UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
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As of June 7, 2021 there were
iMEDIA BRANDS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
May 1, 2021
2
PART I — FINANCIAL INFORMATION
Item 1.FINANCIAL STATEMENTS
iMEDIA BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| May 1, |
| January 30, | |||
2021 | 2021 | |||||
(In thousands, except share and | ||||||
per share data) | ||||||
ASSETS |
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Current assets: |
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Cash | $ | | $ | | ||
Accounts receivable, net |
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Inventories |
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Current portion of television broadcast rights, net | | | ||||
Prepaid expenses and other |
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Total current assets |
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Property and equipment, net |
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Television broadcast rights, net | | | ||||
Intangible assets, net | | | ||||
Other assets |
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TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued liabilities |
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Current portion of television broadcast rights obligations | | | ||||
Current portion of long term credit facility |
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Current portion of operating lease liabilities |
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Deferred revenue |
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Total current liabilities |
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Other long term liabilities |
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Long term credit facility |
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Total liabilities |
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Commitments and contingencies |
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Shareholders' equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Total shareholders’ equity |
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Equity of the non-controlling interest | $ | | $ | | ||
Total equity | $ | | $ | | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
iMEDIA BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three-Month | |||||||
Periods Ended | |||||||
May 1, | May 2, | ||||||
| 2021 |
| 2020 | ||||
(In thousands, except share and per share data) | |||||||
Net sales | $ | | $ | | |||
Cost of sales |
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Gross profit |
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Operating expense: |
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Distribution and selling |
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General and administrative |
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Depreciation and amortization |
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Restructuring costs |
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Total operating expense |
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Operating loss |
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Other income (expense): |
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Interest income |
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Interest expense |
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Total other expense, net |
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Loss before income taxes |
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Income tax provision |
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Net loss | $ | ( | $ | ( | |||
Less: Net loss attributable to non-controlling interest | ( | — | |||||
Net loss attributable to shareholders | ( | ( | |||||
Net loss per common share | $ | ( | $ | ( | |||
Net loss per common share — assuming dilution | $ | ( | $ | ( | |||
Weighted average number of common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
iMEDIA BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
| Common Stock |
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Additional | Equity of | Total | |||||||||||||||
Number | Paid-In | Accumulated | Non-Controlling | Shareholders' | |||||||||||||
of Shares |
| Par Value | Capital | Deficit | Interest | Equity | |||||||||||
For the Three-Month Period Ended May 1, 2021 |
| (In thousands, except share data) | |||||||||||||||
BALANCE, January 30, 2021 |
| | $ | | $ | | $ | ( | $ | — | $ | | |||||
Net loss |
| — |
| — |
| — |
| ( |
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Common stock issuances pursuant to equity compensation awards |
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Share-based payment compensation |
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Common stock and warrant issuance |
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Investment of non-controlling interest | — | — | — | — | | | |||||||||||
BALANCE, May 1, 2021 |
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| Common Stock |
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Additional | Equity of | Total | |||||||||||||||
Number | Paid-In | Accumulated | Non-Controlling | Shareholders' | |||||||||||||
of Shares |
| Par Value | Capital | Deficit | Interest | Equity | |||||||||||
For the Three-Month Period Ended May 2, 2020 |
| (In thousands, except share data) | |||||||||||||||
BALANCE, February 1, 2020 |
| | $ | | $ | | $ | ( | $ | — | $ | | |||||
Net loss |
| — |
| — |
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| ( |
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Common stock issuances pursuant to equity compensation awards |
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Share-based payment compensation |
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Common stock and warrant issuance |
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BALANCE, May 2, 2020 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
iMEDIA BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three-Month | ||||||
Periods Ended | ||||||
May 1, | May 2, | |||||
2021 | 2020 | |||||
(in thousands) | ||||||
OPERATING ACTIVITIES: |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: |
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Depreciation and amortization |
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Share-based payment compensation |
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Payments for television broadcast rights | ( | — | ||||
Amortization of deferred financing costs |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Inventories |
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Deferred revenue |
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Prepaid expenses and other |
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Accounts payable and accrued liabilities |
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Net cash (used for) provided by operating activities |
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INVESTING ACTIVITIES: |
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Property and equipment additions |
| ( |
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Cash paid for business acquisitions |
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Net cash used for investing activities |
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FINANCING ACTIVITIES: |
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Proceeds from issuance of revolving loan |
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Proceeds from issuance of common stock and warrants |
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Payments on revolving loan |
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Payments on term loan |
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Payments on finance leases |
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Payments for restricted stock issuance |
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Net cash provided by (used for) financing activities |
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Net (decrease) increase in cash and restricted cash equivalents |
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BEGINNING CASH AND RESTRICTED CASH EQUIVALENTS |
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ENDING CASH AND RESTRICTED CASH EQUIVALENTS | $ | | $ | | ||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||
Interest paid | $ | | $ | |||
Television broadcast rights obtained in exchange for liabilities | $ | - | $ | | ||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||
Property and equipment purchases included in accounts payable | $ | | $ | | ||
Common stock issuance costs included in accrued liabilities | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
iMEDIA BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 1, 2021
(Unaudited)
(1) General
iMedia Brands, Inc. and its subsidiaries (“we,” “our,” “us,” or the “Company”) is a leading interactive media company that owns a growing portfolio of lifestyle television networks, consumer brands, online marketplaces and media commerce services that together position the Company as a leading single-source partner to television advertisers and consumer brands seeking to entertain and transact with customers using interactive video. The Company’s growth strategy revolves around its ability to increase its expertise and scale using interactive video to engage customers within multiple business models and multiple sales channels. The Company believes its growth strategy builds on its core strengths and provides an advantage in these marketplaces.
The Company’s lifestyle television networks are ShopHQ, ShopBulldogTV and ShopHQHealth. ShopHQ is the Company’s flagship, nationally distributed shopping entertainment network that offers a mix of proprietary, exclusive, and name-brand merchandise in the categories of Jewelry and Watches, Home, Beauty and Health, and Fashion and Accessories, directly to consumers 24 hours a day using engaging interactive video. ShopBulldogTV, which launched in the fourth quarter of fiscal 2019, is a niche television shopping entertainment network that offers male-oriented products and services to men and to women shopping for men. ShopHQHealth, which launched in the third quarter of fiscal 2020, is a niche television shopping entertainment network that offers women and men products and services focused on health and wellness categories such as physical, mental and spiritual health, financial and motivational wellness, weight management and telehealth medical services.
The Company’s engaging, interactive video programming is distributed primarily in linear television through cable and satellite distribution agreements, agreements with telecommunications companies and arrangements with over-the-air broadcast television stations. This interactive programming is also streamed live online at shophq.com, shopbulldogtv.com and shophqhealth.com, which are comprehensive digital commerce platforms that sell products which appear on the Company’s television lifestyle networks as well as offer an extended assortment of online-only merchandise. The Company’s interactive video is also available on over-the-top ("OTT") platforms and ConnectedTV platforms (“CTV”) such as Roku, AppleTV, and Samsung connected televisions, mobile devices, including smartphones and tablets, and through the leading social media channels.
The Company’s consumer brands include J.W. Hulme Company ("J.W. Hulme"), Cooking with Shaquille O’Neal, Kate & Mallory, Live Fit MD, and Christopher & Banks. Christopher & Banks was acquired during the first quarter of fiscal year 2021.
The Company’s online marketplace brands are OurGalleria.com, a high-end branded, online marketplace launched in November 2020 that offers discounted merchandise within an exciting interactive shopping experience, and TheCloseout.com, a deeply-discount branded online marketplace acquired in fiscal year 2021 that offers discounted merchandise in many categories within an exciting interactive shopping experience.
The Company’s media commerce services brands are Float Left Interactive, Inc. ("Float Left"), an OTT app technology services business and the Company’s customer solutions and logistics services business called, i3PL.
Amendment to Articles of Incorporation
Effective July 13, 2020, the Company amended its Articles of Incorporation to increase the authorized shares of common stock by
7
(2) Basis of Financial Statement Presentation
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America have been condensed or omitted in accordance with these rules and regulations. The accompanying condensed consolidated balance sheet as of January 30, 2021 has been derived from the Company’s audited financial statements for the fiscal year ended January 30, 2021. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of these financial statements. Although management believes the disclosures and information presented are adequate, these interim condensed consolidated financial statements should be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its annual report on Form 10-K for the fiscal year ended January 30, 2021. Operating results for the three-month period ended May 1, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 29, 2022.
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year ends on the Saturday nearest to January 31 and results in either a 52-week or 53-week fiscal year. References to years in this report relate to fiscal years, rather than to calendar years. The Company’s most recently completed fiscal year, fiscal 2020, ended on January 30, 2021, and consisted of
. Fiscal 2021 will end January 29, 2022 and will contain . The three-month period ended May 1, 2021 consisted of .Recently Adopted Accounting Standards
In June 2016, the FASB issued guidance on the accounting for credit losses on financial instruments, Topic 326, Financial Instruments—Credit Losses (Accounting Standards Update (“ASU” 2016-13). Topic 326 was subsequently amended by ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. Among other provisions, this guidance introduces a new impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a forward-looking “expected loss” model that will replace the current “incurred loss” model that will generally result in the earlier recognition of allowances for losses. The Company adopted this guidance during the first quarter of fiscal 2021.
In August 2018, the Financial Accounting Standards Board ("FASB") issued Intangibles—Goodwill and Other—Internal-Use Software, Subtopic 350-40 (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this standard during the first quarter of fiscal year 2020 on a prospective basis. The adoption of ASU 2018-15 did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“Topic 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. Topic 848 is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the impact of Topic 848 on the consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-14). This new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount
8
over its fair value. The changes are effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.
(3) Revenue
Revenue Recognition
Revenue is recognized when control of the promised merchandise is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for the merchandise, which is upon shipment. Revenue for services is recognized when the services are provided to the customer. Revenue is reported net of estimated sales returns, credits and incentives, and excludes sales taxes. Sales returns are estimated and provided for at the time of sale based on historical experience. As of May 1, 2021 and January 30, 2021, the Company recorded a merchandise return liability of $
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification ("ASC") 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Substantially all of the Company’s sales are single performance obligation arrangements for transferring control of merchandise to customers.
In accordance with ASC 606-10-50, the Company disaggregates revenue from contracts with customers by significant product groups and timing of when the performance obligations are satisfied. A reconciliation of disaggregated revenue by segment and significant product group is provided in Note 10 - "Business Segments and Sales by Product Group."
As of May 1, 2021, the Company had
Revenue recognized over time was $
Accounts Receivable
The Company’s accounts receivable is comprised primarily of customer receivables from its ValuePay program, but also includes vendor receivables, credit card receivables and other receivables. The Company’s ValuePay program is an installment payment program that entitles customers to purchase merchandise and generally pay for the merchandise in two or more equal monthly credit card installments. The Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when the payment terms are less than one year. Accounts receivable consist primarily of amounts due from customers for merchandise sales and from credit card companies and are reflected net of reserves for estimated uncollectible amounts. As of May 1, 2021 and January 30, 2021, the Company had approximately $
(4) Fair Value Measurements
GAAP utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1 measurement), then priority to quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
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As of May 1, 2021 and January 30, 2021, the Company’s long-term variable rate PNC Credit Facility (as defined below), classified as Level 2, had carrying values of $
(5) Television Broadcast Rights
Television broadcast rights in the accompanying condensed consolidated balance sheets consisted of the following:
| May 1, 2021 |
| January 30, 2021 | |||
Television broadcast rights | $ | | $ | | ||
Less accumulated amortization |
| ( |
| ( | ||
Television broadcast rights, net | $ | | $ | |
During fiscal year 2020, the Company entered into certain affiliation agreements with television service providers for carriage of its television programming over their systems, including channel placement rights, which ensure the Company keeps its channel position on the service provider’s channel line-up during the term. The Company recorded the television broadcast rights of $
In addition to the Company securing broadcast rights for channel position, the Company’s affiliation agreements generally provide that it will pay each operator a monthly service fee, most often based on the number of homes receiving the Company’s programming, and in some cases marketing support payments. Monthly service fees are expensed as distribution and selling expense within the condensed consolidated statement of operations.
(6) Intangible Assets
Intangible assets in the accompanying condensed consolidated balance sheets consisted of the following:
May 1, 2021 | January 30, 2021 | |||||||||||||
Estimated | Gross | Gross | ||||||||||||
Useful Life | Carrying | Accumulated | Carrying | Accumulated | ||||||||||
| (In Years) |
| Amount |
| Amortization |
| Amount |
| Amortization | |||||
Trade Names |
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| $ | |
| $ | ( |
| $ | |
| $ | ( | |
Technology |
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| ( |
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Customer Lists |
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Vendor Exclusivity |
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Total finite-lived intangible assets |
| $ | |
| $ | ( |
| $ | |
| $ | ( |
Finite-lived Intangible Assets
The finite-lived intangible assets are included in the accompanying condensed consolidated balance sheets within intangible assets, net and consist of the J.W. Hulme trade name and customer list; the Float Left developed technology, customer relationships and trade
10
name; a vendor exclusivity agreement; Christopher & Banks customer list and TCO technology. Amortization expense related to the finite-lived intangible assets was $
(7) Credit Agreements
The Company’s long-term credit facility consists of:
| May 1, 2021 |
| January 30, 2021 | |||
PNC revolving loan due July 27, 2023, principal amount | $ | | $ | | ||
PNC term loan due July 27, 2023, principal amount |
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Less unamortized debt issuance costs |
| ( |
| ( | ||
PNC term loan due July 27, 2023, carrying amount |
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Total long-term credit facility |
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Less current portion of long-term credit facility |
| ( |
| ( | ||
Long-term credit facility, excluding current portion | $ | | $ | |
PNC Credit Facility
On February 9, 2012, the Company entered into a credit and security agreement (as amended through February 5, 2021, the "PNC Credit Facility") with PNC Bank, N.A. ("PNC"), a member of The PNC Financial Services Group, Inc., as lender and agent. The PNC Credit Facility, which includes CIBC Bank USA (formerly known as The Private Bank) as part of the facility, provides a revolving line of credit of $
All borrowings under the PNC Credit Facility mature and are payable on
The revolving line of credit under the PNC Credit Facility bears interest at either a Base Rate or LIBOR plus a margin consisting of between
As of May 1, 2021, the Company had borrowings of $
Principal borrowings under the term loan are to be payable in monthly installments over an
amortization period that commenced on September 1, 2018 and are also subject to mandatory prepayment in certain circumstances, including, but not limited to,11
upon receipt of certain proceeds from dispositions of collateral. Borrowings under the term loan are also subject to mandatory prepayment in an amount equal to fifty percent (
Interest expense recorded under the PNC Credit Facility was $
The PNC Credit Facility contains customary covenants and conditions, including, among other things, maintaining a minimum of unrestricted cash plus unused line availability of $
Deferred financing costs, net of amortization, relating to the revolving line of credit were $
The aggregate maturities of the Company’s long-term credit facility as of May 1, 2021 were as follows:
PNC Credit Facility | |||||||||
Fiscal year |
| Term loan |
| Revolving loan |
| Total | |||
2021 | $ | | $ | | $ | | |||
2022 |
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2023 |
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$ | | $ | | $ | |
Cash Requirements
Currently, the Company’s principal cash requirements are to fund business operations, which consist primarily of purchasing inventory for resale, funding ValuePay installment receivables, funding the Company’s basic operating expenses, particularly the Company’s contractual commitments for cable and satellite programming distribution, and the funding of necessary capital expenditures. The Company closely manages its cash resources and working capital. The Company attempts to manage its inventory receipts and reorders in order to ensure its inventory investment levels remain commensurate with the Company’s current sales trends. The Company also monitors the collection of its credit card and ValuePay installment receivables and manages vendor payment terms in order to more effectively manage the Company’s working capital which includes matching cash receipts from the Company’s customers to the extent possible with related cash payments to the Company’s vendors. ValuePay remains a cost-effective promotional tool for the Company. The Company continues to make strategic use of its ValuePay program in an effort to increase sales and to respond to similar competitive programs.
The Company’s ability to fund operations and capital expenditures in the future will be dependent on its ability to generate cash flow from operations, maintain or improve margins, decrease the rate of decline in its sales and to use available funds from its PNC Credit Facility. The Company’s ability to borrow funds is dependent on its ability to maintain an adequate borrowing base and its ability to meet its credit facility’s covenants (as described above). Accordingly, if the Company does not generate sufficient cash flow from operations to fund its working capital needs, planned capital expenditures and meet credit facility covenants, and its cash reserves are depleted, the Company may need to take actions that are within the Company’s control, such as further reductions or delays in capital investments, additional reductions to the Company’s workforce, reducing or delaying strategic investments or other actions. The
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Company believes that it is probable its existing cash balances and its availability under the PNC Credit Facility, will be sufficient to fund the Company’s normal business operations over the next twelve months from the issuance of this report.
(8) Shareholders’ Equity
Common Stock
Effective July 13, 2020, the Company amended its Articles of Incorporation to increase the authorized number of common shares from
Public Offerings
On February 18, 2021, the Company completed a public offering, in which the Company issued and sold
On August 28, 2020, the Company completed a public offering, in which the Company issued and sold
April 2020 Private Placement Securities Purchase Agreement
On April 14, 2020, the Company entered into a common stock and warrant purchase agreement with certain individuals and entities, pursuant to which the Company sold an aggregate of
The purchasers consisted of the following: Invicta Media Investments, LLC, Michael and Leah Friedman and Hacienda Jackson LLC. Invicta Media Investments, LLC is owned by Invicta Watch Company of America, Inc. (“IWCA”), which is the designer and manufacturer of Invicta-branded watches and watch accessories, one of the Company’s largest and longest tenured brands. Michael and Leah Friedman are owners and officers of Sterling Time, LLC (“Sterling Time”), which is the exclusive distributor of IWCA’s watches and watch accessories for television home shopping and the Company’s long-time vendor. IWCA is owned by the Company’s Vice Chair and director, Eyal Lalo, and Michael Friedman also serves as a director of the Company. A description of the relationship between the Company, IWCA and Sterling Time is contained in Note 15 - “Related Party Transactions.” Further, Invicta Media Investments, LLC and Michael and Leah Friedman comprise a “group” of investors within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended, that is the Company’s largest shareholder.
The warrants have an exercise price per share of $
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outstanding common stock and, to the extent a purchaser in this offering would own over
During the third quarter of fiscal 2020, the fully-paid warrants were exercised for the purchase of
Warrants
As of May 1, 2021, the Company had outstanding warrants to purchase
| Warrants |
| Warrants |
| Exercise Price |
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Grant Date | Outstanding | Exercisable | (Per Share) | Expiration Date | |||||
September 19, 2016 |
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| | $ | |
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November 10, 2016 |
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| | $ | |
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January 23, 2017 |
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| | $ | |
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March 16, 2017 |
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| | $ | |
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May 2, 2019 |
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| | $ | |
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April 17, 2020 | | | $ | | |||||
May 22, 2020 | | | $ | | |||||
June 8, 2020 | | | $ | | |||||
June 12, 2020 | | | $ | | |||||
July 11, 2020 | | | $ | |
Commercial Agreement with Shaquille O’Neal
On November 18, 2019, the Company entered into a commercial agreement (“Shaq Agreement”) with ABG-Shaq, LLC (“Shaq”) pursuant to which certain products are sold bearing certain intellectual property rights of Shaquille O’Neal on the terms and conditions set forth in the Shaq Agreement. In exchange for such services and pursuant to a restricted stock unit award agreement, the Company issued
Compensation expense relating to the restricted stock unit grant was $
Restricted Stock Award
On November 23, 2018, the Company entered into a restricted stock award agreement with Flageoli Classic Limited, LLC (“FCL”) granting FCL
14
the brand on the Company’s television network. The restricted shares will vest in three tranches. Of the restricted shares granted,
Compensation expense relating to the restricted stock award was $
Stock Compensation Plans
The Company’s 2020 Equity Incentive Plan ("2020 Plan") provides for the issuance of up to
The Company also maintains the 2011 Omnibus Incentive Plan ("2011 Plan"). Upon the adoption and approval of the 2020 Plan, the Company ceased making awards under the 2011 Plan. Awards outstanding under the 2011 Plan continue to be subject to the terms of the 2011 Plan, but if those awards subsequently expire, are forfeited or cancelled or are settled in cash, the shares subject to those awards will become available for awards under the 2020 Plan. Similarly, the Company ceased making awards under its 2004 Omnibus Stock Plan ("2004 Plan") on June 22, 2014, but outstanding awards under the 2004 Plan remain outstanding in accordance with its terms.
Stock-Based Compensation - Stock Options
Compensation is recognized for all stock-based compensation arrangements by the Company. Stock-based compensation expense related to stock option awards was $
The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s stock. Expected term is calculated using the simplified method taking into consideration the option’s contractual life and vesting terms. The Company uses the simplified method in estimating its expected option term because it believes that historical exercise data cannot be accurately relied upon at this time to provide a reasonable basis for estimating an expected term due to the extreme volatility of its stock price and the resulting unpredictability of its stock option exercises. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
| Fiscal 2021 |
| |
Expected volatility: |
|
| |
Expected term (in years): |
|
| |
Risk-free interest rate: |
|
|
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A summary of the status of the Company’s stock option activity as of May 1, 2021 and changes during the three months then ended is as follows:
2020 | Weighted | Weighted | Weighted | ||||||||||||
Equity | Average | Average | Average | ||||||||||||
Incentive | Exercise | 2011 | Exercise | 2004 | Exercise | ||||||||||
Plan | Price | Plan | Price | Plan | Price | ||||||||||
Balance outstanding, January 30, 2021 | — | $ | — |
| | $ | |
| | $ | | ||||
Granted | | $ | |
| | $ | |
| | $ | | ||||
Exercised | — | $ | — |
| | $ | |
| | $ | | ||||
Forfeited or canceled | — | $ | — |
| | $ | |
| | $ | | ||||
Balance outstanding, May 1, 2021 | | $ | |
| | $ | |
| | $ | | ||||
Options exercisable at May 1, 2021 | — | $ | — |
| | $ | |
| | $ | |
The following table summarizes information regarding stock options outstanding as of May 1, 2021:
Options Outstanding | Options Vested or Expected to Vest | |||||||||||||||||||
|
|
| Weighted |
|
|
|
| Weighted |
| |||||||||||
Average | Average | |||||||||||||||||||
Weighted | Remaining | Weighted | Remaining | |||||||||||||||||
Average | Contractual | Aggregate | Average | Contractual | Aggregate | |||||||||||||||
Number of | Exercise | Life | Intrinsic | Number of | Exercise | Life | Intrinsic | |||||||||||||
Option Type | Shares | Price |
| (Years) | Value | Shares | Price |
| (Years) | Value | ||||||||||
2011 Incentive: | | $ | | $ | | | | $ | ||||||||||||
2011 Incentive: |
| | $ | |
| $ | |
| | $ | |
| $ | | ||||||
2004 Incentive: |
| | $ | |
| $ | |
| | $ | |
| $ | |
The weighted average grant-date fair value of options granted in the first three months of fiscal 2021 was $
Stock-Based Compensation - Restricted Stock Units
Compensation expense relating to restricted stock unit grants was $
The Company has granted time-based restricted stock units to certain key employees as part of the Company’s long-term incentive program. The restricted stock units generally vest in three equal annual installments beginning one year from the grant date and are being amortized as compensation expense over the
The Company granted
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performance period of the award to the extent management views the performance goals as probable of attainment. The grant date fair value of these performance share units is based on the grant date closing price of the Company’s stock.
The Company granted
On May 2, 2019, Timothy A. Peterman was appointed as Chief Executive Officer and entered into an executive employment agreement. In conjunction with the employment agreement, the Company granted
Grant date fair values and derived service periods for each tranche were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of
| Fair Value |
| Derived Service | ||
(Per Share) | Period | ||||
Tranche 1 ( | $ | |
| ||
Tranche 2 ($20.00/share) | $ | |
| ||
Tranche 3 ($40.00/share) | $ | |
|
A summary of the status of the Company’s non-vested restricted stock unit activity as of May 1, 2021 and changes during the three-month period then ended is as follows:
Restricted Stock Units | ||||||||||||||||||||
Market-Based Units | Time-Based Units |
| Performance-Based Units |
| Total | |||||||||||||||
|
| Weighted |
|
| Weighted |
| Weighted |
| Weighted | |||||||||||
Average | Average | Average | Average | |||||||||||||||||
Grant Date | Grant Date | Grant Date | Grant Date | |||||||||||||||||
Shares |
| Fair Value |
| Shares | Fair Value |
| Shares |
| Fair Value |
| Shares | Fair Value | ||||||||
Non-vested outstanding, January 30, 2021 |
| | $ | |
| | $ | |
| | $ | | | $ | | |||||
Granted |
| | $ | |
| | $ | |
| | $ | | | $ | | |||||
Vested |
| | $ | |
| ( | $ | |
| — | $ | — | ( | $ | | |||||
Forfeited |
| | $ | |
| — | $ | — |
| — | $ | — | — | $ | — | |||||
Non-vested outstanding, May 1, 2021 |
| | $ | |
| | $ | |
| | $ | | |