☒ |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-12368 |
Delaware | 75-2543540 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1900 Southeast Loop 820 Fort Worth, | 76140 | |
(Address of Principal Executive | ( | |
Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, par value $0.0024 | TLFA |
Item | Page | |
Part 1 | ||
1 | 1 | |
1A | 4 | |
1B | 6 | |
2 | 6 | |
3 | 6 | |
4 | 6 | |
Part II | ||
5 | 7 | |
6 | 7 | |
7 | 7 | |
7A | 12 | |
8 | 13 | |
9 | 28 | |
9A | 28 | |
9B | 28 | |
Part III | ||
10 | 28 | |
11 | 28 | |
12 | 28 | |
13 | 28 | |
14 | 28 | |
Part IV | ||
15 | 28 | |
16 | 29 |
3 | ||
3 | ||
10 | ||
18 | ||
18 | ||
19 | ||
19 | ||
20 | ||
20 | ||
20 | ||
21 | ||
30 | ||
37 | ||
56 | ||
56 | ||
60 | ||
61 | ||
61 | ||
61 | ||
61 | ||
61 | ||
61 | ||
62 | ||
62 | ||
65 | ||
66 | ||
67 |
ITEM 1. | BUSINESS |
1. | Improving our brand proposition, with both Retail and Commercial customers |
2. | Rebuilding our foundation – the talent, processes, tools and systems needed to serve these customers |
3. | Position us for long-term growth – creating the vision and roadmap for the future |
■ | Significantly improving the product quality, breadth of assortment and value |
■ | Reinventing the pricing architecture/strategy to simplify it, provide great everyday value and also the excitement of sale |
■ | Improving the quality, clarity and efficiency of the marketing collateral and mix |
■ | Relaunching and dramatically improving the website; centralizing web fulfillment |
■ | Significantly improving the Retail organization and skills: new team, training, career paths, incentives |
■ | Launching the Commercial Division: a completely new business model tailored to the needs of the largest customers |
■ | Recruiting, developing and retaining the right team for the work ahead; creating a collaborative, performance-based culture |
■ | Building people management infrastructure: performance evaluations, benefits, communications, recognition, incentives, training |
■ | Replacing and significantly upgrading general ledger, warehouse management and point-of-sale systems |
■ | Developing a robust counter-sourcing program for product and supplies |
■ | Reorganizing and improving factory and warehouse capabilities |
■ | Creating a roadmap for future growth |
North America | International | |||||
Year ended | Opened | Closed | Total | Opened | Closed | Total |
2013 | 3 | 2 | 108 | - | - | 3 |
2014 | 3 | 1 | 110 | - | - | 3 |
2015 | - | - | 110 | 1 | - | 4 |
2016 | 4 | 3* | 111 | - | - | 4 |
2017 | 4* | - | 115 | - | - | 4 |
Product Category | 2017 Sales Mix | 2016 Sales Mix | 2015 Sales Mix | ||
Belts strips and straps | 4% | 4% | 4% | ||
Books, patterns, videos | 1% | 1% | 2% | ||
Buckles | 2% | 3% | 3% | ||
Conchos^ | 2% | 2% | 2% | ||
Craft supplies | 2% | 2% | 2% | ||
Dyes, finishes, glues | 7% | 7% | 7% | ||
Hand tools | 20% | 18% | 16% | ||
Hardware | 8% | 8% | 8% | ||
Kits | 6% | 6% | 6% | ||
Lace | 3% | 3% | 3% | ||
Leather | 40% | 41% | 42% | ||
Stamping tools | 5% | 5% | 5% | ||
100% | 100% | 100% |
Name and Age | Position | Served as Executive Officer Since | |||
Janet Carr, 60 | |||||
Chief Executive Officer | 2018 | ||||
Michael Galvan, 53 | |||||
Chief Financial Officer | |||||
ITEM 1A. | RISK FACTORS |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
U.S. Locations | ||||||||
Alabama | 1 | Montana | 1 | 1 | Missouri | 3 | ||
Alaska | 1 | Nebraska | 1 | 1 | Montana | 1 | ||
Arizona | 4 | Nevada | 2 | 3 | Nebraska | 1 | ||
Arkansas | 1 | New Mexico | 2 | 1 | Nevada | 2 | ||
California | 11 | New York | 2 | 10 | New Mexico | 2 | ||
Colorado | 4 | New Jersey | 1 | 4 | New York | 1 | ||
Connecticut | 1 | North Carolina | 2 | 1 | New Jersey | 1 | ||
Florida | 5 | Ohio | 3 | 5 | North Carolina | 2 | ||
Georgia | 1 | Oklahoma | 2 | 2 | Ohio | 3 | ||
Idaho | 1 | Oregon | 3 | 1 | Oklahoma | 2 | ||
Illinois | 2 | Pennsylvania | 3 | 1 | Oregon | 2 | ||
Indiana | 2 | Rhode Island | 1 | 1 | Pennsylvania | 3 | ||
Iowa | 1 | South Carolina | 1 | 1 | South Carolina | 1 | ||
Kansas | 1 | South Dakota | 1 | 1 | South Dakota | 1 | ||
Kentucky | 1 | Tennessee | 3 | 1 | Tennessee | 3 | ||
Louisiana | 2 | Texas | 18 | 2 | Texas | 16 | ||
Maryland | 1 | Utah | 4 | 1 | Utah | 4 | ||
Massachusetts | 1 | Virginia | 1 | 1 | Washington | 3 | ||
Michigan | 2 | Washington | 3 | 2 | Wisconsin | 1 | ||
Minnesota | 2 | Wisconsin | 1 | 2 | Wyoming | 1 | ||
Missouri | 3 | Wyoming | 1 | |||||
Canadian locations: | Canadian locations: | |||||||
Alberta | 3 | Ontario | 3 | |||||
British Columbia | 1 | Saskatchewan | 1 | |||||
Manitoba | 1 | |||||||
Nova Scotia | 1 | International locations: | ||||||
Spain | 1 |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
2016 | High | Low | 2017 | High | Low | ||||||||||||
4th quarter | $ | 8.25 | $ | 6.85 | 4th quarter | $ | 8.45 | $ | 7.25 | ||||||||
3rd quarter | $ | 7.90 | $ | 6.96 | 3rd quarter | $ | 9.00 | $ | 7.85 | ||||||||
2nd quarter | $ | 7.69 | $ | 6.73 | 2nd quarter | $ | 8.99 | $ | 7.85 | ||||||||
1st quarter | $ | 7.75 | $ | 6.75 | 1st quarter | $ | 8.20 | $ | 7.15 |
Period (2) | (a) Total number of shares purchased | (b) Average price paid per share | (c) Total number of shares purchased as part of publicly announced plans or programs | (d) Dollar value of shares that may yet be purchased under the plans or programs (1) | ||||||||||||
October 1 – October 31, 2021 | - | $ | - | - | $ | 5,000,000 | ||||||||||
November 1 – November 30, 2021 | - | $ | - | - | $ | 5,000,000 | ||||||||||
December 1 – December 31, 2021 | 214,581 | $ | 5.00 | - | $ | 5,000,000 | ||||||||||
Total | 214,581 | $ | 5.00 | - |
ITEM 6. | SELECTED FINANCIAL DATA |
Income Statement Data, Years ended December 31, | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Net sales | $ | 82,321,268 | $ | 82,923,992 | $ | 84,161,200 | $ | 83,430,912 | $ | 78,284,585 | ||||||||||
Gross profit | 52,113,829 | 51,713,242 | 52,071,060 | 52,124,757 | 49,328,024 | |||||||||||||||
Income from operations | 7,241,822 | 10,300,731 | 10,474,700 | 11,958,029 | 11,266,790 | |||||||||||||||
Net income | $ | 4,451,751 | $ | 6,402,259 | $ | 6,402,405 | $ | 7,706,921 | $ | 7,265,717 | ||||||||||
Net income per share | ||||||||||||||||||||
Basic | $ | 0.48 | $ | 0.69 | $ | 0.64 | $ | 0.76 | $ | 0.71 | ||||||||||
Diluted | $ | 0.48 | $ | 0.69 | $ | 0.63 | $ | 0.75 | $ | 0.71 | ||||||||||
Weighted average common shares outstanding for: | ||||||||||||||||||||
Basic EPS | 9,242,092 | 9,301,867 | 10,077,506 | 10,203,063 | 10,176,492 | |||||||||||||||
Diluted EPS | 9,256,810 | 9,321,558 | 10,102,760 | 10,241,121 | 10,216,438 | |||||||||||||||
Cash dividend declared per common share | - | - | - | $ | 0.25 | - | ||||||||||||||
Balance Sheet Data, as of December 31, | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Cash and certificates of deposit | $ | 18,337,258 | $ | 16,862,304 | $ | 10,962,615 | $ | 10,636,530 | $ | 11,082,679 | ||||||||||
Total assets | 74,914,596 | 70,652,720 | 64,611,076 | 62,873,874 | 56,398,566 | |||||||||||||||
Long-term debt, including current portion | 7,371,730 | 7,444,416 | 3,863,307 | 5,643,125 | 2,598,750 | |||||||||||||||
Total Stockholders’ Equity | $ | 59,538,981 | $ | 53,693,201 | $ | 50,972,176 | $ | 49,123,012 | $ | 44,621,542 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
1. | Improving our brand proposition, with both Retail and Commercial customers |
2. | Rebuilding our foundation – the talent, processes, tools and systems needed to serve these customers |
3. | Position us for long-term growth – creating the vision and roadmap for the future |
(in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||
Sales | $ | 82,661 | $ | 64,084 | $ | 18,577 | 29.0 | % | ||||||||
Gross profit | 46,999 | 36,058 | 10,941 | 30.3 | % | |||||||||||
Gross margin percentage | 56.9 | % | 56.3 | % | 0.6 | % | ||||||||||
Operating expenses | 44,699 | 41,328 | 3,371 | 8.2 | % | |||||||||||
Impairment expense | - | 1,078 | (1,078 | ) | (100.0 | )% | ||||||||||
Income (loss) from operations | $ | 2,300 | $ | (6,348 | ) | $ | 8,648 | 136.2 | % |
(in thousands) | 2021 | 2020 | ||||||
Operating expenses | $ | 44,699 | $ | 41,328 | ||||
Non-routine items related to restatement | (1,252 | ) | (3,587 | ) | ||||
Non-routine items related to CFO transition | - | (388 | ) | |||||
Adjusted operating expenses | $ | 43,447 | $ | 37,353 | ||||
Operating expenses % of sales | 54.1 | % | 64.5 | % | ||||
Adjusted operating expenses % of sales | 52.6 | % | 58.3 | % |
Year | North America | International | Total | (Decr) Incr from Prior Year | ||||||||||||
2017 | $ | 78,568,219 | $ | 3,753,049 | $ | 82,321,268 | (0.7 | %) | ||||||||
2016 | $ | 79,041,920 | $ | 3,882,072 | $ | 82,923,992 | (1.5 | %) | ||||||||
2015 | $ | 80,468,597 | $ | 3,692,603 | $ | 84,161,200 | 0.9 | % |
2017 | 2016 | 2015 | ||||||||||
Operating expenses | $ | 44,872,007 | $ | 41,412,511 | $ | 41,596,360 | ||||||
As a % of sales | 54.5 | % | 49.9 | % | 49.4 | % |
Transition tax on deemed repatriation of certain foreign earnings | $ | 514,454 | ||
Foreign Withholding Taxes | 290,128 | |||
Remeasuring deferred tax position at the lowered income tax rate | (463,800 | ) | ||
$ | 340,782 |
# Stores | 2017 | # Stores | 2016 | $ Change | % Change | |||||||||||||||||||
Same stores | 107 | $ | 75,698,765 | 107 | $ | 77,449,960 | $ | (1,751,195 | ) | (2.3 | %) | |||||||||||||
New stores | 7 | 2,374,044 | 4 | 1,034,142 | 1,339,902 | 129.6 | % | |||||||||||||||||
Closed/temp closed stores | 1 | 495,410 | 3 | 557,818 | (62,408 | ) | (11.2 | %) | ||||||||||||||||
Total net sales | 115 | $ | 78,568,219 | 111 | $ | 79,041,920 | $ | (473,701 | ) | (0.6 | )% |
# Stores | 2016 | # Stores | 2015 | $ Change | % Change | |||||||||||||||||||
Same stores | 107 | $ | 77,449,960 | 107 | $ | 78,265,681 | $ | (815,721 | ) | (1.04 | %) | |||||||||||||
New stores | 4 | 1,034,142 | - | - | 1,034,142 | NA | ||||||||||||||||||
Closed/temp closed stores | 3 | 557,818 | 3 | 2,202,916 | (1,645,098 | ) | (74.68 | %) | ||||||||||||||||
Total net sales | 111 | $ | 79,041,920 | 107 | $ | 80,468,597 | $ | (1,426,677 | ) | (1.77 | )% |
Customer Group | 2017 | 2016 | 2015 |
Retail | 60% | 57% | 55% |
Institution | 2% | 2% | 3% |
Wholesale | 34% | 36% | 38% |
Manufacturers | 4% | 5% | 4% |
100% | 100% | 100% |
Year | Net Sales Increase (Decrease) from Prior Yr | Operating Income (Loss) | Operating Income Increase (Decrease) from Prior Year | Operating Income as a Percentage of Sales | ||||||||||||
2017 | (3.3 | %) | $ | (256,995 | ) | (438.3 | )% | (6.8 | %) | |||||||
2016 | 5.1 | % | $ | 75,958 | (37.4 | )% | 2.0 | % | ||||||||
2015 | (14.9 | )% | $ | 121,296 | (79.1 | )% | 3.3 | % |
(amounts in thousands) | 2021 | 2020 | ||||||
Net cash provided by (used in) operating activities | $ | 3,716 | $ | (12,527 | ) | |||
Net cash provided by (used in) investing activities | (1,001 | ) | 6,256 | |||||
Net cash provided by (used in) financing activities | (2,777 | ) | 416 | |||||
Effect of exchange rate changes on cash and cash equivalents | (112 | ) | 279 | |||||
Net decrease in cash and cash equivalents | $ | (174 | ) | $ | (5,576 | ) |
December 31, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 18,337,258 | $ | 16,862,304 | ||||
Accounts receivable-trade, net of allowance for doubtful accounts | ||||||||
of $22,642 and $2,404 as of December 31, 2017 and 2016, respectively | 461,212 | 560,984 | ||||||
Inventory | 37,311,197 | 33,177,539 | ||||||
Prepaid income taxes | 41,307 | 964,323 | ||||||
Prepaid expenses | 1,473,147 | 1,608,860 | ||||||
Other current assets | 189,029 | 140,232 | ||||||
Total current assets | 57,813,150 | 53,314,242 | ||||||
PROPERTY AND EQUIPMENT, at cost | 27,218,481 | 25,536,352 | ||||||
Less accumulated depreciation and amortization | (11,750,639 | ) | (9,884,559 | ) | ||||
Property and equipment, net | 15,467,842 | 15,651,793 | ||||||
DEFERRED INCOME TAXES | 271,738 | 375,236 | ||||||
GOODWILL | 962,949 | 956,201 | ||||||
OTHER INTANGIBLES, net of accumulated amortization of | ||||||||
$710,000 and $708,000 as of December 31, 2017 and 2016, respectively | 19,222 | 20,840 | ||||||
OTHER assets | 379,695 | 334,408 | ||||||
Total Assets | $ | 74,914,596 | $ | 70,652,720 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable-trade | $ | 1,413,450 | $ | 1,621,884 | ||||
Accrued expenses and other liabilities | 4,953,477 | 5,937,187 | ||||||
Current maturities of capital lease obligations | - | 72,686 | ||||||
Current maturities of long-term debt | 614,311 | 614,311 | ||||||
Total current liabilities | 6,981,238 | 8,246,068 | ||||||
DEFERRED INCOME TAXES | 1,636,958 | 1,956,032 | ||||||
LONG-TERM DEBT, net of current maturities | 6,757,419 | 6,757,419 | ||||||
COMMITMENTS AND CONTINGENCIES | - | - | ||||||
STOCKHOLDERS' EQUITY: | ||||||||
Preferred stock, $0.10 par value; 20,000,000 shares | ||||||||
authorized, none issued or outstanding | - | - | ||||||
Common stock, $0.0024 par value; 25,000,000 shares | ||||||||
authorized; 11,313,692 and 11,235,992 shares issued at December 31, 2017 and 2016, respectively; 9,270,862 and 9,193,162 shares outstanding | ||||||||
at December 31, 2017 and 2016, respectively | 27,153 | 26,966 | ||||||
Paid-in capital | 6,831,271 | 6,368,455 | ||||||
Retained earnings | 63,921,244 | 59,469,493 | ||||||
Treasury stock at cost (2,042,830 shares each of 2017 and 2016, respectively) | (10,278,584 | ) | (10,278,584 | ) | ||||
Accumulated other comprehensive income | (962,103 | ) | (1,893,129 | ) | ||||
Total stockholders' equity | 59,538,981 | 53,693,201 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 74,914,596 | $ | 70,652,720 |
2017 | 2016 | 2015 | ||||||||||
NET SALES | $ | 82,321,268 | $ | 82,923,992 | $ | 84,161,200 | ||||||
COST OF SALES | 30,207,439 | 31,210,750 | 32,090,140 | |||||||||
Gross Profit | 52,113,829 | 51,713,242 | 52,071,060 | |||||||||
OPERATING EXPENSES | 44,872,007 | 41,412,511 | 41,596,360 | |||||||||
INCOME FROM OPERATIONS | 7,241,822 | 10,300,731 | 10,474,700 | |||||||||
OTHER (INCOME) EXPENSE: | ||||||||||||
Interest expense | 205,555 | 155,189 | 330,004 | |||||||||
Other, net | (126,857 | ) | (57,287 | ) | (74,357 | ) | ||||||
Total other expense | 78,698 | 97,902 | 255,647 | |||||||||
INCOME BEFORE INCOME TAXES | 7,163,124 | 10,202,829 | 10,219,053 | |||||||||
PROVISION FOR INCOME TAXES | 2,711,373 | 3,800,570 | 3,816,648 | |||||||||
NET INCOME | $ | 4,451,751 | $ | 6,402,259 | $ | 6,402,405 | ||||||
Foreign currency translation adjustments | 931,026 | (205,450 | ) | (999,621 | ) | |||||||
COMPREHENSIVE INCOME | $ | 5,382,777 | $ | 6,196,809 | $ | 5,402,784 | ||||||
NET INCOME PER COMMON SHARE: | ||||||||||||
BASIC | $ | 0.48 | $ | 0.69 | $ | 0.64 | ||||||
DILUTED | $ | 0.48 | $ | 0.69 | $ | 0.63 | ||||||
Weighted Average Number of Shares Outstanding: | ||||||||||||
Basic | 9,242,092 | 9,301,867 | 10,077,506 | |||||||||
Diluted | 9,256,810 | 9,321,558 | 10,102,760 |
2017 | 2016 | 2015 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 4,451,751 | $ | 6,402,259 | $ | 6,402,405 | ||||||
Adjustments to reconcile net income to net cash | ||||||||||||
provided by operating activities - | ||||||||||||
Depreciation and amortization | 1,875,102 | 1,719,154 | 1,567,172 | |||||||||
Loss on disposal or abandonment of assets | 3,139 | 16,985 | 31,064 | |||||||||
Non-cash share-based compensation | 239,599 | 199,870 | 145,322 | |||||||||
Deferred income taxes | (215,576 | ) | 205,111 | 289,171 | ||||||||
Foreign currency translation | 883,670 | (163,292 | ) | (896,928 | ) | |||||||
Net changes in assets and liabilities, net of effect of | ||||||||||||
business acquisitions: | ||||||||||||
Accounts receivable-trade | 99,772 | (7,778 | ) | 71,848 | ||||||||
Inventory | (4,133,658 | ) | 407,000 | (709,047 | ) | |||||||
Prepaid expenses | 135,713 | (284,788 | ) | 43,585 | ||||||||
Other current assets | (48,797 | ) | (70,035 | ) | 87,561 | |||||||
Accounts payable-trade | (208,434 | ) | (361,492 | ) | 728,158 | |||||||
Accrued expenses and other liabilities | (983,710 | ) | (108,365 | ) | 651,038 | |||||||
Income taxes | 923,016 | (415,046 | ) | (212,449 | ) | |||||||
Total adjustments | (1,430,164 | ) | 1,137,324 | 1,796,495 | ||||||||
Net cash provided by operating activities | 3,021,587 | 7,539,583 | 8,198,900 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Purchase of property and equipment | (1,689,645 | ) | (1,697,704 | ) | (2,164,040 | ) | ||||||
Purchase of intangible property | - | - | (10,000 | ) | ||||||||
Proceeds from sale of assets / insurance | 35,963 | 153,483 | 11,662 | |||||||||
Decrease (increase) in other assets | (43,669 | ) | (1,127 | ) | 295 | |||||||
Net cash used in investing activities | (1,697,351 | ) | (1,545,348 | ) | (2,162,083 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Net increase (decrease) in revolving credit loans | - | - | (3,500,000 | ) | ||||||||
Proceeds from notes payable and long-term debt | - | 3,660,505 | 3,711,225 | |||||||||
Payments on notes payable and long-term debt | - | - | (2,143,125 | ) | ||||||||
Payments on capital lease obligations | (72,686 | ) | (79,396 | ) | (79,890 | ) | ||||||
Repurchase of common stock (treasury stock) | - | (3,675,654 | ) | (3,708,862 | ) | |||||||
Proceeds from exercise of stock options | 223,404 | - | 9,920 | |||||||||
Net cash provided by (used in) financing activities | 150,718 | (94,545 | ) | (5,710,732 | ) | |||||||
NET INCREASE (DECREASE) IN CASH | 1,474,954 | 5,899,689 | 326,085 | |||||||||
CASH, beginning of period | 16,862,304 | 10,962,615 | 10,636,530 | |||||||||
CASH, end of period | $ | 18,337,258 | $ | 16,862,304 | $ | 10,962,615 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||
Interest paid during the period | $ | 205,555 | $ | 155,189 | $ | 330,004 | ||||||
Income tax paid during the period, net of refunds | $ | 1,788,357 | $ | 4,215,616 | $ | 3,743,864 | ||||||
NON-CASH INVESTING ACTIVITIES | ||||||||||||
Equipment purchased via capital lease arrangements | - | - | $ | 231,972 |
Number of Shares | Par Value | Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||
BALANCE, January 1, 2015 | 10,210,939 | $ | 26,890 | $ | 6,013,419 | $ | (2,894,068 | ) | $ | 46,664,829 | $ | (688,058 | ) | $ | 49,123,012 | |||||||||||||
Shares issued - stock options exercised | 2,000 | 5 | 9,915 | - | - | - | 9,920 | |||||||||||||||||||||
Share-based compensation | 8,650 | 21 | 145,301 | - | - | - | 145,322 | |||||||||||||||||||||
Net income | - | - | - | - | 6,402,405 | - | 6,402,405 | |||||||||||||||||||||
Purchase of Treasury stock | (528,725 | ) | - | - | (3,708,862 | ) | - | - | (3,708,862 | ) | ||||||||||||||||||
Translation adjustment | - | - | - | - | - | (999,621 | ) | (999,621 | ) | |||||||||||||||||||
BALANCE, December 31, 2015 | 9,692,864 | $ | 26,916 | $ | 6,168,635 | $ | (6,602,930 | ) | $ | 53,067,234 | $ | (1,687,679 | ) | $ | 50,972,176 | |||||||||||||
Share-based compensation | 20,780 | 50 | 199,820 | - | - | - | 199,870 | |||||||||||||||||||||
Net income | - | - | - | - | 6,402,259 | - | 6,402,259 | |||||||||||||||||||||
Purchase of Treasury stock | (520,482 | ) | - | - | (3,675,654 | ) | - | - | (3,675,654 | ) | ||||||||||||||||||
Translation adjustment | - | - | - | - | - | (205,450 | ) | (205,450 | ) | |||||||||||||||||||
BALANCE, December 31, 2016 | 9,193,162 | $ | 26,966 | $ | 6,368,455 | $ | (10,278,584 | ) | $ | 59,469,493 | $ | (1,893,129 | ) | $ | 53,693,201 | |||||||||||||
Shares issued - stock options exercised | 44,400 | 107 | 223,297 | - | - | - | 223,404 | |||||||||||||||||||||
Share-based compensation | 33,300 | 80 | 239,519 | - | - | - | 239,599 | |||||||||||||||||||||
Net income | - | - | - | - | 4,451,751 | - | 4,451,751 | |||||||||||||||||||||
Translation adjustment | - | - | - | - | - | 931,026 | 931,026 | |||||||||||||||||||||
BALANCE, December 31, 2017 | 9,270,862 | $ | 27,153 | $ | 6,831,271 | $ | (10,278,584 | ) | $ | 63,921,244 | $ | (962,103 | ) | $ | 59,538,981 |
BASIC | 2017 | 2016 | 2015 | |||||||||
Net income | $ | 4,451,751 | $ | 6,402,259 | $ | 6,402,405 | ||||||
Weighted average common shares outstanding | 9,242,092 | 9,301,867 | 10,077,506 | |||||||||
Earnings per share – basic | $ | 0.48 | $ | 0.69 | $ | 0.64 | ||||||
DILUTED | ||||||||||||
Net income | $ | 4,451,751 | $ | 6,402,259 | $ | 6,402,405 | ||||||
Weighted average common shares outstanding | 9,242,092 | 9,301,867 | 10,077,506 | |||||||||
Effect of restricted stock awards and assumed exercise of stock options | 14,718 | 19,691 | 25,254 | |||||||||
Weighted average common shares outstanding, assuming dilution | 9,256,810 | 9,321,558 | 10,102,760 | |||||||||
Earnings per share - diluted | $ | 0.48 | $ | 0.69 | $ | 0.63 | ||||||
Outstanding options and restricted stock awards excluded as anti-dilutive | 17,632 | 31,477 | 60,433 |
As of December 31, 2017 | ||||||||||||
Gross | Accumulated Amortization | Net | ||||||||||
Trademarks, Copyrights | $ | 554,369 | $ | 545,897 | $ | 8,472 | ||||||
Non-Compete Agreements | 175,316 | 164,566 | 10,750 | |||||||||
$ | 729,685 | $ | 710,463 | $ | 19,222 |
As of December 31, 2016 | ||||||||||||
Gross | Accumulated Amortization | Net | ||||||||||
Trademarks, Copyrights | $ | 554,369 | $ | 545,279 | $ | 9,090 | ||||||
Non-Compete Agreements | 175,316 | 163,566 | 11,750 | |||||||||
$ | 729,685 | $ | 708,845 | $ | 20,840 |
2018 | $ | 1,417 | ||
2019 | 666 | |||
2020 | 666 | |||
2021 | 666 | |||
2022 | 666 | |||
Thereafter | 5,141 |
December 31, 2017 | December 31, 2016 | |||||||
INVENTORY | ||||||||
On hand: | ||||||||
Finished goods held for sale | $ | 34,824,728 | $ | 30,684,026 | ||||
Raw materials and work in process | 1,138,316 | 1,034,041 | ||||||
Inventory in transit | 1,348,153 | 1,459,472 | ||||||
TOTAL | $ | 37,311,197 | $ | 33,177,539 |
PROPERTY AND EQUIPMENT | ||||||||
Building | $ | 9,257,066 | $ | 9,105,286 | ||||
Land | 1,451,132 | 1,451,132 | ||||||
Leasehold improvements | 1,615,464 | 1,350,916 | ||||||
Equipment and machinery | 6,447,776 | 5,991,343 | ||||||
Furniture and fixtures | 7,907,704 | 7,342,642 | ||||||
Vehicles | 539,339 | 295,033 | ||||||
27,218,481 | 25,536,352 | |||||||
Less: accumulated depreciation | (11,750,639 | ) | (9,884,559 | ) | ||||
TOTAL | $ | 15,467,842 | $ | 15,651,793 | ||||
ACCRUED EXPENSES AND OTHER LIABILITIES | ||||||||
Accrued bonuses | $ | 1,748,236 | $ | 2,123,942 | ||||
Accrued payroll | 630,259 | 689,150 | ||||||
Deferred revenue | 905,657 | 909,297 | ||||||
Sales and payroll taxes payable | 524,184 | 494,720 | ||||||
Inventory in transit | 1,067,143 | 1,432,590 | ||||||
Other | 77,998 | 287,488 | ||||||
TOTAL | $ | 4,953,477 | $ | 5,937,187 |
Year ended December 31 | North America | International | Total | |||||||||
2017 | $ | 2,378 | $ | 761 | $ | 3,139 | ||||||
2016 | 17,699 | (714 | ) | 16,985 | ||||||||
2015 | 19,583 | 11,481 | 31,064 |
2017 | 2016 | |||||||
Business Loan Agreement with BOKF – collateralized by real estate; payable as follows: | ||||||||
Line of Credit Note, as amended, in the maximum principal amount of $15,000,000 with features as more fully described above – interest due monthly at LIBOR plus 1.85%; matures September 18, 2022 | $ | 7,371,730 | $ | 7,371,730 | ||||
Line of Credit Note, as amended, in the maximum principal amount of $6,000,000 with revolving features as more fully described above – interest due monthly at LIBOR plus 1.85%; matures September 18, 2019 | - | - | ||||||
$ | 7,371,730 | $ | 7,371,730 | |||||
Less current maturities | 614,311 | 614,311 | ||||||
$ | 6,757,419 | $ | 6,757,419 |
2018 | $ | 614,311 | ||
2019 | 1,842,932 | |||
2020 | 1,842,932 | |||
2021 | 1,842,932 | |||
2022 | 1,228,623 | |||
$ | 7,371,730 |
Year Ended December 31, | Maximum Matching Contribution per Participant* | Total Matching Contribution | ||||||
2017 | $ | 10,600 | $ | 326,612 | ||||
2016 | $ | 10,600 | $ | 277,753 | ||||
2015 | $ | 10,400 | $ | 290,388 |
2017 | 2016 | 2015 | ||||||||||
Current provision: | ||||||||||||
Federal | $ | 3,090,997 | $ | 3,108,894 | $ | 3,045,292 | ||||||
State | 309,249 | 486,565 | 482,186 | |||||||||
3,400,246 | 3,595,459 | 3,527,478 | ||||||||||
Deferred provision (benefit): | ||||||||||||
Federal | (665,181 | ) | 183,520 | 212,563 | ||||||||
State | (23,692 | ) | 21,591 | 76,607 | ||||||||
(688,873 | ) | 205,111 | 289,170 | |||||||||
$ | 2,711,373 | $ | 3,800,570 | $ | 3,816,648 |
Transition tax on deemed repatriation of certain foreign earnings* | $ | 514,454 | ||
Foreign Withholding Taxes* | 290,128 | |||
Remeasuring deferred tax position at the lowered income tax rate^ | (463,800 | ) | ||
$ | 340,782 |
2017 | 2016 | 2015 | ||||||||||
United States | $ | 6,372,585 | $ | 9,070,894 | $ | 9,272,854 | ||||||
United Kingdom | (171,608 | ) | (81,987 | ) | (43,567 | ) | ||||||
Canada | 1,055,783 | 1,034,027 | 813,824 | |||||||||
Australia | (88,096 | ) | 82,622 | 48,633 | ||||||||
Spain | (5,540 | ) | 97,273 | 127,309 | ||||||||
$ | 7,163,124 | $ | 10,202,829 | $ | 10,219,053 |
2017 | 2016 | |||||||
Deferred income tax assets: | ||||||||
Capitalized inventory costs | $ | 198,616 | $ | 265,454 | ||||
Warrants and share-based compensation | 29,047 | 44,151 | ||||||
Accrued expenses, reserves, and other | 44,075 | 65,631 | ||||||
Total deferred income tax assets | $ | 271,738 | $ | 375,236 | ||||
Deferred income tax liabilities: | ||||||||
Property and equipment depreciation | $ | 1,008,485 | $ | 1,728,265 | ||||
Goodwill and other intangible assets amortization | 155,175 | 227,767 | ||||||
Transition tax on deemed repatriation of foreign earnings | 473,298 | - | ||||||
Total deferred income tax liabilities | $ | 1,636,958 | $ | 1,956,032 |
2017 | 2016 | 2015 | ||
Statutory rate – Federal US income tax | 34% | 34% | 34% | |
State and local taxes | 6% | 6% | 6% | |
Impact of Tax Act | 4% | - | - | |
Non-U.S. income tax at different rates | (1%) | - | - | |
Domestic production activities deduction | (2%) | (1%) | (1%) | |
Other, net | (3%) | (2%) | (2%) | |
Effective rate | 38% | 37% | 37% |
Year ending December 31: | ||||
2018 | $ | 4,324,431 | ||
2019 | 3,579,430 | |||
2020 | 2,968,426 | |||
2021 | 2,255,792 | |||
2022 | 1,461,280 | |||
2023 | 832,593 | |||
2024 | 546,843 | |||
2025 | 432,990 | |||
2026 | 221,967 | |||
2027 | 96,398 | |||
Total minimum lease payments | $ | 16,720,150 |
2017 | 2016 | 2015 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Option | Exercise | Option | Exercise | Option | Exercise | |||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding at January 1 | 56,400 | $ | 5.14 | 68,400 | $ | 5.17 | 72,400 | $ | 5.16 | |||||||||||||||
Granted | - | - | - | - | - | - | ||||||||||||||||||
Forfeited or canceled | (12,000 | ) | 5.14 | (12,000 | ) | 5.30 | (2,000 | ) | 4.96 | |||||||||||||||
Exercised | (44,400 | ) | 5.14 | - | - | (2,000 | ) | 4.96 | ||||||||||||||||
Outstanding at December 31 | - | $ | - | 56,400 | $ | 5.14 | 68,400 | $ | 5.17 | |||||||||||||||
Exercisable at end of year | - | $ | - | 56,400 | $ | 5.14 | 68,400 | $ | 5.17 | |||||||||||||||
Weighted-average fair value of | ||||||||||||||||||||||||
options granted during year | n/a | n/a | n/a |
Shares | Grant Fair Value | |||||||
Balance, January 1, 2016 | 60,432 | $ | 8.97 | |||||
Granted | 33,685 | 7.14 | ||||||
Forfeited | (8,187 | ) | 8.97 | |||||
Vested | (20,780 | ) | 8.97 | |||||
Balance, December 31, 2016 | 65,150 | $ | 8.03 | |||||
Balance, January 1, 2017 | 65,150 | $ | 8.03 | |||||
Granted | 9,005 | 8.05 | ||||||
Forfeited | (4,054 | ) | 8.97 | |||||
Vested | (33,300 | ) | 8.97 | |||||
Balance, December 31, 2017 | 36,801 | $ | 8.03 |
2018 | $ | 100,127 | ||
2019 | 58,126 | |||
2020 | 14,853 | |||
2021 | 1,208 |
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
North America | International | Total | ||||||||||
For the year ended December 31, 2017 | ||||||||||||
Net Sales | $ | 78,568,219 | $ | 3,753,049 | $ | 82,321,268 | ||||||
Gross Profit | 49,889,888 | 2,223,941 | 52,113,829 | |||||||||
Operating earnings | 7,498,817 | (256,995 | ) | 7,241,822 | ||||||||
Interest expense | 205,555 | - | 205,555 | |||||||||
Other expense, net | (135,011 | ) | 8,154 | (126,857 | ) | |||||||
Income before income taxes | 7,428,370 | (265,246 | ) | 7,163,124 | ||||||||
Depreciation and amortization | 1,790,421 | 84,681 | 1,875,102 | |||||||||
Fixed asset additions | 1,666,171 | 23,474 | 1,689,645 | |||||||||
Total assets | $ | 70,302,116 | $ | 4,612,480 | $ | 74,914,596 | ||||||
For the year ended December 31, 2016 | ||||||||||||
Net Sales | $ | 79,041,920 | $ | 3,882,072 | $ | 82,923,992 | ||||||
Gross Profit | 49,315,003 | 2,398,239 | 51,713,242 | |||||||||
Operating earnings | 10,224,773 | 75,958 | 10,300,731 | |||||||||
Interest expense | 155,189 | - | 155,189 | |||||||||
Other expense, net | (35,290 | ) | (21,997 | ) | (57,287 | ) | ||||||
Income before income taxes | 10,104,873 | 97,956 | 10,202,829 | |||||||||
Depreciation and amortization | 1,631,534 | 87,620 | 1,719,154 | |||||||||
Fixed asset additions | 1,609,829 | 87,875 | 1,697,704 | |||||||||
Total assets | $ | 66,502,432 | $ | 4,150,288 | $ | 70,652,720 | ||||||
For the year ended December 31, 2015 | ||||||||||||
Net Sales | $ | 80,468,597 | $ | 3,692,603 | $ | 84,161,200 | ||||||
Gross Profit | 49,838,455 | 2,232,605 | 52,071,060 | |||||||||
Operating earnings | 10,353,404 | 121,296 | 10,474,700 | |||||||||
Interest expense | 330,004 | - | 330,004 | |||||||||
Other expense, net | (63,230 | ) | (11,127 | ) | (74,357 | ) | ||||||
Income before income taxes | 10,086,630 | 132,423 | 10,219,053 | |||||||||
Depreciation and amortization | 1,509,592 | 57,580 | 1,567,172 | |||||||||
Fixed asset additions | 1,878,229 | 285,811 | 2,164,040 | |||||||||
Total assets | $ | 59,894,498 | $ | 4,716,578 | $ | 64,611,076 |
2017 | 2016 | 2015 | ||||||||||
United States | $ | 70,453,773 | $ | 70,886,401 | $ | 72,061,009 | ||||||
Canada | 7,224,894 | 7,199,155 | 7,543,468 | |||||||||
All other countries | 4,642,601 | 4,838,436 | 4,556,723 | |||||||||
$ | 82,321,268 | $ | 82,923,992 | $ | 84,161,200 |
First | Second | Third | Fourth | |||||||||||||
2017 | Quarter | Quarter | Quarter | Quarter | ||||||||||||
Net sales | $ | 20,149,845 | $ | 19,280,770 | $ | 18,388,381 | $ | 24,502,272 | ||||||||
Gross profit | 12,286,045 | 12,895,534 | 11,635,331 | 15,296,919 | ||||||||||||
Net income | 1,231,265 | 1,027,732 | 521,414 | 1,671,340 | ||||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.13 | $ | 0.11 | $ | 0.06 | $ | 0.18 | ||||||||
Diluted | $ | 0.13 | $ | 0.11 | $ | 0.06 | $ | 0.18 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 9,308,726 | 9,225,960 | 9,270,862 | 9,270,862 | ||||||||||||
Diluted | 9,330,919 | 9,229,129 | 9,273,950 | 9,272,330 | ||||||||||||
First | Second | Third | Fourth | |||||||||||||
2016 | Quarter | Quarter | Quarter | Quarter | ||||||||||||
Net sales | $ | 20,672,227 | $ | 19,552,905 | $ | 18,628,362 | $ | 24,100,498 | ||||||||
Gross profit | 12,652,746 | 12,895,790 | 11,644,871 | 14,519,835 | ||||||||||||
Net income | 1,520,997 | 1,820,915 | 1,000,350 | 2,059,997 | ||||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.16 | $ | 0.19 | $ | 0.11 | $ | 0.23 | ||||||||
Diluted | $ | 0.16 | $ | 0.19 | $ | 0.11 | $ | 0.23 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 9,698,951 | 9,209,446 | 9,188,483 | 9,188,483 | ||||||||||||
Diluted | 9,718,453 | 9,227,941 | 9,206,382 | 9,301,867 |
December 31, 2021 | December 31, 2020 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 10,155 | $ | 10,329 | ||||
Accounts receivable-trade, net of allowance for doubtful accounts of $24 and $14 at December 31, 2021 and 2020, respectively | 614 | 350 | ||||||
Inventory | 38,084 | 36,779 | ||||||
Income tax receivable | 972 | 2,753 | ||||||
Prepaid expenses | 483 | 536 | ||||||
Other current assets | 141 | 265 | ||||||
Total current assets | 50,449 | 51,012 | ||||||
Property and equipment, at cost | 27,750 | 27,468 | ||||||
Less accumulated depreciation | (15,989 | ) | (15,078 | ) | ||||
Property and equipment, net | 11,761 | 12,390 | ||||||
Operating lease assets | 10,438 | 11,772 | ||||||
Financing lease assets | 37 | 44 | ||||||
Deferred income taxes | 0 | 82 | ||||||
Other intangibles, net of accumulated amortization of $548 at December 31, 2021 and 2020 | 6 | 6 | ||||||
Other assets | 394 | 387 | ||||||
TOTAL ASSETS | $ | 73,085 | $ | 75,693 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable-trade | $ | 4,786 | $ | 5,737 | ||||
Accrued expenses and other liabilities | 4,302 | 3,642 | ||||||
Current portion of operating lease liabilities | 3,025 | 3,530 | ||||||
Current portion of finance lease liabilities | 15 | 14 | ||||||
Current maturities of long-term debt | 79 | 0 | ||||||
Total current liabilities | 12,207 | 12,923 | ||||||
Uncertain tax positions | 415 | 393 | ||||||
Other non-current liabilities | 417 | 463 | ||||||
Operating lease liabilities, non-current | 8,194 | 9,245 | ||||||
Finance lease liabilities, non-current | 15 | 29 | ||||||
Long-term debt, net of current maturities | 336 | 446 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 8) | 0 | 0 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Preferred stock, $0.10 par value; 20,000,000 shares authorized; NaN issued or outstanding; attributes to be determined on issuance | 0 | 0 | ||||||
Common stock, $0.0024 par value; 25,000,000 shares authorized; 9,971,711 and 10,575,182 shares issued at December 31, 2021 and 2020, respectively; 8,547,335 and 9,150,806 shares outstanding at December 31, 2021 and 2020, respectively | 24 | 25 | ||||||
Paid-in capital | 3,959 | 5,924 | ||||||
Retained earnings | 58,664 | 57,310 | ||||||
Treasury stock at cost (1,424,376 shares at December 31, 2021 and 2020) | (9,773 | ) | (9,773 | ) | ||||
Accumulated other comprehensive loss, net of tax | (1,373 | ) | (1,292 | ) | ||||
Total stockholders’ equity | 51,501 | 52,194 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 73,085 | $ | 75,693 |
For the Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Net sales | $ | 82,661 | $ | 64,084 | ||||
Cost of sales | 35,662 | 28,026 | ||||||
Gross profit | 46,999 | 36,058 | ||||||
Operating expenses | 44,699 | 41,328 | ||||||
Impairment expense | 0 | 1,078 | ||||||
Income (loss) from operations | 2,300 | (6,348 | ) | |||||
Other (income) expense: | ||||||||
Interest expense | 16 | 7 | ||||||
Other, net | 91 | (76 | ) | |||||
Total other (income) expense | 107 | (69 | ) | |||||
Income (loss) before income taxes | 2,193 | (6,279 | ) | |||||
Income tax provision (benefit) | 839 | (1,378 | ) | |||||
Net income (loss) | $ | 1,354 | $ | (4,901 | ) | |||
Foreign currency translation adjustments, net of tax | (81 | ) | (211 | ) | ||||
Comprehensive income (loss) | $ | 1,273 | $ | (5,112 | ) | |||
Net income (loss) per common share: | ||||||||
Basic | $ | 0.16 | $ | (0.54 | ) | |||
Diluted | $ | 0.16 | $ | (0.54 | ) | |||
Weighted average number of shares outstanding: | ||||||||
Basic | 8,709,866 | 9,062,598 | ||||||
Diluted | 8,720,469 | 9,062,598 |
For the Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 1,354 | $ | (4,901 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,105 | 1,021 | ||||||
Operating lease asset amortization | 3,202 | 3,193 | ||||||
Impairment of goodwill and long-lived assets | 0 | 1,078 | ||||||
Loss (gain) on disposal of assets | (8 | ) | 59 | |||||
Stock-based compensation | 797 | 887 | ||||||
Deferred income taxes | 83 | 442 | ||||||
Exchange (gain) loss | 23 | (5 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable-trade | (325 | ) | 86 | |||||
Inventory | (2,777 | ) | (12,686 | ) | ||||
Prepaid expenses | 83 | 675 | ||||||
Other current assets | (8 | ) | 1,574 | |||||
Accounts payable-trade | 1,143 | (440 | ) | |||||
Accrued expenses and other liabilities | 743 | 1,022 | ||||||
Income taxes, net | 1,775 | (1,120 | ) | |||||
Other assets | (52 | ) | (41 | ) | ||||
Operating lease liabilities | (3,422 | ) | (3,371 | ) | ||||
Total adjustments | 2,362 | (7,626 | ) | |||||
Net cash provided by (used in) operating activities | 3,716 | (12,527 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (1,001 | ) | (1,313 | ) | ||||
Proceeds from sales of short-term investments | 0 | 7,523 | ||||||
Proceeds from sales of assets | 0 | 46 | ||||||
Net cash provided by (used in) investing activities | (1,001 | ) | 6,256 | |||||
Cash flows from financing activities: | ||||||||
Proceeds from long-term debt | 0 | 416 | ||||||
Payments of capital lease obligations | (14 | ) | 0 | |||||
Repurchase of common stock | (2,738 | ) | 0 | |||||
Purchase of vested stock for employee payroll tax | (25 | ) | 0 | |||||
Net cash provided by (used in) financing activities | (2,777 | ) | 416 | |||||
Effect of exchange rate changes on cash and cash equivalents | (112 | ) | 279 | |||||
Net decrease in cash and cash equivalents | (174 | ) | (5,576 | ) | ||||
Cash and cash equivalents, beginning of period | 10,329 | 15,905 | ||||||
Cash and cash equivalents, end of period | $ | 10,155 | $ | 10,329 |
For the Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid during the period | $ | 16 | $ | 17 | ||||
Income tax paid (refunded) during the period, net | $ | (994 | ) | $ | 56 | |||
Supplemental disclosures of non-cash activity: | ||||||||
Change in accruals related to property and equipment | $ | 0 | $ | (105 | ) | |||
Operating lease assets obtained in exchange for lease liabilities, net | $ | 1,853 | $ | 1,702 |
Number of Shares Common Stock Outstanding | Par Value | Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||
Balance, December 31, 2019 | 9,022,187 | $ | 25 | $ | 5,037 | $ | (9,773 | ) | $ | 62,211 | $ | (1,081 | ) | 56,419 | ||||||||||||||
Stock-based compensation expense | - | 0 | 887 | 0 | 0 | 0 | 887 | |||||||||||||||||||||
Issuance of restricted stock | 128,619 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Net loss | - | 0 | 0 | 0 | (4,901 | ) | 0 | (4,901 | ) | |||||||||||||||||||
Foreign currency translation adjustments, net of tax | - | 0 | 0 | 0 | 0 | (211 | ) | (211 | ) | |||||||||||||||||||
Balance, December 31, 2020 | 9,150,806 | $ | 25 | $ | 5,924 | $ | (9,773 | ) | $ | 57,310 | $ | (1,292 | ) | $ | 52,194 | |||||||||||||
Stock-based compensation expense | - | 0 | 797 | 0 | 0 | 0 | 797 | |||||||||||||||||||||
Issuance of restricted stock | 114,075 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Purchase of vested stock for employee payroll tax | (4,856 | ) | 0 | (25 | ) | 0 | 0 | 0 | (25 | ) | ||||||||||||||||||
Repurchase of common stock | (712,690 | ) | (1 | ) | (2,737 | ) | 0 | 0 | 0 | (2,738 | ) | |||||||||||||||||
Net income | - | 0 | 0 | 0 | 1,354 | 0 | 1,354 | |||||||||||||||||||||
Foreign currency translation adjustments, net of tax | - | 0 | 0 | 0 | 0 | (81 | ) | (81 | ) | |||||||||||||||||||
Balance, December 31, 2021 | 8,547,335 | $ | 24 | $ | 3,959 | $ | (9,773 | ) | $ | 58,664 | $ | (1,373 | ) | $ | 51,501 |
(in thousands) | 2021 | 2020 | ||||||
United States | $ | 73,546 | $ | 56,877 | ||||
Canada | 7,470 | 5,798 | ||||||
Spain | 1,645 | 1,409 | ||||||
Net sales | $ | 82,661 | $ | 64,084 |
(in thousands, except share data) | 2021 | 2020 (1) | ||||||
Numerator: | ||||||||
Net income (loss) | $ | 1,354 | $ | (4,901 | ) | |||
Denominator: | ||||||||
Basic weighted-average common shares ouststanding | 8,709,866 | 9,062,598 | ||||||
Dilutive effect of service-based restricted stock awards granted to Board of Directors under the Plan | 10,603 | 0 | ||||||
Diluted weighted-average common shares outstanding | 8,720,469 | 9,062,598 |
• | 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. |
(in thousands) | December 31, 2021 | December 31, 2020 | ||||||
On hand: | ||||||||
Finished goods held for sale | $ | 34,928 | $ | 32,654 | ||||
Raw materials and work in process | 828 | 828 | ||||||
Inventory in transit | 2,328 | 3,297 | ||||||
TOTAL | $ | 38,084 | $ | 36,779 |
(in thousands) | December 31, 2021 | December 31, 2020 | ||||||
Building | $ | 9,257 | $ | 9,240 | ||||
Land | 1,451 | 1,451 | ||||||
Leasehold improvements | 1,833 | 1,853 | ||||||
Equipment and machinery | 7,704 | 7,361 | ||||||
Furniture and fixtures | 7,350 | 7,339 | ||||||
Vehicles | 155 | 224 | ||||||
27,750 | 27,468 | |||||||
Lesss: accumulated depreciation | (15,989 | ) | (15,078 | ) | ||||
TOTAL | $ | 11,761 | $ | 12,390 |
(in thousands) | December 31, 2021 | December 31, 2020 | ||||||
United States | $ | 11,508 | $ | 12,077 | ||||
Canada | 252 | 309 | ||||||
United Kingdom | 0 | 2 | ||||||
Spain | 1 | 2 | ||||||
$ | 11,761 | $ | 12,390 |
Accrued Expenses and Other Liabilities | December 31, 2021 | December 31, 2020 | ||||||
(in thousands) | ||||||||
Accrued employee related costs | 2,508 | 1,121 | ||||||
Unearned gift card revenue | 351 | 301 | ||||||
Estimated returns | 242 | 241 | ||||||
Sales and payroll taxes payable | 987 | 935 | ||||||
Accrued vendor payables | 214 | 1,044 | ||||||
TOTAL | $ | 4,302 | $ | 3,642 |
Leases | Balance Sheet Classification | December 31, 2021 | December 31, 2020 | |||||||
(in thousands) | ||||||||||
Assets: | ||||||||||
Operating | Operating lease assets | $ | 10,438 | $ | 11,772 | |||||
Finance | Financing lease assets | 37 | 44 | |||||||
Total assets | $ | 10,475 | $ | 11,816 | ||||||
Liabilities: | ||||||||||
Current | ||||||||||
Operating | Current portion of operating lease liabilities | $ | 3,025 | $ | 3,530 | |||||
Finance | Current portion of finance lease liabilities | 15 | 14 | |||||||
Non-current | ||||||||||
Operating | Operating lease liabilities, non-current | 8,194 | 9,245 | |||||||
Finance | Finance lease liabilities, non-current | 15 | 29 | |||||||
Total lease liabilities | $ | 11,249 | $ | 12,818 |
Lease Cost | Income Statement Classification | December 31, 2021 | December 31, 2020 | ||||||
(in thousands) | |||||||||
Operating lease cost | Operating expenses | $ | 3,664 | $ | 3,809 | ||||
Operating lease cost | Impairment expense | 0 | 601 | ||||||
Short-term lease cost | Operating expenses | 45 | 0 | ||||||
Variable lease cost (1) | Operating expenses | 946 | 937 | ||||||
Finance: (2) | |||||||||
Amortization of lease assets | Operating expenses | 7 | 0 | ||||||
Interest on lease liabilities | Interest expense | 2 | 0 | ||||||
Total lease cost | $ | 4,664 | $ | 5,347 |
December 31, 2021 | ||||||||
Maturity of Lease Liabilities | Operating Leases | Finance Leases | ||||||
(in thousands) | ||||||||
2022 | $ | 3,488 | $ | 17 | ||||
2023 | 2,665 | $ | 15 | |||||
2024 | 2,021 | $ | 0 | |||||
2025 | 1,386 | $ | 0 | |||||
2026 | 1,114 | $ | 0 | |||||
Thereafter | 2,218 | $ | 0 | |||||
Total lease payments | $ | 12,892 | $ | 32 | ||||
Less: Interest | (1,673 | ) | (2 | ) | ||||
Present value of lease liabilities | $ | 11,219 | $ | 30 |
Other Information | December 31, 2021 | December 31, 2020 | ||||||
(in thousands) | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows used in operating leases | $ | 3,876 | $ | 3,866 | ||||
Operating cash flows used in finance leases | 2 | 0 | ||||||
Financing cash flows used in finance leases | 14 | 0 | ||||||
Operating lease assets obtained in exchange for lease obligations | ||||||||
Operating leases, initial recognition | 1,653 | 317 | ||||||
Operating leases, modifications and remeasurements | 200 | 1,340 | ||||||
Finance leases, initial recognition | 0 | 45 |
Lease Term and Discount Rate | December 31, 2021 | December 31, 2020 | ||||||
Weighted-average remaining lease term (years): | ||||||||
Operating leases | 5.3 | 5.9 | ||||||
Finance leases | 1.9 | 2.9 | ||||||
Weighted-average discount rate: | ||||||||
Operating leases | 4.5 | % | 4.4 | % | ||||
Finance leases | 6.5 | % | 6.5 | % |
(in thousands) | 2021 | 2020 | ||||||
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%; matures June 4, 2025 | $ | 336 | $ | 446 | ||||
$ | 336 | $ | 446 | |||||
Less current maturities | 79 | 0 | ||||||
TOTAL | $ | 415 | $ | 446 |
(in thousands) | Year Ended December 31, | |||||||
Income Tax Benefit | 2021 | 2020 | ||||||
Current provision (benefit): | ||||||||
Federal | $ | 640 | $ | (1,385 | ) | |||
State | 98 | 65 | ||||||
Foreign | 0 | 6 | ||||||
Related to UTP | 19 | 20 | ||||||
757 | (1,294 | ) | ||||||
Deferred provision (benefit): | ||||||||
Federal | 0 | (62 | ) | |||||
State | 0 | (3 | ) | |||||
Foreign | 82 | (19 | ) | |||||
82 | (84 | ) | ||||||
Total tax provision (benefit) | $ | 839 | $ | (1,378 | ) |
(in thousands) | Year Ended December 31, | |||||||
Income (Loss) Before Income Taxes | 2021 | 2020 | ||||||
United States | $ | 2,552 | $ | (6,222 | ) | |||
Spain | (135 | ) | 161 | |||||
Canada | (229 | ) | (204 | ) | ||||
Australia | (1 | ) | (7 | ) | ||||
United Kingdom | 6 | (7 | ) | |||||
TOTAL | $ | 2,193 | $ | (6,279 | ) |
Deferred income tax assets: | 2021 | 2020 | ||||||
(in thousands) | ||||||||
Inventory | $ | 464 | $ | 498 | ||||
Stock-based compensation | 59 | 63 | ||||||
Accounts receivable | 4 | 4 | ||||||
Sales returns | 125 | 105 | ||||||
Foreign currency translation gain/loss in OCI | 342 | 323 | ||||||
Goodwill and other intangible assets amortization | 0 | 5 | ||||||
Net operating loss | 646 | 665 | ||||||
Accrued expenses | 359 | 170 | ||||||
Leases | 195 | 250 | ||||||
Other | 2 | 1 | ||||||
Total deferred income tax assets | 2,196 | 2,084 | ||||||
Less: valuation allowance | (1,489 | ) | (1,320 | ) | ||||
Total deferred income tax assets, net of valuation allowance | $ | 707 | $ | 764 | ||||
Property and equipment depreciation | $ | 707 | $ | 682 | ||||
Total deferred income tax liabilities | 707 | 682 | ||||||
Net deferred tax asset (liability) | $ | 0 | $ | 82 |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Statutory rate – Federal U.S. income tax | 21 | % | 21 | % | ||||
State and local taxes | 9 | % | 3 | % | ||||
Permanent book/tax differences | 3 | % | (2 | )% | ||||
Difference in tax rates in loss carryback periods | 0 | % | 8 | % | ||||
Change in valuation allowance | 6 | % | (10 | )% | ||||
Rate differential on UTP reversals | 1 | % | 0 | % | ||||
Other, net | (2 | )% | 2 | % | ||||
Effective rate | 38 | % | 22 | % |
2021 | 2020 | |||||||
UTP at beginning of the year | $ | 393 | $ | 296 | ||||
Gross increase to tax positions in current period | 3 | 77 | ||||||
Interest expense | 19 | 20 | ||||||
UTP at end of year | $ | 415 | $ | 393 |
Balance, January 1, 2021 | 522 | $ | 7.11 | |||||
Granted | 25 | 3.88 | ||||||
Forfeited | (10 | ) | 3.53 | |||||
Vested | (114 | ) | 7.00 | |||||
Balance, December 31, 2021 | 423 | $ | 7.03 |
Unrecognized Expense | ||||
2022 | $ | 784 | ||
2023 | 537 | |||
2024 | 24 | |||
2025 | 5 | |||
$ | 1,350 |
i. | Replaced critical roles within our accounting team with contract accounting resources and continue to search for full-time employees with expertise in GAAP accounting, SEC reporting and disclosure, internal audit and internal controls; |
ii. | Replaced our legacy accounting systems with an integrated enterprise resource planning (“ERP”) solution which includes general ledger, warehouse management and factory production modules designed to calculate inventory on a FIFO basis; |
iii. | Implemented a new point-of-sale system for 94 U.S. stores that is fully integrated with our new ERP system (the remaining 12 stores will be converted during the remainder of 2022); |
iv. | Created a risk controls matrix which includes, among other things, a comprehensive list of key and mitigating controls, a description of the risk the control is designed to mitigate, the individual responsible for each control, the frequency in which the control is performed, and a mapping of each control to the five COSO Framework components (control environment, risk assessment, control activities, information and communication, or monitoring activities); |
v. | Established a greater sense of accountability by requiring sub-certifications below the CEO and CFO level for certain key accounting, finance and operations personnel. |
i. | Ongoing recruitment and hiring of permanent, qualified public-company accounting personnel; |
ii. | Converting the remaining 12 stores onto our new point-of-sale system; |
iii. | Redesigning our accounting procedures and activities to align with our new ERP system that will include built-in controls to improve upon the reliability of financial reporting and the preparation of financial statements in accordance with GAAP; |
iv. | Continuing to improve the accounting close process, including periodic review and update of our accounting close checklists for completeness of duties, accuracy of owners and deadlines to maintain accountability, timely review of account reconciliations and calculations involving judgement, and timely reporting of financial results; |
v. | Updating process narrative documentation in the following areas: (i) financial reporting, (ii) inventory, (iii) purchasing and accounts payable, (iv) revenue, (v) fixed assets and lease accounting, (vi) general accounting, treasury and financial planning & analysis, (vii) tax, (viii) information technology (IT) governance, and (ix) HR and payroll; |
vi. | Periodically reviewing of our risk controls matrix and process narrative documentation to ensure changes such as personnel, information sources, processes, systems, and frequency in performing the control are properly reflected in a timely manner; |
vii. | Reporting the progress and results of our remediation plan to the Audit Committee on a recurring basis, including the identification, status, and resolution of internal control deficiencies; and |
viii. | Creating a comprehensive approach to regularly evaluate the operating effectiveness of our disclosure controls and procedures and our internal control over financial reporting using the COSO Framework as a guide. |
■ | Recurring meetings with leadership, finance and accounting and other key functional areas to train staff on processes for oversight and emphasize each individual’s accountability for internal control compliance, and to create a pattern of regular discussion of such controls. |
■ | Periodic communications from the CEO, CFO and other key senior leaders on the Company’s mission, core values, Code of Business Conduct and Ethics, whistleblower policies, and each employee’s individual responsibility for internal control compliance. |
■ | Reorganization of the finance and accounting team to address segregation of duties issues, oversight and review of work, and recruiting and hiring qualified, competent employees with relevant experience for the roles. |
■ | Regular performance evaluations to include position-specific criteria for functional competence, including performance of internal control responsibilities. |
■ | Completing the implementation of our new point-of-sale system, which is fully integrated with our ERP system, for our remaining 12 stores during the remainder of 2022. |
■ | Continuing to implement functionality in our ERP system to improve on our internal controls over financial reporting, such as implementing the ERP’s bank reconciliation module. |
■ | Creating and implementing newly-designed processes, structures, delegation of authority and controls, in accordance with the COSO Framework, including: |
o | Quarterly updates for the CFO regarding upcoming accounting pronouncement and proposed changes to GAAP accounting standards, tax regulations, and other requirements that may impact the Company’s financial reporting; |
o | Timely reviews each quarter of the most significant accounting estimates and judgements; |
o | Validation of results through detailed variance analyses and reconciliation of account balances performed on a timely basis; |
o | Monthly business review of actual financial performance compared to forecasts with participation from leadership across the organization; and |
o | Establishing a disclosure committee comprised of key management throughout the different areas of the organization to evaluate the appropriateness of disclosures in the Company’s periodic filings on Forms 10-K and 10-Q and to support the CEO and CFO with the certification process. |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE* |
ITEM 11. | EXECUTIVE COMPENSATION* |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS* |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE* |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES* |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 410) |
TANDY LEATHER FACTORY, INC. AND SUBSIDIARIES EXHIBIT INDEX | |||
Exhibit Number | Description | ||
Certificate of Incorporation of The Leather Factory, Inc., and Certificate of Amendment to Certificate of Incorporation of The Leather Factory, Inc. filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 12, 2005 and incorporated by reference herein. | |||
Bylaws of | |||
Certificate of Designations of Series A Junior Participating Preferred Stock of Tandy Leather Factory, Inc. filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 10, 2013 and incorporated by reference herein. | |||
Tandy Leather Factory, Inc. 2013 Restricted Stock Plan, filed as Exhibit 10.1 to Tandy Leather Factory’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2013 and incorporated by reference herein. | |||
Amendment #1 to Tandy Leather Factory, Inc. 2013 Restricted Stock Plan filed as Exhibit 10.5 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 22, 2021 and incorporated by reference herein. | |||
Form of Non-Employee Director Restricted Stock Agreement under Tandy Leather Factory, Inc.’s 2013 Restricted Stock Plan, filed as Exhibit 10.1 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 14, 2014 and incorporated by reference herein. | |||
Form of Employee Restricted Stock Award Agreement under Tandy Leather Factory, Inc.’s 2013 Restricted Stock Plan, filed as Exhibit | |||
Form of Employment Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.1 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein. | |||
Form of Stand-Alone Restricted Stock Unit Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.2 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein. |
Form of Stand-Alone Restricted Stock Unit Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.3 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein. | |||
Form of Stock Purchase Agreement dated January 28, 2021 between the Company and Central Square Management, filed as Exhibit 10.14 to the Tandy Leather Factory, Inc.’s 2019 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 22, 2021 and incorporated by reference herein. | |||
Form of Stock Purchase Agreement dated December 8, 2021 between the Company and Right Lane I, LP. | |||
Code of Business Conduct and Ethics of | |||
Subsidiaries of Tandy Leather Factory, Inc. | |||
Consent of Independent Registered Public Accounting Firm. | |||
Certification by the Chief Executive Officer and President pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |||
Certification by the Chief Financial Officer as amended. | |||
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of | |||
*101.INS | XBRL Instance Document. | ||
*101.SCH | XBRL | ||
*101.CAL | XBRL Taxonomy Extension Calculation Document. | ||
*101.DEF | XBRL Taxonomy Extension | ||
*101.LAB | XBRL Taxonomy Extension Labels Document. | ||
*101.PRE | XBRL Taxonomy Extension | ||
ITEM 16. | FORM 10-K SUMMARY |
By: | ||
Janet Carr | ||
Chief Executive Officer | ||
Signature | Title | Date | ||
/s/ | Chairman of the Board | March | ||
Jefferson Gramm | ||||
/s/ Janet Carr | Chief Executive Officer, Director | March 31, 2022 | ||
Janet Carr | (principal executive officer) | |||
/s/ Michael Galvan | Chief Financial Officer | March 31, 2022 | ||
Michael Galvan | (principal financial officer and | |||
principal accounting officer) | ||||
/s/ William M. Warren | Director | March 31, 2022 | ||
William M. Warren | ||||
/s/ James Pappas | Director | March 31, 2022 | ||
James Pappas | ||||
/s/ Vicki Cantrell | Director | March 31, 2022 | ||
Vicki Cantrell | ||||
Director | ||||
March 31, 2022 | ||||
Sharon M. Leite | ||||
/s/ Sejal Patel | Director | March 31, 2022 | ||
Sejal Patel | ||||
/s/ Elaine D. Crowley | ||||
Director | March 31, 2022 | |||
Elaine D. Crowley | ||||