Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2021 | Mar. 12, 2021 | Jun. 26, 2020 | |
Document and Entity Information | |||
Entity Registrant Name | Summer Infant, Inc. | ||
Document Type | 10-K | ||
Document Period End Date | Jan. 2, 2021 | ||
Title of 12(b) Security | Common Stock, Par Value $0.0001 | ||
Trading Symbol | SUMR | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 6.4 | ||
Entity Common Stock, Shares Outstanding | 2,133,260 | ||
Entity Central Index Key | 0001314772 | ||
Current Fiscal Year End Date | --01-02 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 510 | $ 395 |
Trade receivables, net of allowance for doubtful accounts of $197 and $542 at January 2, 2021 and December 28, 2019, respectively | 25,995 | 32,787 |
Inventory, net | 25,123 | 28,056 |
Prepaids and other current assets | 1,850 | 2,946 |
TOTAL CURRENT ASSETS | 53,478 | 64,184 |
Property and equipment, net | 4,789 | 8,788 |
Intangible assets, net | 11,739 | 12,896 |
Right of use assets, noncurrent | 3,625 | 4,578 |
Deferred tax assets, net | 1,001 | 996 |
Other assets | 105 | 101 |
TOTAL ASSETS | 74,737 | 91,543 |
CURRENT LIABILITIES | ||
Accounts payable | 27,986 | 25,396 |
Accrued expenses | 6,064 | 7,289 |
Lease liabilities, current | 2,349 | 2,495 |
Current portion of long term debt | 2,125 | 875 |
TOTAL CURRENT LIABILITIES | 38,524 | 36,055 |
Long-term debt, less current portion and unamortized debt issuance costs | 27,536 | 45,359 |
Lease liabilities, noncurrent | 1,493 | 2,546 |
Other liabilities | 2,064 | 2,000 |
TOTAL LIABILITIES | 69,617 | 85,960 |
STOCKHOLDERS' EQUITY | ||
Preferred Stock, $0.0001 par value, 1,000,000 authorized, none issued or outstanding at January 2, 2021 and December 28, 2019 | ||
Common Stock $0.0001 par value, authorized, issued and outstanding of 49,000,000, 2,162,459, and 2,132,275 at January 2, 2021 and 49,000,000, 2,138,927, and 2,108,743 at December 28, 2019, respectively | 2 | 2 |
Treasury Stock at cost (30,184 shares at January 2, 2021 and December 28, 2019) | (1,283) | (1,283) |
Additional paid-in capital | 77,979 | 77,715 |
Accumulated deficit | (70,190) | (69,088) |
Accumulated other comprehensive loss | (1,388) | (1,763) |
TOTAL STOCKHOLDERS' EQUITY | 5,120 | 5,583 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 74,737 | $ 91,543 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Consolidated Balance Sheets | ||
Trade receivables, allowance for doubtful accounts | $ 197 | $ 542 |
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, authorized | 1,000,000 | 1,000,000 |
Preferred Stock, issued | 0 | 0 |
Preferred Stock, outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, authorized | 49,000,000 | 49,000,000 |
Common Stock, issued | 2,162,459 | 2,138,927 |
Common Stock, outstanding | 2,132,275 | 2,108,743 |
Treasury Stock at cost, shares | 30,184 | 30,184 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Consolidated Statements of Operations | ||
Net sales | $ 155,299 | $ 173,181 |
Cost of goods sold | 104,448 | 118,296 |
Gross profit | 50,851 | 54,885 |
General & administrative expenses | 29,360 | 34,823 |
Selling expenses | 12,574 | 14,540 |
Depreciation and amortization | 3,348 | 3,720 |
Impairment of intangible asset | 676 | |
Operating income | 4,893 | 1,802 |
Interest expense, net | 4,078 | 4,871 |
Loss from extinguishment of debt | 1,800 | |
Loss before provision for income taxes | (985) | (3,069) |
Provision for income taxes | 117 | 1,095 |
Net loss | $ (1,102) | $ (4,164) |
Net loss per share: | ||
BASIC | $ (0.52) | $ (1.98) |
DILUTED | $ (0.52) | $ (1.98) |
Weighted average shares outstanding: | ||
BASIC | 2,119,499 | 2,100,730 |
DILUTED | 2,133,171 | 2,100,730 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (1,102) | $ (4,164) |
Other comprehensive loss: | ||
Foreign currency translation adjustments | 375 | 158 |
Comprehensive loss | $ (727) | $ (4,006) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (1,102) | $ (4,164) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 3,348 | 3,720 |
Impairment of intangible asset | 676 | |
Stock-based compensation | 253 | 319 |
Loss from extinguishment of debt | 1,800 | |
Amortization of deferred financing costs | 651 | 662 |
Provision for allowances for doubtful accounts | (27) | 316 |
Deferred income taxes | 5 | 1,084 |
Amortization of right of use assets | 2,431 | 1,833 |
Changes in assets and liabilities | ||
Decrease (increase) in accounts receivable | 6,763 | (1,583) |
Decrease in inventory | 2,926 | 8,328 |
Decrease in lease liabilities | (2,678) | (1,370) |
Decrease (increase) in prepaids and other assets | 1,118 | (1,939) |
Decrease (increase) in other assets | (10) | |
Increase (decrease) in accounts payable and accrued expenses | 1,416 | (4,999) |
Net cash provided by operating activities | 17,607 | 2,197 |
Cash flows from investing activities: | ||
Acquisitions of property and equipment | (1,258) | (1,991) |
Acquisitions of intangible assets | (20) | (335) |
Net cash used in investing activities | (1,278) | (2,326) |
Cash flows from financing activities: | ||
Repayment of Prior Term Loan Facility | (16,406) | |
Payment of financing fees and other costs | (1,522) | |
Proceeds from New Term Loan Facility | 7,500 | |
Proceeds from FILO Loan Facility | 2,500 | |
Repayment of New Term Loan Facility | (375) | (875) |
Repayment of FILO Loan Facility | (156) | |
Net borrowings (repayments) on revolving facilities | (10,152) | 932 |
Issuance of common stock upon exercise of stock options | 11 | |
Proceeds from PPP loan | 1,956 | |
Net cash (used in) provided by financing activities | (16,644) | 57 |
Effect of exchange rate changes on cash and cash equivalents | 430 | (254) |
Net increase (decrease) in cash and cash equivalents | 115 | (326) |
Cash and cash equivalents, beginning of year | 395 | 721 |
Cash and cash equivalents, end of year | 510 | 395 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for interest | 2,777 | 3,781 |
Cash (refunded) paid during the year for income taxes | (199) | $ 7 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Derecognition of a building sale-leaseback fixed asset, net of depreciation | 2,357 | |
Derecognition of a building sale-leaseback financial obligation | (2,390) | |
Right-of-use asset acquired through new operating lease | (1,457) | |
Lease liability acquired through new operating lease | $ 1,457 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Treasury Stock | Accumulated Deficit | Accumulated Comprehensive Loss | Total |
Balance, beginning of period at Dec. 29, 2018 | $ 2 | $ 77,396 | $ (1,283) | $ (64,924) | $ (1,921) | $ 9,270 |
Balance, beginning of period (in shares) at Dec. 29, 2018 | 2,091,178 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of common stock upon vesting of restricted shares (in shares) | 17,565 | |||||
Stock-based compensation | 319 | 319 | ||||
Net loss for the year | (4,164) | (4,164) | ||||
Foreign currency translation adjustment | 158 | 158 | ||||
Balance, end of period at Dec. 28, 2019 | $ 2 | 77,715 | (1,283) | (69,088) | (1,763) | 5,583 |
Balance, end of period (in shares) at Dec. 28, 2019 | 2,108,743 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Issuance of common stock upon vesting of restricted shares (in shares) | 20,438 | |||||
Issuance of common stock upon exercise of stock options | 11 | 11 | ||||
Issuance of common stock upon exercise of stock options (in shares) | 1,474 | |||||
Stock-based compensation | 253 | 253 | ||||
Fractional share issuance upon reverse stock split | 1,620 | |||||
Net loss for the year | (1,102) | (1,102) | ||||
Foreign currency translation adjustment | 375 | 375 | ||||
Balance, end of period at Jan. 02, 2021 | $ 2 | $ 77,979 | $ (1,283) | $ (70,190) | $ (1,388) | $ 5,120 |
Balance, end of period (in shares) at Jan. 02, 2021 | 2,132,275 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jan. 02, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Company designs, markets and distributes branded juvenile safety and convenience products that are sold globally to large national retailers as well as independent retailers, primarily in North America. The Company currently markets its products in several product categories including monitoring, safety, nursery, and baby gear. Most products are sold under our core brand names of Summer™ and SwaddleMe ® . When used herein, the terms the “Company,” “we,” “us,” and “our” mean Summer Infant, Inc. and its consolidated subsidiaries. Reverse Stock Split On March 13, 2020, the Company completed a reverse stock split and reduced its common stock outstanding by a ratio of one for nine. Per ASC 505-10, if a reverse stock split occurs after the date of the latest reported balance sheet but before the release of the financial statements, then such changes in the capital structure must be given retroactive effect in the balance sheet. As such, the reverse stock split has been retroactively applied to all years reported in these financial statements. Basis of Presentation and Principles of Consolidation It is the Company’s policy to prepare its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of its wholly‑owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. All dollar amounts included in the Notes to Consolidated Financial Statements are in thousands of U.S. dollars except share and per share amounts. Fiscal Year The Company’s fiscal year ends on the Saturday closest to December 31 of each calendar year. There were fifty three weeks in the fiscal year ended January 2, 2021 and fifty two weeks in the fiscal year ended December 28, 2019. Reclassification Previously reported amounts have been revised in the accompanying consolidated statement of cash flows to properly state the 2019 amortization of deferred financing costs. These revisions increased the Company’s net cash provided by operating activities and decreased the Company’s net cash provided by financing activities. Net decrease in cash and cash equivalents remained unchanged. Summary of Significant Accounting Policies Revenue Recognition The Company applies FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance sets forth a five-step revenue recognition model and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company's principal activities from which it generates its revenue is product sales. The Company has one reportable segment of business. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product delivery occurs. Consideration is typically paid approximately 60 days from the time control is transferred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in selling costs. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of juvenile products to its customers. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. A transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company conducts its business with customers through valid purchase or sales orders each of which is considered a separate contract because individual orders are not interdependent on one another. Product transaction prices on a purchase or sale order are discrete and stand-alone. Purchase or sales orders may be issued under either a customer master service agreement or a reseller allowance agreement. Purchase or sales orders, master service agreements, and reseller allowance agreements which are specific and unique to each customer, may include product price discounts, markdown allowances, return allowances, and/or volume rebates which reduce the consideration due from customers. Variable consideration is estimated using the most likely amount method, which is based on our historical experience as well as current information such as sales forecasts. Contracts may also include cooperative advertising arrangements where the Company allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company's products. These allowances are generally based upon product purchases or specific advertising campaigns. Such allowances are accrued when the related revenue is recognized. These cooperative advertising arrangements provide a distinct benefit and fair value and are accounted for as direct selling expenses. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents Cash flows, cash and cash equivalents include money market accounts and investments with an original maturity of three months or less. At times, the Company possesses cash balances in excess of federally-insured limits. Trade Receivables Trade receivables are carried at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Amounts are considered to be uncollectable based upon historical experience and management’s evaluation of outstanding accounts receivable. Changes in the allowance for doubtful accounts are as follows: For the fiscal year ended January 2, December 28, 2021 2019 Allowance for doubtful accounts, beginning of period $ 542 $ 304 Charges to (recovery of) costs and expenses (27) 316 Account write-offs and other (318) (78) Allowance for doubtful accounts, end of period $ 197 $ 542 Inventory Valuation Inventory is comprised mostly of finished goods and some component parts and is stated at the lower of cost using the first-in, first-out (FIFO) method, or net realizable value. The Company regularly reviews slow-moving and excess inventories, and writes down inventories to net realizable value if the ultimate expected net proceeds from the disposals of excess inventory are less than the carrying cost of the merchandise. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company’s uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components to which the Company has elected to apply the practical expedient and account for each lease component and related non-lease component as one single component. The lease component results in a ROU asset being recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Property and Equipment Property and equipment are recorded at cost. The Company owns the tools and molds used in the production of its products by third party manufacturers. Capitalized mold costs include costs incurred for the pre‑production design and development of the molds. Depreciation is provided over the estimated useful lives of the respective assets using the straight‑line method. Long‑Lived Assets with Finite Lives The Company reviews long‑lived assets with finite lives for impairment on an asset group level whenever events or changes in circumstances indicate that the carrying amount of a long‑lived asset may not be recoverable. An asset is considered to be impaired when its carrying amount exceeds both the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition and the assets’ fair value. Long‑lived assets include property and equipment and finite‑lived intangible assets. The amount of impairment loss, if any, is charged by the Company to current operations. Indefinite‑Lived Intangible Assets The Company accounts for intangible assets in accordance with accounting guidance that requires that intangible assets with indefinite useful lives be tested annually for impairment and more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company’s annual impairment testing is conducted in the fourth quarter of every year. The Company tests indefinite‑lived intangible assets for impairment by comparing the asset’s fair value to its carrying amount. If the fair value is less than the carrying amount, the excess of the carrying amount over fair value is recognized as an impairment charge and the adjusted carrying amount becomes the assets’ new cost basis. Management also evaluates the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is subsequently determined to have a finite useful life, it is amortized prospectively over its estimated remaining useful life. Fair Value Measurements The Company follows ASC 820, “Fair Value Measurements and Disclosures” which includes a framework for measuring fair value and expanded related disclosures. Broadly, the framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The standard established a three‑level valuation hierarchy based upon observable and non‑observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‑derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3—Significant inputs to the valuation model are unobservable. The Company maintains policies and procedures to value instruments using the best and most relevant data available. In addition, the Company utilizes third party specialists that review valuation, including independent price validation. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and short and long-term borrowings. Because of their short maturity, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value. The carrying value of the Company’s debt approximates fair value since the stated rate is similar to rates currently available to the Company for debt with similar terms and remaining maturities. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets and finite-lived intangibles. The Company tests its indefinite-lived assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the carrying value may exceed its fair value. The resulting fair value measurements are considered to be Level 3 inputs. During the fourth quarter of fiscal 2020, the Company determined that the estimated fair value of a definite-lived asset was non-recoverable and the Company recorded a non-cash impairment charge of $676 which reduced the value of the intangible asset to $0, as more fully described in “Note 4 to the Consolidated Financial Statements-Intangible Assets.” The Company did not record an impairment charge in fiscal 2019. Income taxes Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, it is more likely than not that such benefits will be realized. Deferred income tax assets are recorded on a net basis as a long term asset. The Company follows the applicable guidance relative to uncertain tax positions. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Uncertain tax positions must meet a recognition threshold of more-likely-than-not in order for those tax positions to be recognized in the financial statements. Translation of Foreign Currencies Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is its local currency, are translated into U.S. dollars at the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been translated at average rates prevailing during each respective quarter. Resulting translation adjustments are made to a separate component of stockholders’ equity within accumulated other comprehensive loss. Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is the U.S. dollar are remeasured into U.S. dollars at their historical rates or the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been remeasured at average rates prevailing during each respective quarter. Resulting remeasurement adjustments are made to the consolidated statement of operations. Foreign exchange transaction gains and losses are included in the accompanying interim consolidated statement of operations. Shipping Costs Shipping costs to customers are included in selling expenses and amounted to approximately $2,485 and $3,509 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. Advertising Costs The Company charges advertising costs to selling expense as incurred. Advertising expense, which consists primarily of promotional and cooperative advertising allowances provided to customers, was approximately $9,215 and $10,379 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. Segment Information Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment utilizing an omni-channel distribution strategy. Net Income/Loss Per Share Basic income or loss per share for the Company is computed by dividing net income or loss by the weighted-average number of shares of common stock outstanding during the period. Diluted income or loss per share includes the dilutive impact of outstanding stock options and unvested restricted shares. Diluted income/loss per share for the Company is computed by dividing net income/loss by the dilutive weighted average shares outstanding which includes: the dilutive impact (using the “treasury stock” method) of “in the money” stock options and unvested restricted shares issued to employees. Options to purchase 52,272 and 101,320 shares of the Company’s common stock and 9,662 and 22,392 of restricted shares were not included in the calculation, due to the fact that these instruments were anti‑dilutive for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. New Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize most leases on their balance sheet as a right-of-use asset and a lease liability. Leases are classified as either operating or finance, and classification is based on criteria similar to past lease accounting, but without explicit bright lines. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard, and ASU No. 2018-11, “Leases (Topic 842)—Targeted Improvements” (ASU 2018-11), which addresses implementation issues related to the new lease standard. The guidance became effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. The Company adopted the standard on the effective date of December 30, 2018 by applying the new lease requirements at the effective date. The Company also elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allows the Company to carry forward the historical lease classification. The impact of the adoption of ASC 842-Leases (“ASC 842”) on the consolidated balance sheet on the date of adoption was an increase of $6,411 in assets and an increase of $7,037 of liabilities for the recognition of right-of-use assets and lease liabilities. The adoption of ASC 842 was immaterial to the consolidated results of operations and cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and a subsequent amendment to the initial guidance, ASU 2018-19 Codification Improvements to Topic 325, Financial Instruments-Credit Losses (collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held, which include, but are not limited to, trade and other receivables. The new standard is effective for fiscal years beginning after December, 15, 2022. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. 2021 Plan and COVID-19 Pandemic The Company believes that its existing plan will generate sufficient cash which, along with its existing cash and availability under its facilities, will enable it to fund operations through at least the next 12 months. However, should the Company require additional cash, or should the impact from the COVID-19 pandemic discussed below be more severe than expected, the Company would identify other cost reductions or seek additional resources. Beginning in the first quarter of 2020, the COVID-19 pandemic negatively impacted the macroeconomic environment in the United States and globally, and the Company’s business. While our products are considered “essential” and our distribution center located in California continues to operate, some of our customers have been impacted and we have and may continue to see supply chain disruption. The ultimate impact of the COVID-19 pandemic will depend on numerous evolving factors that the Company may not be able to accurately predict, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and other economic and operational conditions the Company may face. The Company is not currently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update any estimates, judgments or materially revise the carrying value of our assets or liabilities. The Company’s estimates may change, however, as events evolve and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. |
REVENUE
REVENUE | 12 Months Ended |
Jan. 02, 2021 | |
REVENUE | |
REVENUE | 2. REVENUE Disaggregation of Revenue The Company’s revenue is primarily from distinct fixed-price product sales in the juvenile product market, to similar customers and channels utilizing similar types of contracts that are short term in nature (less than one year). The Company does not sell service agreements or goods over a period of time and does not sell or utilize customer financing arrangements or time-and-material contracts. The following is a table that presents net sales by geographical area: For the fiscal year ended January 2, December 28, 2021 2019 United States $ 140,173 $ 148,326 All Other 15,126 24,855 $ 155,299 $ 173,181 All Other consists of Canada, Europe, South America, Mexico, Asia, and the Middle East. Contract Balances The Company does not have any contract assets such as work-in-process or contract liabilities such as customer advances. All trade receivables on the Company’s consolidated balance sheet are from contracts with customers. Contract Costs Costs incurred to obtain a contract are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. All contract costs incurred in 2020 and 2019 fall under the provisions of the practical expedient and have therefore been expensed. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jan. 02, 2021 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 3. PROPERTY AND EQUIPMENT Property and equipment, at cost, consisted of the following: For the fiscal year ended January 2, December 28, Depreciation/ 2021 2019 Amortization Period Computer-related $ 4,560 $ 4,511 5 years Tools, dies, prototypes, and molds 27,849 27,457 1 - 5 years Building — 4,156 30 years Other 7,671 7,474 1 - 15 years 40,080 43,598 Less: accumulated depreciation 35,291 34,810 Property and equipment, net $ 4,789 $ 8,788 Property and equipment included amounts acquired under capital leases of approximately $0 and $589 at January 2, 2021 and December 28, 2019, respectively, with related accumulated depreciation of approximately $0 and $115, respectively. Total depreciation expense was $2,847 and $2,982 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. In May 2020, the Company entered into a lease agreement amendment related to our headquarters in Woonsocket, Rhode Island. The agreement decreased the leased premises square footage and extended the current term, which was set to end in March 2021 prior to the amendment to June 2025. It additionally granted two 5-year term extension options. The Company was accounting for the lease in Woonsocket as a sale-leaseback with the building on the balance sheet as property and equipment, net and a corresponding financing obligation in long-term liabilities. Upon the execution of the lease amendment, the Company re-assessed the classification of the lease and determined it to be an operating lease, as the criteria for a sale-leaseback had not been met. This resulted in the de-recognition of the building, from property and equipment, of $2,357, net of accumulated depreciation and the addition of a right-of-use asset and corresponding liability of $1,457. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Jan. 02, 2021 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 4. INTANGIBLE ASSETS Intangible assets consisted of the following: For the fiscal year ended January 2, December 28, 2021 2019 Brand names $ 10,900 $ 11,819 Patents and licenses 4,125 4,101 Customer relationships 6,946 6,946 Other intangibles 1,882 1,882 23,853 24,748 Less: accumulated amortization (12,114) (11,852) Intangible assets, net $ 11,739 $ 12,896 The amortization period for the majority of the intangible assets ranges from 5 to 20 years for those assets that have an estimated life; certain assets have indefinite lives (a brand name). Total of intangibles not subject to amortization amounted to $8,400 for the fiscal years ended January 2, 2021 and December 28, 2019. Amortization expense amounted to $501 and $738 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. In the fourth quarter, the Company recorded an asset impairment charge of $676 representing the remaining unamortized balance of the definite long-lived asset related to the Company’s Born Free Holdings Limited (BFH) trademarks. This intangible asset was determined to have a carrying value that was non-recoverable. The determination resulted from the Company’s decision to dissolve the BFH entity which was completed in December 2020. The Company performed its annual indefinite-lived intangible asset impairment analysis in the fourth fiscal quarter. No asset impairment was recorded for the fiscal years ended January 2, 2021 and December 28, 2019. Estimated amortization expense for the remaining definite-lived assets for the next five years is as follows: Fiscal Year ending 2021 438 2022 438 2023 438 2024 438 2025 434 |
DEBT
DEBT | 12 Months Ended |
Jan. 02, 2021 | |
DEBT | |
DEBT | 5. DEBT Loan Agreement with Bank of America. On October 15, 2020, the Company and its wholly owned subsidiary, Summer Infant (USA), Inc., became parties to a Third Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Bank of America, N.A., as agent, that provides for (i) a $40,000 asset-based revolving credit facility, with a $5,000 unused letter of credit sub-line facility as of January 2, 2021, (ii) a $7,500 term loan and (iii) a $2,500 FILO (first-in, last-out) loan. The Loan Agreement replaced the Company’s prior agreement with BofA and term loan with Pathlight Capital. Pursuant to the Loan Agreement, total borrowing capacity under the revolving credit facility is based on a borrowing base, which is generally defined as 85% of eligible receivables plus the lesser of (i) 70% of the value of eligible inventory (subject to certain limitations) or (ii) 85% of the net orderly liquidation value of eligible inventory, less applicable reserves. The scheduled maturity date of the loans under the revolving credit facility is October 15, 2025 (subject to customary early termination provisions). Loans under the revolving credit facility bear interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins based on average quarterly availability. Interest payments are due monthly, payable in arrears. The Company is also required to pay an annual non-use fee on unused amounts under the revolving credit facility, as well as other customary fees as are set forth in the Loan Agreement. As of January 2, 2021, the interest rate was 2.625% on LIBOR based revolver loans. The amount outstanding on the Restated BofA Agreement at January 2, 2021 was $21,467. Total borrowing base at January 2, 2021 was $32,628 and borrowing availability was $11,161. The principal of the term loan is to be repaid, on a quarterly basis, in installments of $375, until paid in full on termination and subject to mandatory repayment in certain circumstances. The scheduled maturity date of the term loan is October 15, 2025 or earlier, if the revolving credit facility is terminated. The term loan bears interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins, and interest payments are due monthly, in arrears. As of January 2, 2021, the interest rate on LIBOR based term loans and on base rate term loans was 3.875% and 5.750%, respectively. The amount outstanding on the term loan under the Restated BofA Agreement was $7,125 as of January 2, 2021. The total borrowing capacity under the FILO loan is the lesser of (i) the then applicable aggregate FILO commitment amount and (ii) a borrowing base, generally defined as a specific percentage of the value of eligible accounts, plus a specified percentage of the value of eligible inventory. The aggregate FILO commitment amount as of January 2, 2021 was $2,344 with no further availability, and such amount will be proportionately reduced each quarter until the FILO loan is terminated at maturity on October 15, 2024. There can be no voluntary repayment on the FILO loan as long as there are loans outstanding under the revolving credit facility, unless (i) there is an overadvance under the FILO loan, or (ii) such prepayment is accompanied by a permanent dollar for dollar reduction in the aggregate FILO commitment amount such that, after giving effect to such prepayment and reduction, the outstanding principal amount of the FILO loan is equal to but does not exceed the lesser of (A) the aggregate FILO commitment amount and (B) the FILO borrowing base. The FILO loan bears interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins, and interest payments are due monthly, in arrears. As of January 2, 2021, the interest rate on the LIBOR based FILO loans and on base rate FILO loans was 3.625% and 5.500%, respectively. All obligations under the Loan Agreement are secured by substantially all the assets of the Company, and the Company’s subsidiaries, Summer Infant Canada Limited and Summer Infant Europe Limited, are guarantors under the Loan Agreement. The Loan Agreement contains customary affirmative and negative covenants. Among other restrictions, the Company is restricted in its ability to incur additional debt, make acquisitions or investments, dispose of assets, or make distributions unless in each case certain conditions are satisfied. Until the term loan and FILO loan have been repaid in full, the Company must maintain a fixed charge coverage ratio at the end of each fiscal month of at least 1.00 to 1.00 for the twelve-month period then ended. After the term loan and FILO loan have been repaid in full, the Company will be required to maintain the fixed charge coverage ratio if availability falls below $5,000. The Loan Agreement also contains customary events of default, including if the Company fails to comply with any required financial covenants, if there is an event of default under the PPP Loan (described below) and the occurrence of a change of control. In the event of a default, all of the obligations under the Loan Agreement may be declared immediately due and payable. For certain events of default relating to insolvency and receivership, all outstanding obligations become due and payable. As of January 2, 2021, under the Restated BofA Agreement, the interest rate on LIBOR based revolver loans and on base rate revolver loans was 2.625% and 4.500%, respectively. The amount outstanding on the Restated BofA Agreement at January 2, 2021 was $21,467. Total borrowing capacity at January 2, 2021 was $32,628 and borrowing availability was $11,161. The Company has not used any capacity under its letter of credit facility. Prior Bank of America Credit Facility. On June 28, 2018, the Company and Summer Infant (USA), Inc., as borrowers, entered into a Second Amended and Restated Loan and Security Agreement with Bank of America, N.A., as agent, the financial institutions party to the agreement from time to time as lenders, and certain subsidiaries of the Company as guarantors (as amended, the “Restated BofA Agreement”). The Restated BofA Agreement replaced the Company’s prior credit facility with Bank of America, and provided for an asset-based revolving credit facility, with a $5,000 letter of credit sub-line facility. The total borrowing capacity was based on a borrowing base, which was defined as 85% of eligible receivables plus the lesser of (i) 70% of the value of eligible inventory or (ii) 85% of the net orderly liquidation value of eligible inventory, less applicable reserves. The scheduled maturity date of loans under the Restated BofA Agreement was June 28, 2023 (subject to customary early termination provisions). On October 15, 2020, the Restated BofA Agreement was replaced by the Loan Agreement described above. Loans under the Restated BofA Agreement bore interest, at the Company’s option, at a base rate or at LIBOR, plus applicable margins based on average quarterly availability under the Restated BofA Agreement. Interest payments were due monthly, payable in arrears. Prior Term Loan Agreement. On June 28, 2018, the Company and Summer Infant (USA), Inc., as borrowers, entered into a Term Loan and Security Agreement (as amended, the “Term Loan Agreement”) with Pathlight Capital LLC, as agent, each lender from time to time a party to the Term Loan Agreement, and certain subsidiaries of the Company as guarantors, providing for a $17,500 term loan (the “Term Loan”). The principal of the Term Loan was being repaid, on a quarterly basis, in installments of $219, with the first installment having been paid on December 1, 2018, until paid in full on termination, provided that, in connection with the amendments to the Term Loan Agreement, principal payments for March, June and September 2020 were suspended. The Term Loan was repaid in full on October 15, 2020. The refinancing transaction was evaluated to determine the proper accounting treatment for the transaction. Accordingly, debt extinguishment accounting was used to account for the prepayment of the prior term loan facility with Pathlight Capital, LLC, resulting in a loss from the extinguishment of debt of $1,800 for the twelve months ended January 2, 2021. PPP Loan On August 3, 2020, the Company received loan proceeds of $1,956 (the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration under the U.S. CARES Act. The PPP Loan, which was in the form of a promissory note (the “PPP Note”), between the Company and BofA, as the lender, matures on July 27, 2025 and bears interest at a fixed rate of 1% per annum. Monthly principal and interest payments are deferred until (i) the date on which the amount of forgiveness is remitted to the Company’s lender, (ii) the date on which the Company’s lender provides notice that the Company is not entitled to loan forgiveness, and (iii) if a borrower does not apply for loan forgiveness, 10 months after the date of the loan forgiveness covered period. The Company may voluntarily prepay the borrowings in full with no associated penalty or premium. Under the terms of the PPP, the principal and interest may be forgiven if the PPP Loan proceeds are used for qualifying expenses, including payroll costs, rent and utility costs. There is no guaranty that all or a portion of this loan will be forgiven. The PPP Note contains customary representations, warranties, and covenants for this type of transaction, including customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the PPP Note. The occurrence of an event of default may result in, among other things, the Company becoming obligated to repay all amounts outstanding under the PPP Note. The PPP Loan balance of $1,956 is included in Other liabilities on the consolidated balance sheet. On February 18, 2021, the Company applied for full forgiveness of the PPP loan through Bank of America and the application is currently under review by Bank of America. Aggregate maturities of bank debt related to the Loan Agreement and the PPP Loan are as follows: Fiscal Year ending: 2021 2,223 2022 1,985 2023 2,516 2024 2,516 2025 and beyond 23,652 Total $ 32,892 Unamortized debt issuance costs were $1,275 at January 2, 2021 and $2,398 at December 28, 2019, and are presented as a direct deduction of long-term debt on the consolidated balance sheets. Sale-Leaseback On March 24, 2009, Summer Infant (USA), Inc., (“Summer USA”) the Company’s wholly owned subsidiary, entered into a definitive agreement with Faith Realty II, LLC, a Rhode Island limited liability company (“Faith Realty”) (the owner of which is Jason Macari, the former Chief Executive Officer, former director of the Company, and current investor), pursuant to which Faith Realty purchased the corporate headquarters of the Company located at 1275 Park East Drive, Woonsocket, Rhode Island (the “Headquarters”), for $4,052 and subsequently leased the Headquarters back to Summer USA for an annual rent of $390 during the initial seven year term of the lease, payable monthly and in advance. The original lease was to expire on the seventh anniversary of its commencement. Mr. Macari had given a personal guarantee to secure the Faith Realty debt on its mortgage; therefore, due to his continuing involvement in the building transaction, the transaction had been recorded as a financing lease, with no gain recognition. On February 25, 2009, the Company’s Board of Directors (with Mr. Macari abstaining from such action) approved the sale leaseback transaction. In connection therewith, the Board of Directors granted a potential waiver, to the extent necessary, if at all, of the conflict of interest provisions of the Company’s Code of Ethics, effective upon execution of definitive agreements within the parameters approved by the Board. In connection with granting such potential waiver, the Board of Directors engaged independent counsel to review the sale leaseback transaction and an independent appraiser to ascertain (i) the value of the Headquarters and (ii) the market rent for the Headquarters. In reaching its conclusion that the sale leaseback transaction is fair to the Company, the Board of Directors considered a number of factors, including Summer USA’s ability to repurchase the headquarters at 110% of the initial sale price at the end of the initial term. The Company’s Audit Committee approved the sale leaseback transaction (as a related party transaction) and the potential waiver and recommended the matter to a vote of the entire Board of Directors (which approved the transaction). On May 13, 2015, Summer USA entered into an amendment (the “Amendment”) to its lease dated March 24, 2009 (the “Lease”) with Faith Realty (the “Landlord”). Pursuant to the Amendment, (i) the initial term of the Lease was extended for two additional years, such that the initial term would end on March 31, 2018, and the term of the Lease could be extended at Summer USA’s election for one additional term of three years (rather than five years) upon twelve months’ prior notice, (ii) the annual rent for the last two years of the newly amended initial term was set at $429 and the annual rent for the extension period, if elected, was set at $468 and (iii) the Landlord agreed to provide an aggregate improvement allowance of not more than $78 for the newly amended initial term, to be applied against Summer USA’s monthly rent, and an additional improvement allowance of $234 for the extension term, if elected, to be applied against Summer USA’s monthly rent during such extension term. The Amendment was reviewed and approved by the audit committee because it was a related party transaction. On January 22, 2018, Summer USA entered into a second amendment (the “Second Amendment”) to the Lease. Pursuant to the Second Amendment, (i) the term of the Lease was extended to March 31, 2021, with no further rights of extension, (ii) the annual rent for the last three years of the newly amended term was set at $468, (iii) Summer USA no longer has the option to purchase the property subject to the Lease and (iv) the Landlord and Summer USA agreed to certain expenses, repairs and modifications to the property that is subject to the Lease. The Second Amendment was reviewed and approved by the audit committee because it was a related party transaction. At December 28, 2019, approximately $441 of the lease obligation was included in accrued expenses, with the balance of approximately $2,000 included in other liabilities, in the accompanying consolidated balance sheet. On May 1, 2020, Summer USA entered into a third amendment (the “Third Amendment”) to the Lease. The agreement decreased the leased premises square footage and extended the current term, which was set to end in March 2021 prior to the amendment, to June 2025. It additionally granted two 5-year term extension options. Upon the execution of the lease amendment, the Company re-assessed the classification of the lease and determined it to be an operating lease, as the criteria for a sale-leaseback had not been met. This resulted in the de-recognition of the building of $2,357, net of depreciation and the addition of a right-of-use of $1,457 along with a short-term lease liability and a long-term lease liability for $264 and $1,193, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jan. 02, 2021 | |
INCOME TAXES | |
INCOME TAXES | 6. INCOME TAXES In December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) that significantly revised the U.S. tax code effective January 1, 2018 by, among other things, lowering the corporate income tax rate from a top marginal rate of 35% to a flat 21%, limiting deductibility of interest expense and performance based incentive compensation and implementing a territorial tax system. As a result of the Tax Act in the fiscal year ending January 2, 2021 and December 28, 2019 the Company had non-deductible interest for tax purposes resulting in a deferred tax asset in the amount of $1,643 and $1,880 respectively. The Company recorded a valuation allowance on the value of this deferred tax asset until such time as it becomes more likely than not that this asset will be recognized. The provision (benefit) for income taxes is summarized as follows: Fiscal 2020 Fiscal 2019 Current: Federal $ 108 $ — Foreign 2 — State and local 2 11 Total current 112 11 Deferred: Federal (5) $ 683 Foreign 6 222 State and local 4 179 Total deferred 5 1,084 Total provision $ 117 $ 1,095 The tax effects of temporary differences that comprise the deferred tax liabilities and assets are as follows: January 2, December 28, 2021 2019 Deferred tax assets: Accounts receivable $ 51 $ 53 Inventory and Uniform Capitalization reserve 475 506 Interest deduction limitation 1,643 1,880 Lease Liability and accrued expenses 806 1,093 Research and development credit 2,292 2,547 Foreign tax credit 795 795 Net operating loss carry-forward 2,565 2,256 Total deferred tax assets 8,627 9,130 Deferred tax liabilities: Intangible assets and other (2,132) (2,099) ROU Assets and deferred rent (833) (1,036) Property, plant and equipment 28 (54) Total deferred tax liabilities (2,937) (3,189) Valuation allowance (4,689) (4,945) Deferred tax liabilities and valuation allowance (7,626) (8,134) Net deferred income tax asset $ 1,001 $ 996 The following reconciles the benefit for income taxes at the U.S. federal income tax statutory rate to the benefit in the consolidated financial statements: Fiscal 2020 Fiscal 2019 Tax benefit at statutory rate $ (207) $ (644) State income taxes, net of U.S. federal income tax benefit 5 150 Adjustment to uncertain tax position 7,543 — Stock options 5 17 Foreign tax rate differential 2 (5) Tax credits 258 312 Worthless stock deduction (7,435) — Non-deductible expenses 149 117 Expiration of unexercised stock options 90 191 Increase/(Decrease) in valuation allowance (255) 927 Other (38) 30 Total provision $ 117 $ 1,095 The income tax provision for the year ended January 2, 2021 was primarily the result of a deduction related to a worthless stock loss in the Company’s investment in its wholly owned subsidiary, Born Free Holdings Limited (“BFH”), net of reserve for uncertain tax positions. The Company, after analyzing the facts and circumstances, determined to no longer invest in BFH and liquidated the entity. The Company has maintained a permanent investment position and, therefore, has not previously recorded a deferred tax asset for the basis difference in this entity. The original acquisition and financial results of this entity have created an excess of tax basis over the book basis in which the worthless stock that will be deducted for income tax purposes is approximately $26,933, resulting in an estimated net tax benefit of $7,435. The Company analyzed this transaction and determined that this worthless stock deduction qualifies as an ordinary loss. While the Company believes this is a valid income tax deduction, due to the uncertain nature of worthless stock deductions, the Company has determined this tax benefit to be an uncertain tax position. Accordingly, the Company has fully reserved for the tax benefit associated with the worthless stock deduction. As of January 2, 2021, the Company had approximately $3,807 of US federal and state net operating loss carry forwards (or “NOLs”) to offset future federal taxable income. The federal NOL will begin to expire in 2031 and the state NOL began to expire in 2020. As of January 2, 2021, the Company had approximately $893, $304, $2,776, $644, and $2,165 of NOLs in Canada, Australia, Israel, Asia, and the United Kingdom, respectively, which can be carried forward indefinitely. Authoritative guidance requires a valuation allowance to reduce the deferred tax assets reported, if based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all evidence, including the Company’s past earnings history and future earnings forecast, management determined that a valuation allowance in the amount of $2,251 at January 2, 2021 and $2,270 at December 28, 2019 relating to certain federal and state tax credits and foreign NOLs was necessary. Due to the Tax Act, the Company determined a valuation allowance in the amount of $2,438 at January 2, 2021 and $2,675 at December 28, 2019 relating to interest deduction limitations and foreign tax credits was necessary. We apply the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. Our reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken by us in our tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. A summary of the Company’s adjustment to its uncertain tax positions in fiscal years ended January 2, 2021 and December 28, 2019 is set forth below: January 2, December 28, 2021 2019 Balance, at beginning of the year $ — $ — Increase for tax positions related to the current year 7,543 — Balance, at end of year $ 7,543 $ — The unrecognized tax benefits mentioned above included an aggregate of $0 of accrued interest and penalty balances related to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company does not anticipate that its accrual for uncertain tax positions will be reduced by a material amount over the next twelve month period, as it does not expect to settle any potential disputed items with the appropriate taxing authorities nor does it expect the statute of limitations to expire for any items. The Company is subject to U.S. federal income tax, as well as to income tax of multiple state and foreign tax jurisdictions. On a global basis, the open tax years subject to examination by major taxing jurisdictions in which the Company operates is between two to six years. |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended |
Jan. 02, 2021 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | 7. SHARE BASED COMPENSATION The Company is currently authorized to issue up to 188,889 shares for equity awards under the Company's 2012 Incentive Compensation Plan (as amended, “2012 Plan”). Periodically, the Company may also grant equity awards outside of its 2012 Plan as inducement grants for new hires. The Company was authorized to issue up to 333,334 shares for equity awards under its 2006 Performance Equity Plan (“2006 Plan”). In March 2017, the 2006 Plan expired and no additional equity awards can be granted under the 2006 Plan. Under the 2012 Plan, awards may be granted to participants in the form of non-qualified stock options, incentive stock options, restricted stock, deferred stock, restricted stock units and other stock-based awards. Subject to the provisions of the plans, awards may be granted to employees, officers, directors, advisors and consultants who are deemed to have rendered or are able to render significant services to the Company or its subsidiaries and who are deemed to have contributed or to have the potential to contribute to the Company’s success. The Company accounts for options under the fair value recognition standard. The application of this standard resulted in share-based compensation expense for the twelve months ended January 2, 2021 and December 28, 2019 of $253 and $319, respectively. Share based compensation expense is included in selling, general and administrative expenses. As of January 2, 2021, there are 64,776 shares available to grant under the 2012 Plan. Stock Options The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the table below. The Company uses the simplified method to estimate the expected term of the options for grants of “plain vanilla” stock options as prescribed by the Securities and Exchange Commission. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Share-based compensation expense recognized in the consolidated financial statements in fiscal 2019 and 2018 is based on awards that are ultimately expected to vest. The following table summarizes the weighted average assumptions used for options granted during the fiscal years ended January 2, 2021 and December 28, 2019. Fiscal Fiscal 2020 2019 Expected life (in years) 4.7 5.0 Risk-free interest rate 0.3 % 2.3 % Volatility 98.9 % 64.2 % Dividend yield 0.0 % 0.0 % Forfeiture rate 26.5 % 24.2 % The weighted‑average grant date fair value of options granted during the year ended January 2, 2021 was $2.61 per share. The weighted‑average grant date fair value of options granted during the year ended December 28, 2019 was $3.42 per share. A summary of the status of the Company’s options as of January 2, 2021 and changes during the year then ended is presented below: Number Of Weighted-Average Shares Exercise Price Outstanding at beginning of year 101,390 $ 14.35 Granted 21,433 $ 3.65 Exercised or released (1,474) $ 7.53 Canceled or forfeited (60,265) $ 14.03 Expired (445) $ 70.11 Outstanding at end of year 60,639 $ 10.63 Options exercisable at January 2, 2021 28,175 $ 16.37 Outstanding stock options vested and expected to vest as of January 2, 2021 is 50,094. The intrinsic value of options exercised totaled was $13 and $0 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. The following table summarizes information about stock options at January 2, 2021: Options Outstanding Options Exercisable Weighted Weighted Remaining Average Remaining Average Range of Number Contractual Exercise Number Contractual Exercise Exercise Prices Outstanding Life (years) Price Exercisable Life Price $3.51 - $6.00 19,071 8.4 $ 3.65 139 8.6 $ 3.51 $6.01 - $9.00 16,154 8.0 $ 6.66 5,927 7.8 $ 6.86 $9.01 - $18.00 16,536 6.1 $ 14.89 13,231 6.0 $ 15.02 $18.01 - $32.00 8,209 5.0 $ 22.26 8,209 5.0 $ 22.26 $32.01 - $66.96 669 0.6 $ 57.72 669 0.6 $ 57.72 60,639 7.1 $ 10.63 28,175 5.9 $ 16.37 The aggregate intrinsic value of options outstanding and exercisable at January 2, 2021 and December 28, 2019 are $73 and $0, respectively. As of January 2, 2021, there was approximately $48 of unrecognized compensation cost related to non‑vested stock option awards, which is expected to be recognized over a remaining weighted‑average vesting period of 2.5 years. Restricted Stock Awards Restricted stock awards require no payment from the grantee. The related compensation cost of each award is calculated using the market price on the grant date and is expensed equally over the vesting period. A summary of restricted stock awards made in the year ended January 2, 2021, is as follows: Number of Grant Date Shares Fair Value Non-vested restricted stock awards as of December 28, 2019 22,410 $ 10.78 Granted 25,202 $ 9.14 Vested and released (20,453) $ 11.02 Forfeited (12,192) $ 9.56 Non-vested restricted stock awards as of January 2, 2021 14,967 $ 8.68 As of January 2, 2021, there was approximately $57 of unrecognized compensation cost related to non‑vested stock compensation arrangements granted under the Company’s stock incentive plan for restricted stock awards. That cost is expected to be recognized over the next 2.5 years. On March 13, 2020, the Company completed a 1-for-9 reverse stock split reducing the outstanding common shares to 2,108,743. Transactions that occurred prior to the completion of the reverse stock split had the effect of being divided by nine. |
PROFIT SHARING PLAN
PROFIT SHARING PLAN | 12 Months Ended |
Jan. 02, 2021 | |
PROFIT SHARING PLAN | |
PROFIT SHARING PLAN | 8. PROFIT SHARING PLAN Summer Infant (USA), Inc. maintains a defined contribution salary deferral plan under Section 401(k) of the Internal Revenue Code. All employees who meet the plan’s eligibility requirements can participate. Employees may elect to make contributions up to federal limitations. In 2007, the Company adopted a matching plan which was further amended in 2013, and which was funded throughout the year. For the years ended January 2, 2021 and December 28, 2019, the Company recorded 401(k) matching expense of $278 and $311, respectively. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Jan. 02, 2021 | |
MAJOR CUSTOMERS | |
MAJOR CUSTOMERS | 9. MAJOR CUSTOMERS Sales to the Company’s top seven customers together comprised approximately 87% of our sales in fiscal 2020 and 81% of our sales in fiscal 2019. Of these customers, three generated more than 10% of sales for fiscal 2020: Amazon.com (33%), Walmart (28%), and Target (17%). In fiscal 2019, three customers generated more than 10% of sales: Amazon.com (26%), Walmart (25%), and Target (17%). |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jan. 02, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES Leases The Company leases office space and distribution centers primarily related to its United States, Canada, United Kingdom, and Hong Kong operations. In connection with these leases, there were no cash incentives from the landlord to be used for the construction of leasehold improvements within the facility. In May 2020, the Company entered into a lease agreement amendment related to our headquarters in Woonsocket, Rhode Island. The agreement decreased the leased premises square footage and extended the current term, which was set to end in March 2021 prior to the amendment to June 2025. It additionally granted two 5-year term extension options. The Company was accounting for the lease in Woonsocket as a sale-leaseback with the building on the balance sheet as property and equipment, net and a corresponding financing obligation in long-term liabilities. Upon the execution of the lease amendment, the Company re-assessed the classification of the lease and determined it to be an operating lease, as the criteria for a sale had been met. As part of this re-classification, the Company derecognized the financing obligation of $2,390 from long-term liabilities and the amount related to the property and equipment, net of $2,357 from the balance sheet and recorded a ROU asset and lease liability of $1,457 respectively. The Company did not include either of the term extension options in the calculation of the ROU asset and lease liability. In April 2020, the Company entered into a twelve-month sublease agreement for a portion of the distribution warehouse located in Riverside, California. Fixed sublease payments received are recognized on a straight-line basis over the sublease term in general and administrative expenses. In February 2021, Summer USA extended its lease at its Riverside, California distribution center. The existing lease was set to expire on September 30, 2021 and has been extended for 61 months through October 31, 2026. The Company has not included this lease extension in the calculation of ROU asset and lease liability as of January 2, 2021 because it was not reasonably certain that we would be extending this lease until on or around the date that we entered into this agreement. The Company identified and assessed the following significant assumptions in recognizing the right-of-use asset and corresponding liabilities: · Expected lease term— The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. These leases have remaining lease terms between 0.75 and 4.5 years. The Woonsocket lease has two 5-year extension options and the Canada lease has one 5-year extension option that have not been included in the lease term. · Incremental borrowing rate —The Company’s lease agreements do not provide an implicit rate. As the Company does not have any external borrowings for comparable terms of its leases, the Company estimated the incremental borrowing rate based on secured borrowings available to the Company for the next 5 years. This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. · Lease and non - lease components— In certain cases the Company is required to pay for certain additional charges for operating costs, including insurance, maintenance, taxes, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage. The Company determined that these costs are non-lease components and they are not included in the calculation of the lease liabilities because they are variable. Payments for these variable, non-lease components are considered variable lease costs and are recognized in the period in which the costs are incurred. The components of the Company’s lease expense for the years ended January 2, 2021 and December 28, 2019 were as follows: Year Ended Year Ended January 2, 2021 December 28, 2019 Operating lease cost $ 2,710 $ 2,499 Variable lease cost 1,057 1,152 Less: sublease income (749) — Total lease expense $ 3,018 $ 3,651 Weighted-average remaining lease term 1.2 years 2.1 years Weighted-average discount rate: 5.00 % 5.00 % Cash paid for amounts included in the measurement of the Company’s lease liabilities were $2,911 and $2,613 for the years ended January 2, 2021 and December 28, 2019 respectively. As of January 2, 2021, the present value of maturities of the Company’s operating lease liabilities were as follows: Fiscal Year Ending: 2021 $ 2,477 2022 642 2023 476 2024 325 2025 163 Less imputed interest (241) Total $ 3,842 The future fixed sublease receipts under non-cancelable operating lease agreements as of January 2, 2021 are as follows: Fiscal Year Ending: 2021 $ 250 Thereafter — Total $ 250 Employment Contracts In accordance with applicable local law, Summer Infant Europe Limited is required to have employment contracts with all of its employees. In connection with these contracts, Summer Infant Europe Limited makes individual pension contributions to certain employees at varying rates from 1-7% of the employee’s annual salary, as part of their total compensation package. These pension contributions are expensed as incurred. There are no termination benefit provisions in these contracts. Litigation The Company is a party to routine litigation and administrative complaints incidental to its business. The Company does not believe that the resolution of any or all of such current routine litigation and administrative complaints is likely to have a material adverse effect on the Company’s financial condition or results of operations. |
GEOGRAPHICAL INFORMATION
GEOGRAPHICAL INFORMATION | 12 Months Ended |
Jan. 02, 2021 | |
GEOGRAPHICAL INFORMATION | |
GEOGRAPHICAL INFORMATION | 11. GEOGRAPHICAL INFORMATION The Company sells products throughout the United States, Canada, and the United Kingdom, and various other parts of the world. The Company does not disclose product line revenues as it is not practicable for the Company to do so. The following is a table that presents net revenue by geographic area: For the fiscal year ended January 2, December 28, 2021 2019 United States $ 140,173 $ 148,326 All Other 15,126 24,855 $ 155,299 $ 173,181 The following is a table that presents total assets by geographic area: January 2, December 28, 2021 2019 United States $ 70,689 $ 80,693 All Other 4,048 10,850 $ 74,737 $ 91,543 The following is a table that presents total long-lived assets by geographic area: January 2, December 28, 2021 2019 United States $ 19,983 $ 24,804 All Other 1,276 2,555 $ 21,259 $ 27,359 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jan. 02, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS The Company has evaluated all events or transactions that occurred after January 2, 2021 through the date of this Annual Report on Form 10-K and does not have any disclosures here except as previously disclosed in Note 10, Commitments and Contingencies, relating to the extension of our lease agreement at our Riverside, California distribution center. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jan. 02, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Revenue Recognition | Revenue Recognition The Company applies FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance sets forth a five-step revenue recognition model and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company's principal activities from which it generates its revenue is product sales. The Company has one reportable segment of business. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer when product delivery occurs. Consideration is typically paid approximately 60 days from the time control is transferred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in selling costs. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of juvenile products to its customers. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. A transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. The Company conducts its business with customers through valid purchase or sales orders each of which is considered a separate contract because individual orders are not interdependent on one another. Product transaction prices on a purchase or sale order are discrete and stand-alone. Purchase or sales orders may be issued under either a customer master service agreement or a reseller allowance agreement. Purchase or sales orders, master service agreements, and reseller allowance agreements which are specific and unique to each customer, may include product price discounts, markdown allowances, return allowances, and/or volume rebates which reduce the consideration due from customers. Variable consideration is estimated using the most likely amount method, which is based on our historical experience as well as current information such as sales forecasts. Contracts may also include cooperative advertising arrangements where the Company allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company's products. These allowances are generally based upon product purchases or specific advertising campaigns. Such allowances are accrued when the related revenue is recognized. These cooperative advertising arrangements provide a distinct benefit and fair value and are accounted for as direct selling expenses. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Accordingly, actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash flows, cash and cash equivalents include money market accounts and investments with an original maturity of three months or less. At times, the Company possesses cash balances in excess of federally-insured limits. |
Trade Receivables | Trade Receivables Trade receivables are carried at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Amounts are considered to be uncollectable based upon historical experience and management’s evaluation of outstanding accounts receivable. Changes in the allowance for doubtful accounts are as follows: For the fiscal year ended January 2, December 28, 2021 2019 Allowance for doubtful accounts, beginning of period $ 542 $ 304 Charges to (recovery of) costs and expenses (27) 316 Account write-offs and other (318) (78) Allowance for doubtful accounts, end of period $ 197 $ 542 |
Inventory Valuation | Inventory Valuation Inventory is comprised mostly of finished goods and some component parts and is stated at the lower of cost using the first-in, first-out (FIFO) method, or net realizable value. The Company regularly reviews slow-moving and excess inventories, and writes down inventories to net realizable value if the ultimate expected net proceeds from the disposals of excess inventory are less than the carrying cost of the merchandise. |
Leases | Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company’s uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components to which the Company has elected to apply the practical expedient and account for each lease component and related non-lease component as one single component. The lease component results in a ROU asset being recorded on the balance sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. The Company owns the tools and molds used in the production of its products by third party manufacturers. Capitalized mold costs include costs incurred for the pre‑production design and development of the molds. Depreciation is provided over the estimated useful lives of the respective assets using the straight‑line method. |
Long-Lived Assets with Finite Lives | Long‑Lived Assets with Finite Lives The Company reviews long‑lived assets with finite lives for impairment on an asset group level whenever events or changes in circumstances indicate that the carrying amount of a long‑lived asset may not be recoverable. An asset is considered to be impaired when its carrying amount exceeds both the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition and the assets’ fair value. Long‑lived assets include property and equipment and finite‑lived intangible assets. The amount of impairment loss, if any, is charged by the Company to current operations. |
Indefinite-Lived Intangible Assets | Indefinite‑Lived Intangible Assets The Company accounts for intangible assets in accordance with accounting guidance that requires that intangible assets with indefinite useful lives be tested annually for impairment and more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company’s annual impairment testing is conducted in the fourth quarter of every year. The Company tests indefinite‑lived intangible assets for impairment by comparing the asset’s fair value to its carrying amount. If the fair value is less than the carrying amount, the excess of the carrying amount over fair value is recognized as an impairment charge and the adjusted carrying amount becomes the assets’ new cost basis. Management also evaluates the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is subsequently determined to have a finite useful life, it is amortized prospectively over its estimated remaining useful life. |
Fair Value Measurements | Fair Value Measurements The Company follows ASC 820, “Fair Value Measurements and Disclosures” which includes a framework for measuring fair value and expanded related disclosures. Broadly, the framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The standard established a three‑level valuation hierarchy based upon observable and non‑observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‑derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3—Significant inputs to the valuation model are unobservable. The Company maintains policies and procedures to value instruments using the best and most relevant data available. In addition, the Company utilizes third party specialists that review valuation, including independent price validation. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and short and long-term borrowings. Because of their short maturity, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value. The carrying value of the Company’s debt approximates fair value since the stated rate is similar to rates currently available to the Company for debt with similar terms and remaining maturities. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets and finite-lived intangibles. The Company tests its indefinite-lived assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the carrying value may exceed its fair value. The resulting fair value measurements are considered to be Level 3 inputs. During the fourth quarter of fiscal 2020, the Company determined that the estimated fair value of a definite-lived asset was non-recoverable and the Company recorded a non-cash impairment charge of $676 which reduced the value of the intangible asset to $0, as more fully described in “Note 4 to the Consolidated Financial Statements-Intangible Assets.” The Company did not record an impairment charge in fiscal 2019. |
Income taxes | Income taxes Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, it is more likely than not that such benefits will be realized. Deferred income tax assets are recorded on a net basis as a long term asset. The Company follows the applicable guidance relative to uncertain tax positions. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Uncertain tax positions must meet a recognition threshold of more-likely-than-not in order for those tax positions to be recognized in the financial statements. |
Translation of Foreign Currencies | Translation of Foreign Currencies Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is its local currency, are translated into U.S. dollars at the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been translated at average rates prevailing during each respective quarter. Resulting translation adjustments are made to a separate component of stockholders’ equity within accumulated other comprehensive loss. Assets and liabilities of the Company’s foreign subsidiaries whose functional currency is the U.S. dollar are remeasured into U.S. dollars at their historical rates or the exchange rate in effect at the end of the quarter and the income and expense accounts of these affiliates have been remeasured at average rates prevailing during each respective quarter. Resulting remeasurement adjustments are made to the consolidated statement of operations. Foreign exchange transaction gains and losses are included in the accompanying interim consolidated statement of operations. |
Shipping Costs | Shipping Costs Shipping costs to customers are included in selling expenses and amounted to approximately $2,485 and $3,509 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. |
Advertising Costs | Advertising Costs The Company charges advertising costs to selling expense as incurred. Advertising expense, which consists primarily of promotional and cooperative advertising allowances provided to customers, was approximately $9,215 and $10,379 for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. |
Segment Information | Segment Information Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment utilizing an omni-channel distribution strategy. |
Net Income/Loss Per Share | Net Income/Loss Per Share Basic income or loss per share for the Company is computed by dividing net income or loss by the weighted-average number of shares of common stock outstanding during the period. Diluted income or loss per share includes the dilutive impact of outstanding stock options and unvested restricted shares. Diluted income/loss per share for the Company is computed by dividing net income/loss by the dilutive weighted average shares outstanding which includes: the dilutive impact (using the “treasury stock” method) of “in the money” stock options and unvested restricted shares issued to employees. Options to purchase 52,272 and 101,320 shares of the Company’s common stock and 9,662 and 22,392 of restricted shares were not included in the calculation, due to the fact that these instruments were anti‑dilutive for the fiscal years ended January 2, 2021 and December 28, 2019, respectively. |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize most leases on their balance sheet as a right-of-use asset and a lease liability. Leases are classified as either operating or finance, and classification is based on criteria similar to past lease accounting, but without explicit bright lines. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard, and ASU No. 2018-11, “Leases (Topic 842)—Targeted Improvements” (ASU 2018-11), which addresses implementation issues related to the new lease standard. The guidance became effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. The Company adopted the standard on the effective date of December 30, 2018 by applying the new lease requirements at the effective date. The Company also elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allows the Company to carry forward the historical lease classification. The impact of the adoption of ASC 842-Leases (“ASC 842”) on the consolidated balance sheet on the date of adoption was an increase of $6,411 in assets and an increase of $7,037 of liabilities for the recognition of right-of-use assets and lease liabilities. The adoption of ASC 842 was immaterial to the consolidated results of operations and cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and a subsequent amendment to the initial guidance, ASU 2018-19 Codification Improvements to Topic 325, Financial Instruments-Credit Losses (collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held, which include, but are not limited to, trade and other receivables. The new standard is effective for fiscal years beginning after December, 15, 2022. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. |
2021 Plan and COVID-19 Pandemic | 2021 Plan and COVID-19 Pandemic The Company believes that its existing plan will generate sufficient cash which, along with its existing cash and availability under its facilities, will enable it to fund operations through at least the next 12 months. However, should the Company require additional cash, or should the impact from the COVID-19 pandemic discussed below be more severe than expected, the Company would identify other cost reductions or seek additional resources. Beginning in the first quarter of 2020, the COVID-19 pandemic negatively impacted the macroeconomic environment in the United States and globally, and the Company’s business. While our products are considered “essential” and our distribution center located in California continues to operate, some of our customers have been impacted and we have and may continue to see supply chain disruption. The ultimate impact of the COVID-19 pandemic will depend on numerous evolving factors that the Company may not be able to accurately predict, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and other economic and operational conditions the Company may face. The Company is not currently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update any estimates, judgments or materially revise the carrying value of our assets or liabilities. The Company’s estimates may change, however, as events evolve and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of changes in the allowance for doubtful accounts | For the fiscal year ended January 2, December 28, 2021 2019 Allowance for doubtful accounts, beginning of period $ 542 $ 304 Charges to (recovery of) costs and expenses (27) 316 Account write-offs and other (318) (78) Allowance for doubtful accounts, end of period $ 197 $ 542 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
REVENUE | |
Schedule of net sales by geographical area | For the fiscal year ended January 2, December 28, 2021 2019 United States $ 140,173 $ 148,326 All Other 15,126 24,855 $ 155,299 $ 173,181 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment, at cost | For the fiscal year ended January 2, December 28, Depreciation/ 2021 2019 Amortization Period Computer-related $ 4,560 $ 4,511 5 years Tools, dies, prototypes, and molds 27,849 27,457 1 - 5 years Building — 4,156 30 years Other 7,671 7,474 1 - 15 years 40,080 43,598 Less: accumulated depreciation 35,291 34,810 Property and equipment, net $ 4,789 $ 8,788 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | For the fiscal year ended January 2, December 28, 2021 2019 Brand names $ 10,900 $ 11,819 Patents and licenses 4,125 4,101 Customer relationships 6,946 6,946 Other intangibles 1,882 1,882 23,853 24,748 Less: accumulated amortization (12,114) (11,852) Intangible assets, net $ 11,739 $ 12,896 |
Estimated amortization expense for the remaining definite-lived assets for the next five years | Estimated amortization expense for the remaining definite-lived assets for the next five years is as follows: Fiscal Year ending 2021 438 2022 438 2023 438 2024 438 2025 434 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
DEBT | |
Schedule of aggregate maturities of the Loan Agreement and the PPP Loan | Aggregate maturities of bank debt related to the Loan Agreement and the PPP Loan are as follows: Fiscal Year ending: 2021 2,223 2022 1,985 2023 2,516 2024 2,516 2025 and beyond 23,652 Total $ 32,892 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
INCOME TAXES | |
Schedule of provision (benefit) for income taxes | Fiscal 2020 Fiscal 2019 Current: Federal $ 108 $ — Foreign 2 — State and local 2 11 Total current 112 11 Deferred: Federal (5) $ 683 Foreign 6 222 State and local 4 179 Total deferred 5 1,084 Total provision $ 117 $ 1,095 |
Schedule of tax effects of temporary differences that comprise the deferred tax liabilities and assets | January 2, December 28, 2021 2019 Deferred tax assets: Accounts receivable $ 51 $ 53 Inventory and Uniform Capitalization reserve 475 506 Interest deduction limitation 1,643 1,880 Lease Liability and accrued expenses 806 1,093 Research and development credit 2,292 2,547 Foreign tax credit 795 795 Net operating loss carry-forward 2,565 2,256 Total deferred tax assets 8,627 9,130 Deferred tax liabilities: Intangible assets and other (2,132) (2,099) ROU Assets and deferred rent (833) (1,036) Property, plant and equipment 28 (54) Total deferred tax liabilities (2,937) (3,189) Valuation allowance (4,689) (4,945) Deferred tax liabilities and valuation allowance (7,626) (8,134) Net deferred income tax asset $ 1,001 $ 996 |
Schedule of reconciliation of the benefit for income taxes at the U.S. federal income tax statutory rate to the benefit in the consolidated financial statements | Fiscal 2020 Fiscal 2019 Tax benefit at statutory rate $ (207) $ (644) State income taxes, net of U.S. federal income tax benefit 5 150 Adjustment to uncertain tax position 7,543 — Stock options 5 17 Foreign tax rate differential 2 (5) Tax credits 258 312 Worthless stock deduction (7,435) — Non-deductible expenses 149 117 Expiration of unexercised stock options 90 191 Increase/(Decrease) in valuation allowance (255) 927 Other (38) 30 Total provision $ 117 $ 1,095 |
Schedule of the Company's adjustment to its uncertain tax positions | January 2, December 28, 2021 2019 Balance, at beginning of the year $ — $ — Increase for tax positions related to the current year 7,543 — Balance, at end of year $ 7,543 $ — |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
SHARE BASED COMPENSATION | |
Summary of weighted average assumptions used for stock options granted | Fiscal Fiscal 2020 2019 Expected life (in years) 4.7 5.0 Risk-free interest rate 0.3 % 2.3 % Volatility 98.9 % 64.2 % Dividend yield 0.0 % 0.0 % Forfeiture rate 26.5 % 24.2 % |
Summary of status of the Company's options and changes during the period | Number Of Weighted-Average Shares Exercise Price Outstanding at beginning of year 101,390 $ 14.35 Granted 21,433 $ 3.65 Exercised or released (1,474) $ 7.53 Canceled or forfeited (60,265) $ 14.03 Expired (445) $ 70.11 Outstanding at end of year 60,639 $ 10.63 Options exercisable at January 2, 2021 28,175 $ 16.37 |
Summary of stock options, by range of exercise prices | The following table summarizes information about stock options at January 2, 2021: Options Outstanding Options Exercisable Weighted Weighted Remaining Average Remaining Average Range of Number Contractual Exercise Number Contractual Exercise Exercise Prices Outstanding Life (years) Price Exercisable Life Price $3.51 - $6.00 19,071 8.4 $ 3.65 139 8.6 $ 3.51 $6.01 - $9.00 16,154 8.0 $ 6.66 5,927 7.8 $ 6.86 $9.01 - $18.00 16,536 6.1 $ 14.89 13,231 6.0 $ 15.02 $18.01 - $32.00 8,209 5.0 $ 22.26 8,209 5.0 $ 22.26 $32.01 - $66.96 669 0.6 $ 57.72 669 0.6 $ 57.72 60,639 7.1 $ 10.63 28,175 5.9 $ 16.37 |
Schedule of non-vested activity - Restricted Stock Awards | Number of Grant Date Shares Fair Value Non-vested restricted stock awards as of December 28, 2019 22,410 $ 10.78 Granted 25,202 $ 9.14 Vested and released (20,453) $ 11.02 Forfeited (12,192) $ 9.56 Non-vested restricted stock awards as of January 2, 2021 14,967 $ 8.68 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of lease expense | The components of the Company’s lease expense for the years ended January 2, 2021 and December 28, 2019 were as follows: Year Ended Year Ended January 2, 2021 December 28, 2019 Operating lease cost $ 2,710 $ 2,499 Variable lease cost 1,057 1,152 Less: sublease income (749) — Total lease expense $ 3,018 $ 3,651 Weighted-average remaining lease term 1.2 years 2.1 years Weighted-average discount rate: 5.00 % 5.00 % |
Schedule of maturities of the operating lease liabilities | As of January 2, 2021, the present value of maturities of the Company’s operating lease liabilities were as follows: Fiscal Year Ending: 2021 $ 2,477 2022 642 2023 476 2024 325 2025 163 Less imputed interest (241) Total $ 3,842 |
Schedule of future fixed sublease receipts under non-cancelable operating lease agreements | The future fixed sublease receipts under non-cancelable operating lease agreements as of January 2, 2021 are as follows: Fiscal Year Ending: 2021 $ 250 Thereafter — Total $ 250 |
GEOGRAPHICAL INFORMATION (Table
GEOGRAPHICAL INFORMATION (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
GEOGRAPHICAL INFORMATION | |
Schedule of net revenue by geographic area | The following is a table that presents net revenue by geographic area: For the fiscal year ended January 2, December 28, 2021 2019 United States $ 140,173 $ 148,326 All Other 15,126 24,855 $ 155,299 $ 173,181 |
Schedule of total assets by geographic area | The following is a table that presents total assets by geographic area: January 2, December 28, 2021 2019 United States $ 70,689 $ 80,693 All Other 4,048 10,850 $ 74,737 $ 91,543 |
Schedule of total long lived assets by geographic area | The following is a table that presents total long-lived assets by geographic area: January 2, December 28, 2021 2019 United States $ 19,983 $ 24,804 All Other 1,276 2,555 $ 21,259 $ 27,359 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | Mar. 13, 2020 | Jan. 02, 2021USD ($) | Jan. 02, 2021USD ($)segmentshares | Dec. 28, 2019USD ($)shares |
Fiscal Year | ||||
Fiscal Period Duration | 371 days | 364 days | ||
Revenue Recognition | ||||
Number of reportable segments | segment | 1 | |||
Days in accounts receivable | P60D | |||
Changes in the allowance for doubtful accounts | ||||
Allowance for doubtful accounts, beginning of period | $ 542 | $ 304 | ||
Charges to (recovery of) costs and expenses | (27) | 316 | ||
Account write-offs and other | (318) | (78) | ||
Allowance for doubtful accounts, end of period | $ 197 | 197 | 542 | |
Fair Value Measurements | ||||
Amortization of definite-lived intangible assets | 676 | 676 | ||
Adjusted value of definite-lived intangible asset | 0 | $ 0 | ||
Segment Information | ||||
Number of operating segments | segment | 1 | |||
Net Income/Loss Per Share | ||||
Reverse stock split | 0.1111 | |||
New Accounting Pronouncements | ||||
ROU asset | 3,625 | $ 3,625 | $ 4,578 | |
Operating Lease, Liability | 3,842 | 3,842 | ||
2016-02 | Adjustment | ||||
New Accounting Pronouncements | ||||
ROU asset | 6,411 | 6,411 | ||
Operating Lease, Liability | $ 7,037 | $ 7,037 | ||
Stock Options | ||||
Net Income/Loss Per Share | ||||
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares) | shares | 52,272 | 101,320 | ||
Restricted Stock Awards | ||||
Net Income/Loss Per Share | ||||
Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares) | shares | 9,662 | 22,392 | ||
Selling expenses | ||||
Shipping costs and Advertising costs | ||||
Shipping costs | $ 2,485 | $ 3,509 | ||
Advertising costs | $ 9,215 | $ 10,379 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Net sales by geographical area | ||
Net sales | $ 155,299 | $ 173,181 |
Election of practical expedient, incremental cost of obtaining contracts | true | |
United States | ||
Net sales by geographical area | ||
Net sales | $ 140,173 | 148,326 |
All Other | ||
Net sales by geographical area | ||
Net sales | $ 15,126 | $ 24,855 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) $ in Thousands | 12 Months Ended | |||
Jan. 02, 2021USD ($)Options | Dec. 28, 2019USD ($) | May 31, 2020USD ($) | May 01, 2020USD ($) | |
PROPERTY AND EQUIPMENT | ||||
Property and equipment, gross | $ 40,080 | $ 43,598 | ||
Less: accumulated depreciation | 35,291 | 34,810 | ||
Property and equipment, net | 4,789 | 8,788 | ||
Total depreciation expense | 2,847 | 2,982 | ||
ROU asset | $ 3,625 | 4,578 | ||
Woonsocket, RI | ||||
PROPERTY AND EQUIPMENT | ||||
Number of options to extend | Options | 2 | |||
Extension term | 5 years | |||
ROU asset | $ 1,457 | |||
Adjustments resulting from lease amendment agreement | ||||
PROPERTY AND EQUIPMENT | ||||
Property and equipment, net | $ (2,357) | |||
ROU asset | $ 1,457 | |||
Computer-related | ||||
PROPERTY AND EQUIPMENT | ||||
Property and equipment, gross | $ 4,560 | $ 4,511 | ||
Depreciation/Amortization Period | 5 years | 5 years | ||
Tools, dies, prototypes, and molds | ||||
PROPERTY AND EQUIPMENT | ||||
Property and equipment, gross | $ 27,849 | $ 27,457 | ||
Tools, dies, prototypes, and molds | Minimum | ||||
PROPERTY AND EQUIPMENT | ||||
Depreciation/Amortization Period | 1 year | 1 year | ||
Tools, dies, prototypes, and molds | Maximum | ||||
PROPERTY AND EQUIPMENT | ||||
Depreciation/Amortization Period | 5 years | 5 years | ||
Building | ||||
PROPERTY AND EQUIPMENT | ||||
Property and equipment, gross | $ 4,156 | |||
Depreciation/Amortization Period | 30 years | 30 years | ||
Other | ||||
PROPERTY AND EQUIPMENT | ||||
Property and equipment, gross | $ 7,671 | $ 7,474 | ||
Other | Minimum | ||||
PROPERTY AND EQUIPMENT | ||||
Depreciation/Amortization Period | 1 year | 1 year | ||
Other | Maximum | ||||
PROPERTY AND EQUIPMENT | ||||
Depreciation/Amortization Period | 15 years | 15 years | ||
Property and equipment acquired under capital leases | ||||
PROPERTY AND EQUIPMENT | ||||
Property and equipment, gross | $ 0 | $ 589 | ||
Less: accumulated depreciation | $ 0 | $ 115 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jan. 02, 2021 | Jan. 02, 2021 | Dec. 28, 2019 | |
INTANGIBLE ASSETS | |||
Intangible assets, gross | $ 23,853 | $ 23,853 | $ 24,748 |
Less: Accumulated amortization | (12,114) | (12,114) | (11,852) |
Intangible assets, net | 11,739 | 11,739 | 12,896 |
Amortization expense | 501 | 738 | |
Amortization of definite-lived intangible assets | 676 | 676 | |
Intangibles not subject to amortization | 8,400 | 8,400 | 8,400 |
Impairment of intangible assets | 0 | $ 0 | |
Estimated future amortization expense | |||
2021 | 438 | 438 | |
2022 | 438 | 438 | |
2023 | 438 | 438 | |
2024 | 438 | 438 | |
2025 | 434 | $ 434 | |
Minimum | |||
INTANGIBLE ASSETS | |||
Amortization period of intangible assets | 5 years | 5 years | |
Maximum | |||
INTANGIBLE ASSETS | |||
Amortization period of intangible assets | 20 years | 20 years | |
Patents and licenses | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | 4,125 | $ 4,125 | $ 4,101 |
Customer relationships | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | 6,946 | 6,946 | 6,946 |
Other intangibles | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | 1,882 | 1,882 | 1,882 |
Brand names | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | $ 10,900 | $ 10,900 | $ 11,819 |
DEBT - Loan Agreement with Bank
DEBT - Loan Agreement with Bank of America (Details) - USD ($) $ in Thousands | Jun. 28, 2018 | Jan. 02, 2021 | Oct. 15, 2020 |
FILO Facility | |||
DEBT | |||
Maximum borrowing capacity | $ 2,344 | ||
FILO Facility | LIBOR | |||
DEBT | |||
Interest rate during the period | 3.625% | ||
FILO Facility | Base rate | |||
DEBT | |||
Interest rate during the period | 5.50% | ||
Term Loan Facility | |||
DEBT | |||
Amount outstanding | $ 7,125 | ||
Term Loan Facility | LIBOR | |||
DEBT | |||
Interest rate during the period | 3.875% | ||
Term Loan Facility | Base rate | |||
DEBT | |||
Interest rate during the period | 5.75% | ||
Restated Bank of America Agreement | |||
DEBT | |||
Amount outstanding | $ 21,467 | ||
Borrowing capacity | 32,628 | ||
Borrowing availability | 11,161 | ||
Restated Bank of America Agreement | Credit Facility | |||
DEBT | |||
Amount outstanding | 21,467 | ||
Borrowing capacity | 32,628 | ||
Borrowing availability | $ 11,161 | ||
Restated Bank of America Agreement | Credit Facility | LIBOR | |||
DEBT | |||
Interest rate during the period | 2.625% | ||
Restated Bank of America Agreement | Credit Facility | Base rate | |||
DEBT | |||
Interest rate during the period | 4.50% | ||
Restated Bank of America Agreement | Revolving Facility | |||
DEBT | |||
Maximum borrowing capacity | $ 40,000 | ||
Borrowing base as a percentage of eligible receivables | 85.00% | ||
Borrowing base as a percentage of eligible inventory | 70.00% | ||
Borrowing base as a percentage of net orderly liquidation value of eligible inventory and less reserves | 85.00% | ||
Restated Bank of America Agreement | Revolving Facility | LIBOR | |||
DEBT | |||
Interest rate during the period | 2.625% | ||
Restated Bank of America Agreement | Letter of credit sub-line facility | |||
DEBT | |||
Maximum borrowing capacity | $ 5,000 | ||
Restated Bank of America Agreement | FILO Facility | |||
DEBT | |||
Maximum borrowing capacity | 2,500 | ||
Restated Bank of America Agreement | Term Loan Facility | |||
DEBT | |||
Maximum borrowing capacity | $ 7,500 | ||
Prior Credit Facility | Revolving Facility | |||
DEBT | |||
Borrowing base as a percentage of eligible receivables | 85.00% | ||
Borrowing base as a percentage of eligible inventory | 70.00% | ||
Borrowing base as a percentage of net orderly liquidation value of eligible inventory and less reserves | 85.00% | ||
Prior Credit Facility | Letter of credit sub-line facility | |||
DEBT | |||
Maximum borrowing capacity | $ 5,000 |
DEBT - Term Loan Agreement (Det
DEBT - Term Loan Agreement (Details) $ in Thousands | Jun. 28, 2018USD ($) | Jan. 02, 2021USD ($) |
DEBT | ||
Loss from extinguishment of debt | $ (1,800) | |
Term Loan | ||
DEBT | ||
Quarterly basis installment amount | $ 219 | $ 375 |
Face amount of loan | $ 17,500 | |
Term Loan | Minimum | ||
DEBT | ||
Fixed charge coverage ratio at the end of each fiscal month | 1 | |
Threshold availability to maintain minimum fixed charge coverage ratio | $ 5,000 | |
FILO Facility | LIBOR | ||
DEBT | ||
Interest rate during the period | 3.625% | |
FILO Facility | Base rate | ||
DEBT | ||
Interest rate during the period | 5.50% |
DEBT - PPP Loan and Aggregate m
DEBT - PPP Loan and Aggregate maturities (Details) - USD ($) $ in Thousands | Aug. 03, 2020 | Jan. 02, 2021 | Dec. 28, 2019 |
Aggregate maturities of bank debt related to the Loan Agreement and the PPP Loan | |||
Unamortized debt issuance costs | $ 1,275 | $ 2,398 | |
Restated Bank of America Agreement | PPP Loan | |||
DEBT | |||
Loan proceeds | $ 1,956 | ||
Fixed rate interest | 1.00% | ||
Period for loan forgiveness | 10 months | ||
Aggregate maturities of bank debt related to the Loan Agreement and the PPP Loan | |||
2021 | 2,223 | ||
2022 | 1,985 | ||
2023 | 2,516 | ||
2024 | 2,516 | ||
2025 and beyond | 23,652 | ||
Total | 32,892 | ||
Restated Bank of America Agreement | PPP Loan | Other liabilities | |||
DEBT | |||
Loan proceeds | $ 1,956 |
DEBT - Sale Leaseback Transacti
DEBT - Sale Leaseback Transactions (Details) $ in Thousands | Jan. 22, 2018USD ($) | May 13, 2015USD ($)period | Mar. 24, 2009USD ($) | Dec. 28, 2019USD ($) | Jan. 02, 2021USD ($) | May 31, 2020item | May 01, 2020USD ($) |
Sale Leaseback Transaction [Line Items] | |||||||
Property and equipment, net | $ 8,788 | $ 4,789 | |||||
ROU asset | 4,578 | 3,625 | |||||
Lease liabilities, current | 2,495 | 2,349 | |||||
Lease liabilities, noncurrent | 2,546 | $ 1,493 | |||||
Adjustments resulting from lease amendment agreement | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Property and equipment, net | $ (2,357) | ||||||
ROU asset | 1,457 | ||||||
Lease liabilities, current | 264 | ||||||
Lease liabilities, noncurrent | $ 1,193 | ||||||
Operating Lease, Third Amendment | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Number of options to extend | item | 2 | ||||||
Extension term | 5 years | ||||||
Summer Infant (USA), Inc. | Faith Realty | Sale-leaseback definitive agreement | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Sale proceeds | $ 4,052 | ||||||
Repurchase price as a percentage of the initial sale price | 110.00% | ||||||
Summer Infant (USA), Inc. | Faith Realty | Sale-leaseback definitive agreement | Accrued expenses | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Lease obligation | 441 | ||||||
Summer Infant (USA), Inc. | Faith Realty | Sale-leaseback definitive agreement | Other liabilities | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Lease obligation | $ 2,000 | ||||||
Summer Infant (USA), Inc. | Faith Realty | Original Lease | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Annual rent | $ 390 | ||||||
Lease term | 7 years | ||||||
Summer Infant (USA), Inc. | Faith Realty | Amended Lease | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Annual rent | $ 429 | ||||||
Lease term | 2 years | ||||||
Leasehold improvement allowance | $ 78 | ||||||
Summer Infant (USA), Inc. | Faith Realty | Amended Lease, Optional Extension | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Annual rent | $ 468 | ||||||
Number of extensions | period | 1 | ||||||
Lease term | 3 years | ||||||
Prior notice required for extension | 12 months | ||||||
Leasehold improvement allowance | $ 234 | ||||||
Summer Infant (USA), Inc. | Faith Realty | Second Amendment | |||||||
Sale Leaseback Transaction [Line Items] | |||||||
Annual rent | $ 468 | ||||||
Lease term | 3 years |
INCOME TAXES - Tax Act (Details
INCOME TAXES - Tax Act (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Tax Cuts and Jobs Act | ||||
Federal statutory income tax rate | 21.00% | 35.00% | ||
Deferred tax asset, non-deductible interest | $ 1,643 | $ 1,880 |
INCOME TAXES - Income Tax Expen
INCOME TAXES - Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Current: | ||
Federal | $ 108 | |
Foreign | 2 | |
State and local | 2 | $ 11 |
Total current | 112 | 11 |
Deferred: | ||
Federal | (5) | 683 |
Foreign | 6 | 222 |
State and local | 4 | 179 |
Total deferred | 5 | 1,084 |
Total provision | $ 117 | $ 1,095 |
INCOME TAXES - Deferred Income
INCOME TAXES - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Deferred tax assets: | ||
Accounts receivable | $ 51 | $ 53 |
Inventory and Uniform Capitalization reserve | 475 | 506 |
Interest deduction limitation | 1,643 | 1,880 |
Lease Liability and accrued expenses | 806 | 1,093 |
Research and development credit | 2,292 | 2,547 |
Foreign tax credit | 795 | 795 |
Net operating loss carry-forward | 2,565 | 2,256 |
Total deferred tax assets | 8,627 | 9,130 |
Deferred tax liabilities: | ||
Intangible assets and other | (2,132) | (2,099) |
ROU Assets and deferred rent | (833) | (1,036) |
Property, plant and equipment | 28 | (54) |
Total deferred tax liabilities | (2,937) | (3,189) |
Valuation allowance | (4,689) | (4,945) |
Deferred tax liabilities and valuation allowance | (7,626) | (8,134) |
Net deferred income tax asset | $ 1,001 | $ 996 |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Effective Income Tax Rate Reconciliation | ||
Tax benefit at statutory rate | $ (207) | $ (644) |
State income taxes, net of U.S. federal income tax benefit | 5 | 150 |
Adjustment to uncertain tax position | 7,543 | |
Stock options | 5 | 17 |
Foreign tax rate differential | 2 | (5) |
Tax credits | 258 | 312 |
Worthless stock deduction | (7,435) | |
Non-deductible expenses | 149 | 117 |
Expiration of unexercised stock options | 90 | 191 |
Increase/(Decrease) in valuation allowance | (255) | 927 |
Other | (38) | 30 |
Total provision | 117 | $ 1,095 |
Worthless stock deducted for income tax purposes | $ 26,933 |
INCOME TAXES - NOL Carryforward
INCOME TAXES - NOL Carryforwards and Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Net operating loss carryforwards | ||
Valuation Allowance | $ 4,689 | $ 4,945 |
Writedown related to interest deduction limitations | 2,438 | 2,675 |
Accrued interest and penalties relating to uncertain tax positions | 0 | |
Reconciliation of Unrecognized Tax positions | ||
Balance, at beginning of the year | 0 | |
Increase for tax positions related to the current year | 7,543 | |
Balance, at end of year | $ 7,543 | 0 |
Minimum | ||
Net operating loss carryforwards | ||
Period subject to examination by major taxing jurisdictions | 2 years | |
Maximum | ||
Net operating loss carryforwards | ||
Period subject to examination by major taxing jurisdictions | 6 years | |
Federal and state | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | $ 3,807 | |
Foreign | Canada | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | 893 | |
Foreign | Australia | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | 304 | |
Foreign | Israel | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | 2,776 | |
Foreign | Asia | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | 644 | |
Foreign | United Kingdom | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | 2,165 | |
State and foreign | ||
Net operating loss carryforwards | ||
Valuation Allowance | $ 2,251 | $ 2,270 |
SHARE BASED COMPENSATION - Summ
SHARE BASED COMPENSATION - Summary of Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Mar. 31, 2017 | |
Selling, general and administrative expenses | |||
SHARE BASED COMPENSATION | |||
Share-based compensation expense | $ 253 | $ 319 | |
2006 Plan | |||
SHARE BASED COMPENSATION | |||
Number of shares authorized under the plan | 333,334 | ||
Shares available to grant | 0 | ||
2012 Plan | |||
SHARE BASED COMPENSATION | |||
Number of shares authorized under the plan | 188,889 | ||
Shares available to grant | 64,776 |
SHARE BASED COMPENSATION - Stoc
SHARE BASED COMPENSATION - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Weighted average assumptions | ||
Expected life (in years) | 4 years 8 months 12 days | 5 years |
Risk-free interest rate | 0.30% | 2.30% |
Volatility | 98.90% | 64.20% |
Dividend yield | 0.00% | 0.00% |
Forfeiture rate | 26.50% | 24.20% |
Additional information | ||
Weighted-average grant date fair value of options granted (in dollars per share) | $ 2.61 | $ 3.42 |
Outstanding stock options expected to vest (in shares) | 50,094 | |
Intrinsic value of options exercised | $ 13 | $ 0 |
Number Of Shares | ||
Outstanding at beginning of year (in shares) | 101,390 | |
Granted (in shares) | 21,433 | |
Exercised or released (in shares) | (1,474) | |
Canceled or forfeited (in shares) | (60,265) | |
Expired (in shares) | (445) | |
Outstanding at end of year (in shares) | 60,639 | 101,390 |
Options exercisable at end of year (in shares) | 28,175 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning of year (in dollars per share) | $ 14.35 | |
Granted (in dollars per share) | 3.65 | |
Exercised or released (in dollars per share) | 7.53 | |
Canceled or forfeited (in dollars per share) | 14.03 | |
Expired (in dollars per share) | 70.11 | |
Outstanding at end of year (in dollars per share) | 10.63 | $ 14.35 |
Options exercisable at January 2, 2021 (in dollars per share) | $ 16.37 |
SHARE BASED COMPENSATION - St_2
SHARE BASED COMPENSATION - Stock Options by Exercise Price (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Options Outstanding | ||
Number Outstanding (in shares) | 60,639 | |
Remaining Contractual Life (years) | 7 years 1 month 6 days | |
Weighted Average Exercise Price (in dollars per share) | $ 10.63 | |
Options Exercisable | ||
Number Exercisable (in shares) | 28,175 | |
Remaining Contractual Life (in years) | 5 years 10 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 16.37 | |
Share based compensation, additional information | ||
Aggregate intrinsic value of options outstanding | $ 73 | $ 0 |
Aggregate intrinsic value of options exercisable | 73 | $ 0 |
Unrecognized compensation cost | $ 48 | |
Weighted average vesting period for recognition of unrecognized cost | 2 years 6 months | |
$3.51 - $6.00 | ||
Range of Exercise Prices | ||
Exercise price, low end of range (in dollars per share) | $ 3.51 | |
Exercise price, high end of range (in dollars per share) | $ 6 | |
Options Outstanding | ||
Number Outstanding (in shares) | 19,071 | |
Remaining Contractual Life (years) | 8 years 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 3.65 | |
Options Exercisable | ||
Number Exercisable (in shares) | 139 | |
Remaining Contractual Life (in years) | 8 years 7 months 6 days | |
Weighted Average Exercise Price (in dollars per share) | $ 3.51 | |
$6.01 - $9.00 | ||
Range of Exercise Prices | ||
Exercise price, low end of range (in dollars per share) | 6.01 | |
Exercise price, high end of range (in dollars per share) | $ 9 | |
Options Outstanding | ||
Number Outstanding (in shares) | 16,154 | |
Remaining Contractual Life (years) | 8 years | |
Weighted Average Exercise Price (in dollars per share) | $ 6.66 | |
Options Exercisable | ||
Number Exercisable (in shares) | 5,927 | |
Remaining Contractual Life (in years) | 7 years 9 months 18 days | |
Weighted Average Exercise Price (in dollars per share) | $ 6.86 | |
$9.01 - $18.00 | ||
Range of Exercise Prices | ||
Exercise price, low end of range (in dollars per share) | 9.01 | |
Exercise price, high end of range (in dollars per share) | $ 18 | |
Options Outstanding | ||
Number Outstanding (in shares) | 16,536 | |
Remaining Contractual Life (years) | 6 years 1 month 6 days | |
Weighted Average Exercise Price (in dollars per share) | $ 14.89 | |
Options Exercisable | ||
Number Exercisable (in shares) | 13,231 | |
Remaining Contractual Life (in years) | 6 years | |
Weighted Average Exercise Price (in dollars per share) | $ 15.02 | |
$18.01 - $32.00 | ||
Range of Exercise Prices | ||
Exercise price, low end of range (in dollars per share) | 18.01 | |
Exercise price, high end of range (in dollars per share) | $ 32 | |
Options Outstanding | ||
Number Outstanding (in shares) | 8,209 | |
Remaining Contractual Life (years) | 5 years | |
Weighted Average Exercise Price (in dollars per share) | $ 22.26 | |
Options Exercisable | ||
Number Exercisable (in shares) | 8,209 | |
Remaining Contractual Life (in years) | 5 years | |
Weighted Average Exercise Price (in dollars per share) | $ 22.26 | |
$32.01 - $66.96 | ||
Range of Exercise Prices | ||
Exercise price, low end of range (in dollars per share) | 32.01 | |
Exercise price, high end of range (in dollars per share) | $ 66.96 | |
Options Outstanding | ||
Number Outstanding (in shares) | 669 | |
Remaining Contractual Life (years) | 7 months 6 days | |
Weighted Average Exercise Price (in dollars per share) | $ 57.72 | |
Options Exercisable | ||
Number Exercisable (in shares) | 669 | |
Remaining Contractual Life (in years) | 7 months 6 days | |
Weighted Average Exercise Price (in dollars per share) | $ 57.72 |
SHARE BASED COMPENSATION - Rest
SHARE BASED COMPENSATION - Restricted Stock (Details) $ / shares in Units, $ in Thousands | Mar. 13, 2020shares | Jan. 02, 2021USD ($)$ / sharesshares |
Additional disclosures | ||
Reverse stock split | 0.1111 | |
Outstanding common shares | 2,108,743 | |
Restricted Stock Awards | ||
SHARE BASED COMPENSATION | ||
Required payment from grantee | $ | $ 0 | |
Number of Shares | ||
Non-vested restricted stock awards, Beginning of year | 22,410 | |
Granted (in shares) | 25,202 | |
Vested and released (in shares) | (20,453) | |
Forfeited (in shares) | (12,192) | |
Non-vested restricted stock awards, End of year | 14,967 | |
Grant Date Fair Value | ||
Non-vested restricted stock awards as of December 28, 2019 (in dollars per share) | $ / shares | $ 10.78 | |
Granted (in dollars per share) | $ / shares | 9.14 | |
Vested and released (in dollars per share) | $ / shares | 11.02 | |
Forfeited (in dollars per share) | $ / shares | 9.56 | |
Non-vested restricted stock awards as of January 2, 2021 (in dollars per share) | $ / shares | $ 8.68 | |
Additional disclosures | ||
Unrecognized compensation cost | $ | $ 57 | |
Weighted average vesting period for recognition of unrecognized cost | 2 years 6 months |
PROFIT SHARING PLAN (Details)
PROFIT SHARING PLAN (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
PROFIT SHARING PLAN | ||
Matching expense | $ 278 | $ 311 |
MAJOR CUSTOMERS (Details)
MAJOR CUSTOMERS (Details) - Sales - Customer concentration risk - customer | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
MAJOR CUSTOMERS | ||
Number of significant customers | 7 | 7 |
Percentage of concentration risk | 87.00% | 81.00% |
Number of customers individually representing more than 10% of sales | 3 | 3 |
Amazon.com | ||
MAJOR CUSTOMERS | ||
Percentage of concentration risk | 33.00% | 26.00% |
Walmart | ||
MAJOR CUSTOMERS | ||
Percentage of concentration risk | 28.00% | 25.00% |
Target | ||
MAJOR CUSTOMERS | ||
Percentage of concentration risk | 17.00% | 17.00% |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
May 31, 2020USD ($) | Apr. 30, 2020 | Jan. 02, 2021USD ($)Options | Feb. 28, 2021 | Dec. 28, 2019USD ($) | |
Leases | |||||
Cash incentives from the landlord | $ 0 | ||||
Derecognition of a building sale-leaseback financial obligation | 2,390 | ||||
Derecognition of a building sale-leaseback fixed asset, net of depreciation | 2,357 | ||||
ROU asset | $ 3,625 | $ 4,578 | |||
Woonsocket, RI | |||||
Leases | |||||
Number of options to extend | Options | 2 | ||||
Extension term | 5 years | ||||
Derecognition of a building sale-leaseback financial obligation | $ 2,390 | ||||
Derecognition of a building sale-leaseback fixed asset, net of depreciation | 2,357 | ||||
ROU asset | $ 1,457 | ||||
Riverside, CA | |||||
Leases | |||||
Extension term | 61 months | ||||
Sublease term | 12 months | ||||
Canada | |||||
Leases | |||||
Number of options to extend | Options | 1 | ||||
Extension term | 5 years |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Leases | ||
Term of secured borrowings used to estimate incremental borrowing rate (in years) | 5 years | |
Cash paid for amounts included in the measurement of the Company's lease liabilities | $ 2,911 | $ 2,613 |
Components of lease expense | ||
Operating lease cost | 2,710 | 2,499 |
Variable lease cost | 1,057 | 1,152 |
Less: sublease income | (749) | |
Total lease expense | $ 3,018 | $ 3,651 |
Weighted-average remaining lease term (in years) | 1 year 2 months 12 days | 2 years 1 month 6 days |
Weighted-average discount rate | 5.00% | 5.00% |
Maturities of the operating lease liabilities | ||
2020 | $ 2,477 | |
2021 | 642 | |
2022 | 476 | |
2024 | 325 | |
2025 | 163 | |
Less imputed interest | (241) | |
Total | 3,842 | |
Future fixed sublease receipts under non-cancelable operating lease agreements | ||
2021 | 250 | |
Total | $ 250 | |
Minimum | ||
Leases | ||
Remaining lease term (in years) | 9 months | |
Maximum | ||
Leases | ||
Remaining lease term (in years) | 4 years 6 months | |
Summer Infant Europe Limited | ||
Employment Contracts | ||
Termination benefit provisions | $ 0 | |
Summer Infant Europe Limited | Minimum | ||
Employment Contracts | ||
Employer's contribution as a percentage of employee's annual salary | 1.00% | |
Summer Infant Europe Limited | Maximum | ||
Employment Contracts | ||
Employer's contribution as a percentage of employee's annual salary | 7.00% |
GEOGRAPHICAL INFORMATION (Detai
GEOGRAPHICAL INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
GEOGRAPHICAL INFORMATION | ||
Net revenue | $ 155,299 | $ 173,181 |
Total assets | 74,737 | 91,543 |
Total long-lived assets | 21,259 | 27,359 |
United States | ||
GEOGRAPHICAL INFORMATION | ||
Net revenue | 140,173 | 148,326 |
Total assets | 70,689 | 80,693 |
Total long-lived assets | 19,983 | 24,804 |
All Other | ||
GEOGRAPHICAL INFORMATION | ||
Net revenue | 15,126 | 24,855 |
Total assets | 4,048 | 10,850 |
Total long-lived assets | $ 1,276 | $ 2,555 |