2021 United States $ 10,989 $ 11,508 Canada 173 252 Spain - 1 $ 11,162 $ 11,761 Depreciation expense was $1.2 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively. Short-term Liabilities Accrued Expenses and Other Liabilities December 31, 2022 December 31, 2021 (in thousands) Accrued employee related costs 1,432 2,508 Unearned gift card revenue 256 351 Estimated returns 72 242 Sales and payroll taxes payable 693 987 Accrued vendor payables 228 214 TOTAL $ 2,681 $ 4,302 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES [Abstract] | |
Operating Lease Assets and Liabilities | Additional information regarding the Company’s operating and finance leases is as follows (in thousands, except for lease term and discount rate information): Leases Balance Sheet Classification December 31, 2022 December 31, 2021 (in thousands) Assets: Operating Operating lease assets $ 9,742 $ 10,438 Finance Financing lease assets 31 37 Total assets $ 9,773 $ 10,475 Liabilities: Current Operating Current portion of operating lease liabilities $ 2,881 $ 3,025 Finance Current portion of finance lease liabilities 15 15 Non-current Operating Operating lease liabilities, non-current 7,469 8,194 Finance Finance lease liabilities, non-current 1 15 Total lease liabilities $ 10,366 $ 11,249 |
Lease Cost | Lease Cost Income Statement Classification December 31, 2022 December 31, 2021 (in thousands) Operating lease cost Operating expenses $ 3,737 $ 3,664 Operating lease cost Impairment expense - - Short-term lease cost Operating expenses 38 45 Variable lease cost (1) Operating expenses 797 946 Finance: (2) Amortization of lease assets Operating expenses 7 7 Interest on lease liabilities Interest expense 1 2 Total lease cost $ 4,580 $ 4,664 (1) Variable lease cost includes payment for certain real estate taxes, insurance, common area maintenance, and other charges related to lease agreements, which are not included in the measurement of the operating lease liabilities. (2) Finance lease costs were less than $1,000 during the 2020 year. |
Maturity of Lease Liabilities | December 31, 2022 Maturity of Lease Liabilities Operating Leases Finance Leases (in thousands) 2022 $ 3,482 $ 16 2023 2,821 - 2024 1,930 - 2025 1,499 - 2026 1,080 - Thereafter 1,357 - Total lease payments $ 12,169 $ 16 Less: Interest (1,819 ) - Present value of lease liabilities $ 10,350 $ 16 |
Operating Leases Other Information | Other Information December 31, 2022 December 31, 2021 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 3,871 $ 3,876 Operating cash flows used in finance leases 1 2 Financing cash flows used in finance leases 14 14 Operating lease assets obtained in exchange for lease obligations Operating leases, initial recognition 3,122 1,653 Operating leases, modifications and remeasurements 762 200 |
Lease Term and Discount Rate | Lease Term and Discount Rate December 31, 2022 December 31, 2021 Weighted-average remaining lease term (years): Operating leases 4.8 5.3 Finance leases 0.9 1.9 Weighted-average discount rate: Operating leases 5.0 % 4.5 % Finance leases 6.0 % 6.5 % |
NOTES PAYABLE AND LONG-TERM D_2
NOTES PAYABLE AND LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE AND LONG-TERM DEBT [Abstract] | |
Debt Outstanding | December 31, (in thousands) 2022 2021 Institute of Official Credit (“ICO”) Guarantee for Small and Medium-sized Enterprises with Banco Santander S.A. (Spain) as described more fully above - interest due monthly at 1.50 June 4, 2025 $ - $ 336 $ - $ 336 Less current maturities - 79 TOTAL $ - $ 415 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES [Abstract] | |
Provision for Income Taxes | The provision for income taxes consists of the following: (in thousands) Year Ended December 31, Income Tax Provision 2022 2021 Current provision: Federal $ 16 $ 640 State 41 98 Foreign 96 - Related to UTP 28 19 181 757 Deferred provision: Federal - - State - - Foreign - 82 - 82 Total tax provision $ 181 $ 839 |
Income (Loss) Before Income Taxes | Income (loss) before income taxes was earned in the following tax jurisdictions: (in thousands) Year Ended December 31, Income (Loss) Before Income Taxes 2022 2021 United States $ 733 $ 2,552 Spain (83 ) (135 ) Canada 758 (229 ) Australia - (1 ) United Kingdom - 6 TOTAL $ 1,408 $ 2,193 |
Income Tax Effects of Temporary Differences Impacting Deferred Income Tax Assets and Liabilities | The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows: Deferred income tax assets: 2022 2021 (in thousands) Inventory $ 471 $ 464 Stock-based compensation 93 59 Accounts receivable 14 4 Sales returns 47 125 Foreign currency translation gain/loss in OCI 689 342 Goodwill and other intangible assets amortization - - Net operating loss 261 646 Accrued expenses 63 359 Leases 152 195 Other - 2 Total deferred income tax assets 1,790 2,196 Less: valuation allowance (1,151 ) (1,489 ) Total deferred income tax assets, net of valuation allowance $ 639 $ 707 Property and equipment depreciation $ 639 $ 707 Total deferred income tax liabilities 639 707 Net deferred tax asset (liability) $ - $ - |
Reconciliation of Effective Tax Rate from Statutory Rate | Below is a reconciliation of our effective tax rate from the statutory rate: Year Ended December 31, 2022 2021 Statutory rate – Federal U.S. income tax 21.0 % 21.0 % State and local taxes (0.6 )% 9.0 % Permanent book/tax differences 11.3 % 3.0 % Difference in tax rates in loss carryback periods 0.0 % 0.0 % Change in valuation allowance (20.3 )% 6.0 % Rate differential on UTP reversals 2.0 % 1.0 % Other, net (0.5 )% (1.7 )% Effective rate 12.9 % 38.3 % |
Reconciliation of Uncertain Tax Positions | A reconciliation of the beginning and ending amount of uncertain tax positions (“UTP”) is as follows: 2022 2021 UTP at beginning of the year $ 415 $ 393 Gross increase to tax positions in current period 7 3 Interest expense 28 19 UTP at end of year $ 450 $ 415 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY [Abstract] | |
Activity of Non-vested Restricted Stock and RSU Awards | A summary of the activity for non-vested restricted stock and RSU awards is as follows: Shares Weighted Average (in thousands) Share Price Balance, January 1, 2022 423 $ 7.03 Granted 161 5.01 Forfeited - - Vested (143 ) 6.56 Balance, December 31 2022 441 $ 6.46 |
Non-vested, Service-based Stock Awards | As of December 31, 2022, there was unrecognized compensation cost related to non-vested, service-based awards of $1.1 million which will be recognized over 1.1 weighted average years in each of the following years: Unrecognized Expense 2023 $ 752 2024 239 2025 89 2026 7 $ 1,087 |
DESCRIPTION OF BUSINESS, Summar
DESCRIPTION OF BUSINESS, Summary (Details) | 12 Months Ended |
Dec. 31, 2022 Segment Store | |
Description of Business [Abstract] | |
Number of stores | 103 |
Number of operating segments | Segment | 1 |
Number of reporting segments | Segment | 1 |
United States [Member] | |
Description of Business [Abstract] | |
Number of stores | 92 |
Canada [Member] | |
Description of Business [Abstract] | |
Number of stores | 10 |
Spain [Member] | |
Description of Business [Abstract] | |
Number of stores | 1 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES, Error Correction (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Prior Period Adjustments [Abstract] | ||
Inventory | $ 38,227 | $ 38,084 |
Accounts Payable | 3,082 | $ 4,786 |
Prior Period Adjustment [Member] | ||
Prior Period Adjustments [Abstract] | ||
Inventory | (900) | |
Accounts Payable | $ (900) |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable and Expected Credit Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accounts Receivable and Expected Credit Losses [Abstract] | |||
Accounts receivable | $ 370 | $ 614 | $ 400 |
Maximum [Member] | |||
Accounts Receivable and Expected Credit Losses [Abstract] | |||
Allowance for expected credit losses | $ 100 | $ 100 | $ 100 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES, Foreign Currency Translation and Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Foreign currency translation and transactions [Abstract] | ||
Foreign currency transaction gain (loss) | $ 0 | $ 0 |
Maximum [Member] | ||
Foreign currency translation and transactions [Abstract] | ||
Foreign currency translation loss adjustments net of tax change (benefit) | $ 0.5 | $ 0.1 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Level | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Revenue recognition [Abstract] | |||
Credit card receivables | $ 200 | ||
Sales return allowance | $ 100 | $ 200 | $ 100 |
Gift card redemption period | 1 year | ||
Gift cards issued | $ 500 | 400 | |
Revenue recognized from redemption of gift cards | 600 | 200 | |
Disaggregated revenue [Abstract] | |||
Sales | $ 80,335 | 82,661 | |
Discounts [Abstract] | |||
Number of price levels | Level | 3 | ||
Accounts Expenses and Other Liabilities [Member] | |||
Revenue recognition [Abstract] | |||
Contract with customer liability | $ 300 | 400 | 200 |
United States [Member] | |||
Disaggregated revenue [Abstract] | |||
Sales | 71,665 | 73,546 | |
Canada [Member] | |||
Disaggregated revenue [Abstract] | |||
Sales | 7,393 | 7,470 | |
Other [Member] | |||
Disaggregated revenue [Abstract] | |||
Sales | 1,277 | 1,645 | |
Maximum [Member] | |||
Revenue recognition [Abstract] | |||
Estimate of merchandise expected to be returned | $ 100 | $ 100 | $ 100 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES, Property and Equipment, Net of Accumulated Depreciation (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Equipment and Machinery [Member] | Minimum [Member] | |
Property and equipment, net of accumulated depreciation [Abstract] | |
Estimated useful lives of assets | 3 years |
Equipment and Machinery [Member] | Maximum [Member] | |
Property and equipment, net of accumulated depreciation [Abstract] | |
Estimated useful lives of assets | 10 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property and equipment, net of accumulated depreciation [Abstract] | |
Estimated useful lives of assets | 7 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property and equipment, net of accumulated depreciation [Abstract] | |
Estimated useful lives of assets | 15 years |
Vehicles [Member] | |
Property and equipment, net of accumulated depreciation [Abstract] | |
Estimated useful lives of assets | 5 years |
Buildings and Related Improvements [Member] | |
Property and equipment, net of accumulated depreciation [Abstract] | |
Estimated useful lives of assets | 40 years |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES, Impairment of Long-lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Impairment of long-lived assets [Abstract] | ||
Impairment losses | $ 0 | $ 0 |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES, Earnings Per Share (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Numerator [Abstract] | |||
Net income (loss) | [1] | $ 1,227 | $ 1,354 |
Denominator [Abstract] | |||
Basic weighted-average common shares outstanding (in shares) | [1] | 8,363,390 | 8,709,866 |
Diluted weighted-average common shares outstanding (in shares) | [1] | 8,394,567 | 8,720,469 |
Shares excluded from the diluted EPS calculation (in shares) | 90,748 | 168,735 | |
Restricted Stock [Member] | Board of Directors [Member] | |||
Denominator [Abstract] | |||
Dilutive effect of service-based restricted stock awards granted (in shares) | [1] | 8,735 | 10,603 |
Restricted Stock [Member] | Employees [Member] | |||
Denominator [Abstract] | |||
Dilutive effect of service-based restricted stock awards granted (in shares) | [1] | 22,442 | 0 |
[1]For the years ended December 31, 2022 and 2021, there were 90,748 and 168,735, respectively, shares excluded from the diluted EPS calculation because the impact of their assumed vesting would be anti-dilutive. |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES, Other Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Maximum [Member] | ||
Other Intangible Assets [Abstract] | ||
Amortization of intangible assets (excluding goodwill) | $ 10 | $ 10 |
Amortization expense, 2023 | 10 | |
Amortization expense, 2024 | 10 | |
Amortization expense, 2025 | 10 | |
Amortization expense, 2026 | 10 | |
Amortization expense, 2027 | $ 10 | |
Trademarks/Copyrights [Member] | ||
Other Intangible Assets [Abstract] | ||
Weighted average amortization period | 15 years |
SIGNIFICANT ACCOUNTING POLIC_12
SIGNIFICANT ACCOUNTING POLICIES, Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair value of financial instruments [Abstract] | ||
Transfers into (out of) Level 3 | $ 0 | $ 0 |
SIGNIFICANT ACCOUNTING POLIC_13
SIGNIFICANT ACCOUNTING POLICIES, Shipping and Handling Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Shipping and handling costs [Abstract] | ||
Operating expenses | $ 45,109 | $ 44,699 |
Shipping and Handling [Member] | ||
Shipping and handling costs [Abstract] | ||
Operating expenses | $ 3,500 | $ 3,400 |
SIGNIFICANT ACCOUNTING POLIC_14
SIGNIFICANT ACCOUNTING POLICIES, Advertising (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Advertising [Abstract] | ||
Advertising expense | $ 1.2 | $ 1 |
BALANCE SHEET COMPONENTS, Inven
BALANCE SHEET COMPONENTS, Inventory, Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Inventory on hand [Abstract] | ||
Finished goods held for sale | $ 35,234 | $ 34,928 |
Raw materials and work in process | 925 | 828 |
Inventory in transit | 2,068 | 2,328 |
Total inventory | 38,227 | 38,084 |
Property and Equipment [Abstract] | ||
Property and equipment, gross | 28,124 | 27,750 |
Less: accumulated depreciation | (16,962) | (15,989) |
Property and equipment, net | 11,162 | 11,761 |
Depreciation expense | 1,200 | 1,100 |
United States [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, net | 10,989 | 11,508 |
Canada [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, net | 173 | 252 |
Spain [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, net | 0 | 1 |
Building [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, gross | 9,266 | 9,257 |
Land [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, gross | 1,451 | 1,451 |
Leasehold Improvements [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, gross | 1,870 | 1,833 |
Equipment and Machinery [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, gross | 7,931 | 7,704 |
Furniture and Fixtures [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, gross | 7,471 | 7,350 |
Vehicles [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment, gross | $ 135 | $ 155 |
BALANCE SHEET COMPONENTS, Short
BALANCE SHEET COMPONENTS, Short-term Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Liabilities [Abstract] | ||
Accrued employee related costs | $ 1,432 | $ 2,508 |
Unearned gift card revenue | 256 | 351 |
Estimated returns | 72 | 242 |
Sales and payroll taxes payable | 693 | 987 |
Accrued vendor payables | 228 | 214 |
TOTAL | $ 2,681 | $ 4,302 |
LEASES, Lease Assets, Liabiliti
LEASES, Lease Assets, Liabilities and Lease Cost (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Assets [Abstract] | ||||
Operating lease assets | $ 9,742,000 | $ 10,438,000 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Operating lease assets | Operating lease assets | ||
Financing lease assets | $ 31,000 | $ 37,000 | ||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Financing lease assets | Financing lease assets | ||
Total assets | $ 9,773,000 | $ 10,475,000 | ||
Current [Abstract] | ||||
Current portion of operating lease liabilities | $ 2,881,000 | $ 3,025,000 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of operating lease liabilities | Current portion of operating lease liabilities | ||
Current portion of finance lease liabilities | $ 15,000 | $ 15,000 | ||
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of finance lease liabilities | Current portion of finance lease liabilities | ||
Noncurrent [Abstract] | ||||
Operating lease liabilities, non-current | $ 7,469,000 | $ 8,194,000 | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Operating lease liabilities, non-current | Operating lease liabilities, non-current | ||
Finance lease liabilities, non-current | $ 1,000 | $ 15,000 | ||
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Finance lease liabilities, non-current | Finance lease liabilities, non-current | ||
Total lease liabilities | $ 10,366,000 | $ 11,249,000 | ||
Lease Cost [Abstract] | ||||
Operating lease asset impairment expense | 0 | |||
Finance [Abstract] | ||||
Total lease cost | 4,580,000 | 4,664,000 | ||
Maximum [Member] | ||||
Finance [Abstract] | ||||
Finance lease costs | $ 1,000 | |||
ASU 2016-02 [Member] | Maximum [Member] | ||||
Lease Cost [Abstract] | ||||
Operating lease asset impairment expense | 0 | |||
Operating Expenses [Member] | ||||
Lease Cost [Abstract] | ||||
Operating lease cost | 3,737,000 | 3,664,000 | ||
Short-term lease cost | 38,000 | 45,000 | ||
Variable lease cost | [1] | 797,000 | 946,000 | |
Finance [Abstract] | ||||
Amortization of lease assets | [2] | 7,000 | 7,000 | |
Impairment Expense [Member] | ||||
Lease Cost [Abstract] | ||||
Operating lease cost | 0 | 0 | ||
Interest Expense [Member] | ||||
Finance [Abstract] | ||||
Interest on lease liabilities | [2] | $ 1,000 | $ 2,000 | |
[1]Variable lease cost includes payment for certain real estate taxes, insurance, common area maintenance, and other charges related to lease agreements, which are not included in the measurement of the operating lease liabilities.[2]Finance lease costs were less than $1,000 during the 2020 year. |
LEASES, Maturity of Lease Liabi
LEASES, Maturity of Lease Liabilities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Maturity of Operating Lease Liabilities [Abstract] | |
2022 | $ 3,482 |
2023 | 2,821 |
2024 | 1,930 |
2025 | 1,499 |
2026 | 1,080 |
Thereafter | 1,357 |
Total lease payments | 12,169 |
Less: Interest | (1,819) |
Present value of lease liabilities | 10,350 |
Maturities of Finance Lease Liabilities [Abstract] | |
2022 | 16 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
Thereafter | 0 |
Total lease payments | 16 |
Less: Interest | 0 |
Present value of lease liabilities | $ 16 |
LEASES, Operating Leases Other
LEASES, Operating Leases Other Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Paid for Amounts Included in the Measurement of Lease Liabilities [Abstract] | ||
Operating cash flows used in operating leases | $ 3,871 | $ 3,876 |
Operating cash flows used in finance leases | 1 | 2 |
Financing cash flows used in finance leases | 14 | 14 |
Operating Lease Assets Obtained in Exchange for Lease Obligations [Abstract] | ||
Operating leases, initial recognition | 3,122 | 1,653 |
Operating leases, modifications and remeasurements | $ 762 | $ 200 |
LEASES, Lease Term and Discount
LEASES, Lease Term and Discount Rate (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Weighted-Average Remaining Lease Term (Years) [Abstract] | ||
Operating leases | 4 years 9 months 18 days | 5 years 3 months 18 days |
Finance leases | 10 months 24 days | 1 year 10 months 24 days |
Weighted-Average Discount Rate [Abstract] | ||
Operating leases | 5% | 4.50% |
Finance leases | 6% | 6.50% |
NOTES PAYABLE AND LONG-TERM D_3
NOTES PAYABLE AND LONG-TERM DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Long-term Debt [Abstract] | |||
Line of credit note | $ 0 | $ 336 | |
Less current maturities | $ 0 | 79 | |
Institute of Official Credit Guarantee for Small and Medium-sized Enterprises [Member] | |||
Debt Instruments [Abstract] | |||
Proceeds from long-term debt | $ 400 | ||
Fixed interest rate | 1.50% | ||
Line of Credit [Member] | |||
Long-term Debt [Abstract] | |||
Line of credit note | $ 0 | 336 | |
Less current maturities | 0 | 79 | |
Outstanding debt | $ 0 | 415 | |
Line of Credit [Member] | Institute of Official Credit Guarantee for Small and Medium-sized Enterprises [Member] | |||
Debt Instruments [Abstract] | |||
Maturity date | Jun. 04, 2025 | ||
Long-term Debt [Abstract] | |||
Line of credit note | $ 0 | $ 336 |
EMPLOYEE BENEFIT AND SAVINGS _2
EMPLOYEE BENEFIT AND SAVINGS PLANS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Pension and Other Postretirement Benefits Cost [Abstract] | ||
Defined contribution plan, employer match expense | $ 300,000 | $ 300,000 |
Employer discretionary contribution amount | $ 0 | $ 0 |
100% Contribution [Member] | ||
Pension and Other Postretirement Benefits Cost [Abstract] | ||
Employer matching contribution, percentage of match | 100% | 100% |
Employer matching contribution, percentage of eligible earnings contributed by employees | 3% | 3% |
50% Contribution [Member] | ||
Pension and Other Postretirement Benefits Cost [Abstract] | ||
Employer matching contribution, percentage of match | 50% | 50% |
Employer matching contribution, percentage of eligible earnings contributed by employees | 2% | 2% |
INCOME TAXES, Provision for Inc
INCOME TAXES, Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current provision [Abstract] | ||
Federal | $ 16 | $ 640 |
State | 41 | 98 |
Foreign | 96 | 0 |
Related to UTP | 28 | 19 |
Total current provision | 181 | 757 |
Deferred provision [Abstract] | ||
Federal | 0 | 0 |
State | 0 | 0 |
Foreign | 0 | 82 |
Total deferred provision (benefit) | 0 | 82 |
Total tax provision | 181 | 839 |
Income tax refund received | 1,400 | |
Additional tax refund receivable | 200 | |
State net operating loss carryovers | 3,700 | |
Foreign tax net operating loss carryovers | 500 | |
Deferred tax assets | $ 0 | $ 0 |
INCOME TAXES, Income (Loss) Bef
INCOME TAXES, Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income (loss) before income taxes [Abstract] | ||
TOTAL | $ 1,408 | $ 2,193 |
United States [Member] | ||
Income (loss) before income taxes [Abstract] | ||
Income (loss) before income taxes | 733 | 2,552 |
Spain [Member] | ||
Income (loss) before income taxes [Abstract] | ||
Income (loss) before income taxes | (83) | (135) |
Canada [Member] | ||
Income (loss) before income taxes [Abstract] | ||
Income (loss) before income taxes | 758 | (229) |
Australia [Member] | ||
Income (loss) before income taxes [Abstract] | ||
Income (loss) before income taxes | 0 | (1) |
United Kingdom [Member] | ||
Income (loss) before income taxes [Abstract] | ||
Income (loss) before income taxes | $ 0 | $ 6 |
INCOME TAXES, Income Tax Effect
INCOME TAXES, Income Tax Effects of Temporary Differences Impacting Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred income tax assets [Abstract] | ||
Inventory | $ 471 | $ 464 |
Stock-based compensation | 93 | 59 |
Accounts receivable | 14 | 4 |
Sales returns | 47 | 125 |
Foreign currency translation gain/loss in OCI | 689 | 342 |
Goodwill and other intangible assets amortization | 0 | 0 |
Net operating loss | 261 | 646 |
Accrued expenses | 63 | 359 |
Leases | 152 | 195 |
Other | 0 | 2 |
Total deferred income tax assets | 1,790 | 2,196 |
Less: valuation allowance | (1,151) | (1,489) |
Total deferred income tax assets, net of valuation allowance | 639 | 707 |
Deferred income tax liabilities [Abstract] | ||
Property and equipment depreciation | 639 | 707 |
Total deferred income tax liabilities | 639 | 707 |
Net deferred tax asset (liability) | 0 | $ 0 |
Decrease in valuation allowance for deferred income tax assets | $ (300) |
INCOME TAXES, Reconciliation of
INCOME TAXES, Reconciliation of Effective Tax Rate from Statutory Rate (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES [Abstract] | ||
Statutory rate - Federal U.S. income tax | 21% | 21% |
State and local taxes | (0.60%) | 9% |
Permanent book/tax differences | 11.30% | 3% |
Difference in tax rates in loss carryback periods | 0% | 0% |
Change in valuation allowance | (20.30%) | 6% |
Rate differential on UTP reversals | 2% | 1% |
Other, net | (0.50%) | (1.70%) |
Effective rate | 12.90% | 38.30% |
INCOME TAXES, Reconciliation _2
INCOME TAXES, Reconciliation of Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of Uncertain Tax Positions ("UTP") [Roll Forward] | ||
UTP at beginning of the year | $ 415 | $ 393 |
Gross increase to tax positions in current period | 7 | 3 |
Interest expense | 28 | 19 |
UTP at end of year | $ 450 | $ 415 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Jul. 31, 2021 USD ($) |
Legal Proceedings [Abstract] | |
Penalty amount | $ 200,000 |
Former CFO and CEO [Member] | |
Legal Proceedings [Abstract] | |
Penalty amount | $ 25,000 |
SIGNIFICANT BUSINESS CONCENTR_2
SIGNIFICANT BUSINESS CONCENTRATIONS AND RISK (Details) | 12 Months Ended | |
Dec. 31, 2022 Customer Supplier | Dec. 31, 2021 Customer | |
Supplier Concentration Risk [Member] | United States [Member] | ||
Concentration Risk [Abstract] | ||
Number of suppliers | Supplier | 130 | |
Supplier Concentration Risk [Member] | Foreign Countries [Member] | ||
Concentration Risk [Abstract] | ||
Number of suppliers | Supplier | 20 | |
Sales Revenue [Member] | Customer Concentration Risk [Member] | ||
Concentration Risk [Abstract] | ||
Number of customers accounted more than 0.4% of revenue | Customer | 0 | 0 |
Sales Revenue [Member] | Customer Concentration Risk [Member] | Five Major Customers [Member] | ||
Concentration Risk [Abstract] | ||
Number of customers accounted more than 0.4% of revenue | Customer | 5 | 5 |
Sales Revenue [Member] | Customer Concentration Risk [Member] | Five Major Customers [Member] | Maximum [Member] | ||
Concentration Risk [Abstract] | ||
Concentration risk percentage | 2% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Major Customers [Member] | ||
Concentration Risk [Abstract] | ||
Number of customers accounted more than 0.4% of revenue | Customer | 2 | 2 |
Concentration risk percentage | 10% | 23.70% |
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Ten Major Suppliers [Member] | ||
Concentration Risk [Abstract] | ||
Concentration risk percentage | 30% | |
Number of suppliers accounted for 30% of inventory purchases | Supplier | 10 |
STOCKHOLDERS' EQUITY, Restricte
STOCKHOLDERS' EQUITY, Restricted Stock Plan (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Oct. 31, 2018 | Dec. 31, 2022 | Jun. 30, 2020 | Jan. 31, 2013 | |
Restricted Stock Units [Member] | Chief Executive Officer [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Number of restricted stock units granted (in shares) | 644,000 | ||||
Serviced Based Restricted Stock Units [Member] | Chief Executive Officer [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Vesting period from grant date | 5 years | ||||
Number of restricted stock units granted (in shares) | 460,000 | ||||
Performance Based Restricted Stock Units [Member] | Chief Executive Officer [Member] | Tranche One [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Number of restricted stock units granted (in shares) | 92,000 | ||||
Minimum amount of operating income, award vesting condition | $ 12 | ||||
Performance Based Restricted Stock Units [Member] | Chief Executive Officer [Member] | Tranche Two [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Number of restricted stock units granted (in shares) | 92,000 | ||||
Minimum amount of operating income, award vesting condition | $ 14 | ||||
2013 Restricted Stock Plan [Member] | Minimum [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Vesting period from grant date | 4 years | ||||
2013 Restricted Stock Plan [Member] | Restricted Stock Units [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Number of common shares reserved for issuance (in shares) | 800,000 | ||||
2013 Restricted Stock Plan [Member] | Restricted Stock Units [Member] | Maximum [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Number of common shares reserved for issuance (in shares) | 300,000 | ||||
2013 Restricted Stock Plan [Member] | Serviced Based Restricted Stock Units [Member] | Non-Employee Director [Member] | |||||
Restricted Stock Plan [Abstract] | |||||
Vesting period from grant date | 4 years | ||||
Number of restricted stock units granted (in shares) | 14,000 |
STOCKHOLDERS' EQUITY, Summary o
STOCKHOLDERS' EQUITY, Summary of Activity for Non-vested Restricted Stock and RSU Awards (Details) - Restricted Stock and RSU [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Shares [Roll Forward] | |
Balance, shares (in shares) | shares | 423 |
Granted, shares (in shares) | shares | 161 |
Forfeited, shares (in shares) | shares | 0 |
Vested, shares (in shares) | shares | (143) |
Balance, shares (in shares) | shares | 441 |
Weighted Average Share Price [Abstract] | |
Balance, weighted average share price (in dollars per share) | $ / shares | $ 7.03 |
Granted, weighted average share price (in dollars per share) | $ / shares | 5.01 |
Forfeited, weighted average share price (in dollars per share) | $ / shares | 0 |
Vested, weighted average share price (in dollars per share) | $ / shares | 6.56 |
Balance, weighted average share price (in dollars per share) | $ / shares | $ 6.46 |
STOCKHOLDERS' EQUITY, Non-veste
STOCKHOLDERS' EQUITY, Non-vested Service-based Awards (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Serviced Based Restricted Stock Units [Member] | ||
Share-based Compensation Expense [Abstract] | ||
Stock-based compensation expense | $ 1,100,000 | $ 800,000 |
Unrecognized compensation cost period of recognition | 1 year 1 month 6 days | |
2023 | $ 752,000 | |
2024 | 239,000 | |
2025 | 89,000 | |
2025 | 7,000 | |
Unrecognized Expense | 1,087,000 | |
Performance Based Restricted Stock Units [Member] | ||
Share-based Compensation Expense [Abstract] | ||
Stock-based compensation expense | $ 0 | |
Restricted Stock and RSU [Member] | ||
Share-based Compensation Expense [Abstract] | ||
Number of shares issued from vesting of restricted stock (in shares) | 140,277 | 114,075 |
STOCKHOLDERS' EQUITY, Share Rep
STOCKHOLDERS' EQUITY, Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||||
Apr. 11, 2022 | Dec. 08, 2021 | Jan. 28, 2021 | Jul. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 08, 2022 | Apr. 10, 2022 | Dec. 07, 2021 | Jan. 27, 2021 | Aug. 09, 2020 | |
Stockholders' Equity Note [Abstract] | |||||||||||
Common stock, par value (in dollars per share) | $ 0.0024 | $ 0.0024 | |||||||||
Purchase price | $ 1,798 | $ 2,738 | |||||||||
Share Repurchase Program [Member] | |||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||
Remaining repurchase of common stock | $ 5,000 | $ 5,000 | |||||||||
Repurchase of common stock (in shares) | 359,500 | 212,690 | 500,000 | 600 | |||||||
Common stock, par value (in dollars per share) | $ 0.0024 | $ 0.0024 | $ 0.0024 | ||||||||
Purchase price per share (in dollars per share) | $ 5 | $ 5 | $ 3.35 | ||||||||
Purchase price | $ 1,800 | $ 1,100 | $ 1,700 | ||||||||
Percentage of outstanding common stock | 4.20% | 2.40% | 5.50% | ||||||||
Maximum [Member] | Share Repurchase Program [Member] | |||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||
Repurchase of common stock shares | $ 5,000 | $ 5,000 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - JP Morgan Chase Bank, N.A. [Member] - Subsequent Event [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Jan. 03, 2023 | |
Subsequent Event [Abstract] | ||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | |
Line of credit facility, funds borrowed | $ 0 |