Cover Page
Cover Page - shares | 9 Months Ended | |
Apr. 30, 2022 | Jun. 08, 2022 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-35319 | |
Entity Registrant Name | Steel Connect, Inc. | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000914712 | |
Current Fiscal Year End Date | --07-31 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-2921333 | |
Entity Address, Address Line One | 2000 Midway Ln | |
Entity Address, City or Town | Smyrna | |
Entity Address, State or Province | TN | |
Entity Address, Postal Zip Code | 37167 | |
City Area Code | 914 | |
Local Phone Number | 461-1276 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 60,398,784 | |
Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | STCN | |
Security Exchange Name | NASDAQ | |
Series D Preferred Stock | ||
Entity Information [Line Items] | ||
No Trading Symbol | true | |
Title of 12(b) Security | Rights to Purchase Series D Junior Participating Preferred Stock | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 49,914 | $ 58,117 |
Accounts receivable, trade, net of allowance for doubtful accounts of $44 and $49 at April 30, 2022 and July 31, 2021, respectively | 43,932 | 36,547 |
Inventories, net | 9,837 | 9,043 |
Funds held for clients | 7,580 | 8,212 |
Prepaid expenses and other current assets | 4,331 | 4,958 |
Current assets of discontinued operations | 0 | 96,522 |
Total current assets | 115,594 | 213,399 |
Property and equipment, net | 3,768 | 4,616 |
Operating lease right-of-use assets | 21,814 | 18,253 |
Other assets | 6,123 | 5,692 |
Long-term assets of discontinued operations | 0 | 434,421 |
Total assets | 147,299 | 676,381 |
Current Liabilities | ||
Accounts payable | 32,355 | 29,829 |
Accrued expenses | 29,406 | 32,653 |
Funds held for clients | 7,580 | 8,212 |
Current lease obligations | 7,613 | 9,643 |
Other current liabilities | 15,208 | 14,264 |
Current liabilities of discontinued operations | 0 | 123,392 |
Total current liabilities | 92,162 | 217,993 |
Convertible note payable | 10,572 | 9,343 |
Long-term lease obligations | 14,119 | 8,719 |
Other long-term liabilities | 4,693 | 3,863 |
Long-term liabilities of discontinued operations | 0 | 395,071 |
Total long-term liabilities | 29,384 | 416,996 |
Total liabilities | 121,546 | 634,989 |
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at April 30, 2022 and July 31, 2021 | 35,180 | 35,180 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at April 30, 2022 and July 31, 2021; zero shares issued and outstanding at April 30, 2022 and July 31, 2021 | 0 | 0 |
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,398,784 issued and outstanding shares at April 30, 2022; 63,099,496 issued and outstanding shares at July 31, 2021 | 604 | 632 |
Additional paid-in capital | 7,479,185 | 7,478,638 |
Accumulated deficit | (7,494,102) | (7,480,220) |
Accumulated other comprehensive income | 4,886 | 7,162 |
Total stockholders' (deficit) equity | (9,427) | 6,212 |
Total liabilities, contingently redeemable preferred stock and stockholders' (deficit) equity | $ 147,299 | $ 676,381 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Accounts receivable, trade, allowance for doubtful accounts | $ 44 | $ 49 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 4,965,000 | 4,965,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,400,000,000 | 1,400,000,000 |
Common stock, shares issued (in shares) | 60,398,784 | 63,099,496 |
Common stock, shares outstanding (in shares) | 60,398,784 | 63,099,496 |
Contingent Redeemable Preferred Stock | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 35,000 | 35,000 |
Preferred stock, shares issued (in shares) | 35,000 | 35,000 |
Preferred stock, shares outstanding (in shares) | 35,000 | 35,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Income Statement [Abstract] | ||||
Net revenue | $ 51,548 | $ 49,434 | $ 150,223 | $ 178,552 |
Cost of revenue | 42,303 | 39,531 | 120,672 | 139,262 |
Gross profit | 9,245 | 9,903 | 29,551 | 39,290 |
Operating expenses: | ||||
Selling, general and administrative | 9,214 | 12,417 | 28,899 | 36,754 |
Total operating expenses | 9,214 | 12,417 | 28,899 | 36,754 |
Operating income (loss) | 31 | (2,514) | 652 | 2,536 |
Other income (expense): | ||||
Interest income | 3 | 1 | 9 | 10 |
Interest expense | (848) | (619) | (2,359) | (1,913) |
Other gains (losses), net | 2,151 | 153 | 1,605 | (3,990) |
Total other income (expense), net | 1,306 | (465) | (745) | (5,893) |
Income (loss) from continuing operations before income taxes | 1,337 | (2,979) | (93) | (3,357) |
Income tax expense | 11,032 | 6,315 | 12,070 | 8,124 |
Loss from continuing operations, after income taxes | (9,695) | (9,294) | (12,163) | (11,481) |
Income (loss) from discontinued operations, net of tax | 39,895 | (18,335) | (108) | (21,895) |
Net income (loss) | 30,200 | (27,629) | (12,271) | (33,376) |
Less: Preferred dividends on redeemable preferred stock | (537) | (519) | (1,611) | (1,586) |
Net income (loss) attributable to common stockholders | $ 29,663 | $ (28,148) | $ (13,882) | $ (34,962) |
Basic and diluted net income (loss) per share attributable to common stockholders: | ||||
Continuing operations (in usd per share) | $ (0.17) | $ (0.16) | $ (0.23) | $ (0.21) |
Discontinued operations (in usd per share) | 0.67 | (0.29) | 0 | (0.35) |
Total income (loss) per share (in usd per share) | $ 0.50 | $ (0.45) | $ (0.23) | $ (0.56) |
Weighted average common shares used in: | ||||
Basic (loss) per share (in shares) | 59,853 | 62,263 | 59,961 | 61,898 |
Diluted (loss) per share (in shares) | 59,853 | 62,263 | 59,961 | 61,898 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 30,200 | $ (27,629) | $ (12,271) | $ (33,376) |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustment | (2,461) | (112) | (2,276) | 5,281 |
Total other comprehensive (loss) income | (2,461) | (112) | (2,276) | 5,281 |
Comprehensive income (loss) | $ 27,739 | $ (27,741) | $ (14,547) | $ (28,095) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Beginning balance (in shares) at Jul. 31, 2020 | 62,787,919 | ||||
Beginning balance at Jul. 31, 2020 | $ 48,818 | $ 628 | $ 7,478,047 | $ (7,433,700) | $ 3,843 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (33,376) | (33,376) | |||
Preferred dividends | (1,586) | (1,586) | |||
Issuance of common stock pursuant to employee stock purchase plan (in shares) | 8,792 | ||||
Issuance of common stock pursuant to employee stock purchase plan | 4 | 4 | |||
Restricted stock grants (in shares) | 332,578 | ||||
Restricted stock grants | 0 | $ 3 | (3) | ||
Restricted stock forfeitures (in shares) | (32,895) | ||||
Share-based compensation | 443 | 443 | |||
Other comprehensive items | 5,281 | 5,281 | |||
Ending balance (in shares) at Apr. 30, 2021 | 63,096,394 | ||||
Ending balance at Apr. 30, 2021 | 19,584 | $ 631 | 7,478,491 | (7,468,662) | 9,124 |
Beginning balance (in shares) at Jan. 31, 2021 | 63,000,314 | ||||
Beginning balance at Jan. 31, 2021 | 47,747 | $ 630 | 7,478,395 | (7,440,514) | 9,236 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (27,629) | (27,629) | |||
Preferred dividends | (519) | (519) | |||
Issuance of common stock pursuant to employee stock purchase plan (in shares) | 362 | ||||
Issuance of common stock pursuant to employee stock purchase plan | 0 | ||||
Restricted stock grants (in shares) | 95,718 | ||||
Restricted stock grants | 0 | $ 1 | (1) | ||
Share-based compensation | 97 | 97 | |||
Other comprehensive items | (112) | (112) | |||
Ending balance (in shares) at Apr. 30, 2021 | 63,096,394 | ||||
Ending balance at Apr. 30, 2021 | $ 19,584 | $ 631 | 7,478,491 | (7,468,662) | 9,124 |
Beginning balance (in shares) at Jul. 31, 2021 | 63,099,496 | 63,099,496 | |||
Beginning balance at Jul. 31, 2021 | $ 6,212 | $ 632 | 7,478,638 | (7,480,220) | 7,162 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (12,271) | (12,271) | |||
Preferred dividends | (1,611) | (1,611) | |||
Issuance of common stock pursuant to employee stock purchase plan (in shares) | 499 | ||||
Restricted stock grants (in shares) | 348,789 | ||||
Restricted stock grants | 0 | $ 3 | (3) | ||
Restricted stock forfeitures (in shares) | (3,050,000) | ||||
Restricted stock forfeitures | 0 | $ (31) | 31 | ||
Share-based compensation | 519 | 519 | |||
Other comprehensive items | $ (2,276) | (2,276) | |||
Ending balance (in shares) at Apr. 30, 2022 | 60,398,784 | 60,398,784 | |||
Ending balance at Apr. 30, 2022 | $ (9,427) | $ 604 | 7,479,185 | (7,494,102) | 4,886 |
Beginning balance (in shares) at Jan. 31, 2022 | 60,457,720 | ||||
Beginning balance at Jan. 31, 2022 | (36,740) | $ 605 | 7,479,073 | (7,523,765) | 7,347 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | 30,200 | 30,200 | |||
Preferred dividends | (537) | (537) | |||
Restricted stock grants (in shares) | 141,064 | ||||
Restricted stock grants | 0 | $ 1 | (1) | ||
Restricted stock forfeitures (in shares) | (200,000) | ||||
Restricted stock forfeitures | 0 | $ (2) | 2 | ||
Share-based compensation | 111 | 111 | |||
Other comprehensive items | $ (2,461) | (2,461) | |||
Ending balance (in shares) at Apr. 30, 2022 | 60,398,784 | 60,398,784 | |||
Ending balance at Apr. 30, 2022 | $ (9,427) | $ 604 | $ 7,479,185 | $ (7,494,102) | $ 4,886 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 30, 2022 | Apr. 30, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (12,271) | $ (33,376) |
Loss from discontinued operations, net of tax | 108 | 21,895 |
Loss from continuing operations | (12,163) | (11,481) |
Adjustments to reconcile net loss to cash flows from operating activities: | ||
Depreciation | 1,698 | 2,620 |
Amortization of deferred financing costs | 102 | 103 |
Accretion of debt discount | 1,229 | 930 |
Share-based compensation | 519 | 443 |
Non-cash lease expense | 7,083 | 7,505 |
Other (gains) losses, net | (1,605) | 5,605 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (8,786) | 14,247 |
Inventories, net | (1,291) | 1,671 |
Prepaid expenses and other current assets | 240 | 37 |
Accounts payable and accrued expenses | 2,076 | (20,556) |
Refundable and accrued income taxes, net | 142 | 11,458 |
Other assets and liabilities | 5,489 | (17,545) |
Net cash used in operating activities of continuing operations | (5,267) | (4,963) |
Cash flows from investing activities: | ||
Additions of property and equipment | (1,142) | (902) |
Proceeds from the disposition of property and equipment | 0 | 69 |
Net cash used in investing activities of continuing operations | (1,142) | (833) |
Cash flows from financing activities: | ||
Preferred dividend payments | (1,598) | (1,586) |
Repayments on capital lease obligations | (54) | (52) |
Proceeds from issuance of common stock | 0 | 4 |
Net cash used in financing activities of continuing operations | (1,652) | (1,634) |
Net effect of exchange rate changes on cash, cash equivalents and restricted cash | (774) | 746 |
Cash flows from discontinued operations: | ||
Operating activities | (6,738) | 25,975 |
Investing activities | 625 | (1,812) |
Financing activities | 4,230 | (6,142) |
Net cash (used in) provided by discontinued operations | (1,883) | 18,021 |
Net decrease in cash, cash equivalents and restricted cash | (8,835) | (6,684) |
Cash, cash equivalents and restricted cash, beginning of period | 66,329 | 77,071 |
Cash, cash equivalents and restricted cash, end of period | 57,494 | 70,387 |
Cash and cash equivalents of continuing operations, end of period | 49,914 | 61,990 |
Funds held for clients, end of period | $ 7,580 | $ 8,397 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 9 Months Ended |
Apr. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Steel Connect, Inc., (the “Company”) is a holding company which operates through its wholly-owned subsidiary, ModusLink Corporation ("ModusLink" or "Supply Chain"). ModusLink Corporation provides digital and physical supply chain solutions to many of the world's leading brands across a diverse range of industries, including consumer electronics, telecommunications, computing and storage, software and content, consumer packaged goods, medical devices, retail and luxury and connected devices. With a global footprint spanning North America, Europe and the Asia Pacific, ModusLink’s solutions and services are designed to improve end-to-end supply chains in order to drive growth, lower costs, and improve profitability. Disposition of IWCO Direct On February 25, 2022, the Company entered into a transaction agreement (the “Transaction Agreement”) with (a) IWCO Direct Holding Inc. (''IWCO Direct" or "Direct Marketing") and its indirect subsidiaries, (b) Cerberus Business Finance, LLC, in its capacities as collateral agent and administrative agent under a financing agreement (in such capacities, the “Agent”), dated as of December 15, 2017, between IWCO Direct, IWCO Direct’s direct and indirect subsidiaries, the Agent and the lenders party thereto (the “Lenders”) (the “Financing Agreement”), (c) the Lenders, (d) the Lenders or their respective designees listed on the signature pages to the Transaction Agreement under the caption “Participating Lender Purchasers” (the “Participating Lender Purchasers”), (e) SPH Group Holdings LLC (the “Sponsor”) and (f) Instant Web Holdings, LLC (the “Buyer”), an entity owned by the Participating Lender Purchasers. On the Effective Date (as defined in the Transaction Agreement) and pursuant to the terms of the Transaction Agreement, the Company transferred all of its interests in IWCO Direct to the Buyer as part of a negotiated restructuring of the capital structure and certain financial obligations of IWCO Direct under the Financing Agreement as contemplated by the Transaction Agreement. See Notes 2 and 4 for further details regarding the disposition of IWCO Direct. Liquidity and Capital Resources Historically, the Company has financed its operations and met its capital requirements primarily through funds generated from operations, the sale of its securities, borrowings from lending institutions and sale of facilities that were not fully utilized. The Company believes it has access to adequate resources to meet its needs for normal operating costs, capital expenditures and working capital for its existing business for at least twelve months from the date of this filing. As of April 30, 2022, these resources include current cash and cash equivalents, and ModusLink's credit agreement with Umpqua Bank (the “Umpqua Revolver”), as lender and as agent. The Umpqua Revolver provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit and expires on March 16, 2024. There was no balance outstanding on the Umpqua Revolver as of April 30, 2022. See Note 9 for further details regarding the Umpqua Revolver. As of April 30, 2022 and July 31, 2021, the Company had cash and cash equivalents of $49.9 million and $58.1 million, respectively. As of April 30, 2022, the Company had a working capital surplus of $23.4 million. Impact of COVID-19 The ongoing COVID-19 pandemic (in particular, the emergence of new variants of the virus across the globe) has caused, and continues to cause, significant disruptions in the U.S. and global economies. For example, national and local governments in the United States and around the world continue to implement measures to prevent the spread of COVID-19 and its variants, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, quarantines, curfews, and recommendations to practice physical distancing. Such measures have restricted and continue to restrict individuals’ daily activities and curtail or cease many businesses’ normal operations. The COVID-19 pandemic has adversely impacted, and is likely to further adversely impact, nearly all aspects of our business and markets, including our workforce and the operations of our clients, suppliers, and business partners. Beginning in March 2020, when the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency, we experienced impacts to our customers' demand, facility operations, supply chain, availability and productivity of personnel, while also working to comply with rapidly evolving international, federal, state and local restrictions and recommendations on travel and workplace health and safety. We experienced disruptions to our business continuity as a result of temporary closures of certain of ModusLink’s facilities in the third and fourth quarters of fiscal year 2020, as well as the fourth quarter of fiscal year 2021. However, these temporary closures did not have a significant impact on ModusLink’s operations. Recently, an outbreak in Mainland China forced temporary lockdown orders from March 14, 2022 to March 20, 2022 in several cities in which ModusLink operates. In April and May 2022, there were further temporary lockdown orders which impacted several ModusLink facilities in China; however, ModusLink was able to resume operations on May 5, 2022 at one site and at another site on May 31, 2022. As of the filing of this quarterly report on Form 10-Q, all of ModusLink’s facilities were open and operating at or near capacity. The lockdowns in China have not had a significant impact to ModusLink’s operations through the filing of this quarterly report on Form 10-Q. I f the situation continues at this level or worsens, however, it could result in a potential adverse impact on our business, results of operations and financial condition. We will evaluate further actions if circumstances warrant. Beginning in the second quarter of 2020, with the shutdown of the U.S. economy due to the COVID-19 pandemic, IWCO Direct’s business was also significantly and adversely affected by a material reduction in customer mailing activities. Additionally, although IWCO Direct operated as an essential business, it had reduced operating levels and labor shifts due to lower sales volume during the third quarter of fiscal year 2020. To help combat these impacts and mitigate the financial impact of the COVID-19 pandemic on our business, during fiscal year 2020 we took proactive measures by initiating cost reduction actions, including the waiver of board fees, hiring freezes, staffing and force reductions, company-wide salary reductions, bonus payment deferrals and temporary 401(k) match suspension. The temporary waiver of board fees and company-wide salary reduction actions taken in the prior fiscal year were fully restored prior to the beginning of fiscal year 2021, and the majority of salary reductions were repaid prior to the fiscal quarter ended January 31, 2021. Additionally, against the backdrop of the reduction in IWCO Direct's business, the Company held extensive discussions with Cerberus about amending and extending IWCO Direct’s credit facility with Cerberus under which there was approximately $361.3 million outstanding as of January 31, 2022 that was to mature in December 2022. These discussions ultimately resulted in the disposition of IWCO Direct. For more information, see “Disposition of IWCO Direct” above and Notes 2 and 4 below. We continue our focus on cash management and liquidity, which includes aggressive working capital management. We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including its impact on our clients, employees, suppliers, vendors, business partners and distribution channels. We believe that such impacts could include, the continued disruption to the demand for our businesses' products and services; disruptions in or closures of our business operations or those of our customers or suppliers; the impact of the global business and economic environment on liquidity and the availability of capital; increased costs and delays in payments of outstanding receivables beyond normal payment terms; supply chain disruptions; uncertain demand; and the effect of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers. Despite indications of economic recovery, the severity of the impact of the COVID-19 pandemic on the Company’s business in the fiscal year ending July 31, 2022 and beyond is difficult to predict and will depend on a number of uncertain factors and trends. Such factors and trends include, but are not limited to: the duration and severity of the virus and its current variants; the emergence of new variant strains; the availability and widespread use of vaccines; the impact of the global business and economic environment on liquidity and the availability of capital; the extent and severity of the impact on our customers and suppliers; and U.S. and foreign government actions that have been taken, or may be taken in the future, to mitigate adverse economic or other impacts or to mitigate the spread of the virus and its variants. The Company continues to monitor for any developments or updates to COVID-19 guidelines from public health and governmental authorities, as well as the protection of the health and safety of its personnel, and is continuously working to ensure that its health and safety protocols, business continuity plans and crisis management protocols are in place to help mitigate any negative impacts of the COVID-19 pandemic on the Company’s employees, business or operations. Proposed Merger with Steel Holdings On November 19, 2020, the Company's Board of Directors (the "Board") received a preliminary, non-binding expression of interest (the "Expression of Interest") from Steel Partners Holdings L.P. ("Steel Holdings") to acquire all of the outstanding shares of common stock not already owned by Steel Holdings or its affiliates for a combination of cash and Steel Holdings 6% Series A Preferred Units, which would imply a value per share of common stock in the range of $0.65 to $0.72 per share. The Board has established a special committee comprised solely of independent directors (the "Acquisition Proposal Special Committee") authorized to retain independent legal and financial advisors and to review, evaluate, negotiate and approve or disapprove the Expression of Interest, and to explore alternative strategies or transactions. The Acquisition Proposal Special Committee announced on January 11, 2021 that it had retained financial advisors and legal counsel. As set forth in the Expression of Interest, the proposed transaction will be subject to the approval of the Acquisition Proposal Special Committee, as well as a non-waivable condition requiring approval of a majority of the outstanding shares of common stock of the Company not owned by Steel Holdings and its affiliates and related parties. The Board resolutions establishing the Acquisition Proposal Special Committee expressly provide that the Board will not approve the proposed transaction contemplated by the Expression of Interest or any alternative thereto without a prior favorable recommendation by the Acquisition Proposal Special Committee. On March 24, 2022, Steel Holdings delivered a revised expression of interest to acquire all of the outstanding shares of common stock not already owned by Steel Holdings or its affiliates (the “Enhanced Proposal”) to the Acquisition Proposal Special Committee, which altered and increased the consideration proposed in its November 19, 2020 proposal. Under the Enhanced Proposal, the stockholders of the Company would receive cash consideration of $1.30 per share, representing a premium of approximately 10% over the closing price of the Company’s common stock on March 23, 2022 and about an 83% premium over the closing share price on November 18, 2020. On May 27, 2022, Steel Holdings communicated a further revised expression of interest (the “Further Enhanced Proposal”) to the Acquisition Proposal Special Committee, which altered and increased the consideration proposed in the Enhanced Proposal. Under the Further Enhanced Proposal, the stockholders of the Company would receive both (a) cash consideration of $1.35 per share, representing a premium of approximately 12.5% over the closing price of the Company’s common stock on May 31, 2022 and a premium of approximately 92.8% over the closing share price of the Company’s common stock on November 18, 2020, and (b) a contingent value right to receive their pro rata share of proceeds, to the extent such proceeds exceed $80 million, if ModusLink were to be sold during the 2 years period following completion of the proposed combination of Steel Holdings and the Company. On June 12, 2022, the Company, Steel Holdings and SP Merger Sub, Inc., a wholly-owned subsidiary of Steel Holdings (“Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Steel Holdings. The Merger Agreement provides that each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger (other than dissenting shares and shares owned by the Company, Steel Holdings or any of their respective subsidiaries) will, subject to the terms and conditions set forth in the Merger Agreement, be converted into the right to receive (i) $1.35 in cash, without interest and (ii) one contingent value right to receive a pro rata share of the proceeds received by the Company, Steel Holdings or any of their affiliates with respect to the sale, transfer or other disposition of all or any portion of the assets currently owned by ModusLink within 2 years of the Merger’s closing date, to the extent such proceeds exceed $80 million plus certain related costs and expenses. Steel Holdings and certain of its affiliates have also entered into a Voting and Support Agreement pursuant to which, among other things, they have agreed to vote all shares of common stock and Series C Preferred Stock beneficially owned by them in favor of the adoption of the Merger Agreement and the Merger and any alternative acquisition agreement approved by the Company's board of directors (acting on the recommendation of the Special Committee). The Merger Agreement includes a "go-shop" period that expires at 11:59 p.m. Eastern time on July 12, 2022, during which the Company may actively solicit and consider alternative acquisition proposals. The closing of the Merger is conditioned upon receipt of approval of the Merger from (i) the holders of a majority in voting power of the outstanding shares of common stock and Series C Preferred Stock of the Company (voting on an as converted to shares of common stock basis), voting together as a single class, (ii) a majority of the outstanding shares of common stock of the Company not owned, directly or indirectly, by Steel Holdings and its affiliates and related parties, and any other officers or directors of the Company and (iii) the holders of a majority of the outstanding shares of Series C Preferred Stock of the Company, voting as a separate class, as well as other customary closing conditions. Accordingly, there can be no assurance that the Company will be able to complete the Merger on the expected timeline or at all. See “Part II, Item 1A. Risk Factors” included in this quarterly report on Form 10-Q. The board of directors of the Company (the “Company Board”), acting on the unanimous recommendation of the special committee of the Company Board (the “Special Committee”), and the Board of Directors of Steel Partner Holdings GP Inc., the general partner of Steel Holdings, approved the Merger Agreement and the transactions contemplated by the Merger Agreement (such transactions, collectively, the “Transactions”) and resolved to recommend the stockholders adopt the Merger Agreement and approve the Transactions. The Special Committee, which is comprised solely of independent and disinterested directors of the Company who are unaffiliated with Steel Holdings, exclusively negotiated the terms of the Merger Agreement with Steel Holdings, with the assistance of its independent financial and legal advisors. Subject to the satisfaction of all of the conditions to closing, including the receipt of the separate stockholder approvals, the Merger is expected to close in the second half of 2022. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Apr. 30, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATIONThe accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended July 31, 2021 (Fiscal Year 2021), which are contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2021, as amended on November 30, 2021 (the "2021 Annual Report'). The results for the nine months ended April 30, 2022 are not necessarily indicative of the results to be expected for the full fiscal year. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. All significant intercompany transactions and balances have been eliminated in consolidation. The Company considers events or transactions that occur after the balance sheet date but before the issuance of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For the nine months ended April 30, 2022, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed. Discontinued operations As discussed in Note 1, on February 25, 2022, the Company completed its disposition of IWCO Direct. The results of IWCO Direct are reclassified as discontinued operations for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations in the prior year condensed consolidated balance sheet are classified as discontinued operations. All references made to financial data in this quarterly report on Form 10-Q are to the Company's continuing operations, unless otherwise specifically noted. Reclassification On the statement of cash flows for the nine months ended April 30, 2021, the Company reclassified the non-cash portion of lease expense which totaled $7.5 million from Other Assets and Liabilities to Non-cash Lease Expense. This reclassification was made to prior year balances to conform with current reporting and had no impact on net loss or stockholder's equity. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Apr. 30, 2022 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Adoption of New Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which amends the existing guidance relating to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The new guidance was effective for the Company's first quarter of the fiscal year ending July 31, 2022 (Fiscal Year 2022). The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements. In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope , respectively (collectively, "Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by Topic 848 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted this standard after LIBOR was discontinued on December 31, 2021. The adoption of this standard did not materially impact the Company's condensed consolidated financial statements as the Company did not have any hedging relationships or transactions impacted by the discontinuance of LIBOR. Accounting Standards Issued and Not Yet Implemented In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which was further updated and clarified by the FASB through issuance of additional related ASUs. This guidance requires measurement and recognition of expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU will be effective for the Company beginning in the first quarter of the fiscal year ending July 31, 2024 on a modified retrospective basis, which requires a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) . The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity's financial statements and information about events, conditions and circumstances that can affect the assessment of the amount or timing of an entity's future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning in our fiscal year ending July 31, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance . The ASU requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This guidance is effective for all entities for annual periods beginning after December 15, 2021 and early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
Apr. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS As discussed in Note 1, on February 25, 2022 (the "Disposal Date"), the Company completed the disposition of IWCO Direct. The Company received no cash consideration for the disposition (the entire transaction being referred to as the “IWCO Direct Disposal”). As of the Disposal Date and subject to the terms and conditions of the Transaction Agreement, the parties entered into certain mutual releases as fully set forth in the Transaction Agreement. In addition, as part of the overall transaction, the Buyer issued a note in the principal amount of $6.9 million payable to the Company as consideration for intercompany obligations owed by IWCO Direct to the Company (the “Subordinated Note”). The Subordinated Note is subordinated to the obligations under the Financing Agreement (including any amendments or other modifications thereto) and matures on the date that is the earlier of (a) the later of (i) August 25, 2027 and (ii) the date that is six months after the maturity of the Financing Agreement, and (b) the date that is six months after repayment in full of the obligations under the Financing Agreement. Due to the subordinated nature of the Subordinated Note and the assessment of collectability, the Company determined the fair value of the Subordinated Note was zero. The foregoing description of the Transaction Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Transaction Agreement, a copy of which is filed as Exhibit 10.1 to this quarterly report on Form 10-Q. The Company deconsolidated IWCO Direct as of the Disposal Date as the Company no longer held a controlling financial interest in IWCO Direct as of that date. The Company did not have any amounts included in accumulated other comprehensive loss associated with IWCO Direct at the time of deconsolidation. The disposal of IWCO Direct represents a strategic shift to exit the direct marketing business and its results are reported as discontinued operations for all periods presented. The statement of operations data for IWCO Direct presented in the table below only include its financial results in periods prior to the Disposal Date. As a result the prior period results presented below may not be comparable to the current period. Three Months Ended Nine Months Ended 2022 2021 2022 2021 (in thousands) Net revenue $ 18,167 $ 102,351 $ 165,542 $ 299,214 Cost of revenue 17,894 80,007 156,697 229,939 Gross profit 273 22,344 8,845 69,275 Operating expenses: Selling, general and administrative 4,517 8,988 30,744 33,319 Amortization of intangible assets 1,218 4,182 9,303 16,076 Impairment of goodwill (a) — 25,658 — 25,658 Total operating expenses 5,735 38,828 40,047 75,053 Operating loss (5,462) (16,484) (31,202) (5,778) Other income (expense): Gain upon deconsolidation of IWCO Direct 38,043 — 38,043 — Interest income — — — 3 Interest expense (1,848) (7,145) (16,111) (21,491) Other losses, net — (1) — (38) Total other expense, net 36,195 (7,146) 21,932 (21,526) Loss from operations of discontinued operations before income taxes 30,733 (23,630) (9,270) (27,304) Income tax benefit (9,162) (5,295) (9,162) (5,409) Income (loss) from discontinued operations, net of tax $ 39,895 $ (18,335) $ (108) $ (21,895) (a) During the three months ended April 30, 2021, the Company recorded a pre-tax goodwill impairment charge of $25,658 for the Direct Marketing reporting unit due to a decline in IWCO Direct’s fair value as a result of customer exits and decreasing demand for direct marketing products. The major classes of assets and liabilities included in discontinued operations related to IWCO Direct are presented in the table below. July 31, (in thousands) ASSETS Cash and cash equivalents $ 38,814 Accounts receivable, trade, net 33,258 Inventories, net 7,186 Other current assets 17,264 Current assets of discontinued operations $ 96,522 Property and equipment, net 54,247 Goodwill 231,470 Other intangible assets, net 115,005 Operating lease right-of-use assets 32,583 Other assets 1,116 Long-term assets of discontinued operations $ 434,421 LIABILITIES Accounts payable $ 25,688 Accrued expenses 74,218 Current lease obligations 4,047 Current portion of long-term debt 5,602 Other current liabilities 13,837 Current liabilities of discontinued operations $ 123,392 Long-term debt, net of current portion 358,189 Lease obligations 30,207 Other long-term liabilities 6,675 Long-term liabilities of discontinued operations $ 395,071 |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Apr. 30, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET The table below presents the components of Inventories, net: April 30, July 31, (In thousands) Raw materials $ 8,709 $ 8,299 Work-in-process 237 76 Finished goods 891 668 $ 9,837 $ 9,043 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Apr. 30, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following tables reflect the components of "Accrued expenses" and "Other current liabilities": April 30, July 31, Accrued Expenses (In thousands) Accrued taxes $ 3,631 $ 3,686 Accrued compensation 6,444 7,163 Accrued audit, tax and legal 2,753 3,147 Accrued contract labor 939 930 Accrued other 15,639 17,727 $ 29,406 $ 32,653 April 30, July 31, Other Current Liabilities (In thousands) Accrued pricing liabilities $ 10,295 $ 10,295 Other 4,913 3,969 $ 15,208 $ 14,264 As of both April 30, 2022 and July 31, 2021, the Company had accrued pricing liabilities of approximately $10.3 million. As previously reported by the Company, several adjustments were made to its historic financial statements for periods ending on or before January 31, 2012, the most significant of which related to the treatment of vendor rebates in its pricing policies. Where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract, the Company concluded that these amounts were not properly recorded as revenue. Accordingly, revenue was reduced by an equivalent amount for the period that the rebate was estimated to have been affected. A corresponding liability for the same amount was recorded in that period (referred to as accrued pricing liabilities). The Company believes that it may not ultimately be required to pay all or any of the accrued pricing liabilities based upon the expiration of statutes of limitations, and due in part to the nature of the interactions with its clients. The remaining accrued pricing liabilities as of April 30, 2022 will be derecognized when there is sufficient information for the Company to conclude that such liabilities are not subject to escheatment and have been extinguished, which may occur through payment, legal release, or other legal or factual determination. The Company has not provided for any provision for interest and or penalties related to escheatment as it has concluded that such is not probable to occur, and any potential interest and penalties cannot be reasonably estimated. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Apr. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING ModusLink Restructuring Activities During the fiscal year ended July 31, 2021, ModusLink implemented a strategic plan to reorganize its sales function and the e-Business operations. The restructuring charges associated with this plan were incurred during the fiscal year ended July 31, 2021 and were composed of employee termination costs. In November 2021, ModusLink amended its strategic plan to include reorganizing its supply chain operations and recorded a restructuring charge of approximately $0.9 million during the three months ended January 31, 2022. The table below summarizes restructuring charges in the statements of operations for employee termination costs: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Cost of revenue $ (16) $ 22 $ 664 $ 22 Selling, general and administrative 134 (322) 310 896 $ 118 $ (300) $ 974 $ 918 IWCO Direct's restructuring charges have been reclassified to discontinued operations as a result of the IWCO Direct Disposal. Changes to the restructuring liability during the nine months ended April 30, 2022 were as follows: (In thousands) Balance as of July 31, 2021 $ 1,059 Costs incurred 974 Cash payments (1,385) Change in estimates (88) Balance as of April 30, 2022 $ 560 |
LEASES
LEASES | 9 Months Ended |
Apr. 30, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The table below presents the components of the Company's lease expense: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Operating lease cost $ 2,596 $ 2,601 $ 7,569 $ 7,963 Short-term lease expense 482 451 1,221 1,254 Variable lease cost 4 (9) 20 10 Interest on finance lease liabilities 1 1 2 4 $ 3,083 $ 3,044 $ 8,812 $ 9,231 Supplemental Cash Flow Information Supplemental cash flow information related to the Company's leases was as follows: Nine Months Ended 2022 2021 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 7,450 $ 8,001 Operating cash flows from finance leases $ 2 $ 4 Financing cash flows from finance leases $ 54 $ 52 |
LEASES | LEASES The table below presents the components of the Company's lease expense: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Operating lease cost $ 2,596 $ 2,601 $ 7,569 $ 7,963 Short-term lease expense 482 451 1,221 1,254 Variable lease cost 4 (9) 20 10 Interest on finance lease liabilities 1 1 2 4 $ 3,083 $ 3,044 $ 8,812 $ 9,231 Supplemental Cash Flow Information Supplemental cash flow information related to the Company's leases was as follows: Nine Months Ended 2022 2021 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 7,450 $ 8,001 Operating cash flows from finance leases $ 2 $ 4 Financing cash flows from finance leases $ 54 $ 52 |
DEBT
DEBT | 9 Months Ended |
Apr. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below: April 30, July 31, (In thousands) Unsecured 7.50% Convertible Senior Note due March 1, 2024 $ 14,940 $ 14,940 Credit Facilities Umpqua Revolver — — Less: unamortized discounts and issuance costs (a) (4,459) (5,793) Total debt, net $ 10,481 $ 9,147 (a) Amounts include deferred debt issuance costs related to credit facilities of $91 thousand and $196 thousand as of April 30, 2022 and July 31, 2021, respectively, which are presented in Other Assets. 7.50% Convertible Senior Note On February 28, 2019, the Company entered into a 7.50% Convertible Senior Note Due 2024 Purchase Agreement (the "SPHG Note Purchase Agreement") with SPH Group Holdings LLC ("SPHG Holdings"), whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for a 7.50% Convertible Senior Note due 2024 (the "SPHG Note"). SPHG Holdings has the right, at its option, prior to the close of business on the business day immediately preceding the maturity date of the SPHG Note, to convert the SPHG Note or a portion thereof that is $1,000 or an integral multiple thereof, into shares of common stock (if the Company has not received a required stockholder approval) or cash, shares of common stock or a combination of cash and shares of common stock, as applicable (if the Company has received a required stockholder approval), at an initial conversion rate of 421.2655 shares of common stock, which is equivalent to an initial conversion price of approximately $2.37 per share (subject to adjustment as provided in the SPHG Note) per $1,000 principal amount of the SPHG Note, subject to, and in accordance with, the settlement provisions of the SPHG Note. As of April 30, 2022, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of April 30, 2022, the remaining period over which the unamortized discount will be amortized is 22 months. As of April 30, 2022 and July 31, 2021, the net carrying value of the SPHG Note was $10.6 million and $9.3 million, respectively. The effective interest rate on the SPHG Note, including accretion of the discount, is 27.8%. The following tables reflect the components of the SPHG Note: April 30, July 31, (In thousands) Carrying amount of equity component $ 8,200 $ 8,200 Principal amount of note $ 14,940 $ 14,940 Unamortized debt discount (4,368) (5,597) Net carrying amount $ 10,572 $ 9,343 Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Interest expense related to contractual interest coupon $ 277 $ 287 $ 849 $ 573 Interest expense related to accretion of the discount 429 313 1,229 930 $ 706 $ 600 $ 2,078 $ 1,503 Umpqua Revolver On March 16, 2022, ModusLink, as borrower, entered into a new credit agreement with Umpqua Bank (the "Umpqua Revolver"), as lender and as agent. The Umpqua Revolver provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit and expires on March 16, 2024. Concurrent with signing the Umpqua Revolver ModusLink submitted a notice of termination to MidCap Financial Trust for its $12.5 million revolving credit facility (the “MidCap Credit Facility”), which was set to expire on December 31, 2022. There was no balance outstanding on the Midcap Credit Facility at the time of its termination. ModusLink believes it will remain in compliance with the Umpqua Revolver’s covenants for at least the next twelve months. As of April 30, 2022, ModusLink had available borrowing capacity of $12.2 million and there was no balance outstanding on the Umpqua Revolver. Cerberus Term Loan On February 25, 2022, Company transferred all of its interests in IWCO Direct to the Buyer as part of a negotiated restructuring of the capital structure and certain financial obligations of IWCO Direct, including the Cerberus Term Loan which, were derecognized upon deconsolidation. See Notes 1, 2 and 4 for more details regarding the IWCO Direct Disposal. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Apr. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES On April 13, 2018, a purported stockholder, Donald Reith, filed a verified complaint, Reith v. Lichtenstein, et al., 2018-277 (Del. Ch.) in the Delaware Court of Chancery ("Chancery Court"). The complaint alleges class and derivative claims for breach of fiduciary duty and/or aiding and abetting breach of fiduciary duty and unjust enrichment against the Board, Warren G. Lichtenstein, Glen M. Kassan, William T. Fejes, Jack L. Howard, Jeffrey J. Fenton, Philip E. Lengyel and Jeffrey S. Wald; and stockholders Steel Holdings, Steel Partners, Ltd., SPHG Holdings, Handy & Harman Ltd. ("Handy & Harman") and WHX CS Corp. (collectively, the "Steel Parties") in connection with the acquisition of $35.0 million of the Series C Convertible Preferred Stock by SPHG Holdings and equity grants made to Messrs. Lichtenstein, Howard and Fejes on December 15, 2017 (collectively, the "Challenged Transactions"). The Company is named as a nominal defendant. The complaint alleges that although the Challenged Transactions were approved by a special committee consisting of the independent members of the Board (Messrs. Fenton, Lengyel and Wald), the Steel Parties dominated and controlled the special committee, who approved the Challenged Transactions in breach of their fiduciary duty. Plaintiff alleges that the Challenged Transactions unfairly diluted stockholders and therefore unjustly enriched Steel Holdings, SPHG Holdings and Messrs. Lichtenstein, Howard and Fejes. The complaint also alleges that the Board made misleading disclosures in the Company's proxy statement for the 2017 Annual Meeting of Stockholders in connection with seeking approval to amend the 2010 Incentive Award Plan to authorize the issuance of additional shares to accommodate certain shares underlying the equity grants. Remedies requested include rescission of the Series C Convertible Preferred Stock and equity grants, disgorgement of any unjustly obtained property or compensation and monetary damages. On June 8, 2018, defendants moved to dismiss the complaint for failure to plead demand futility and failure to state a claim. On June 28, 2019, the Court denied most of the motion to dismiss allowing the matter to proceed. On August 13, 2021, the Company, together with certain of its current and former directors of the Board, Warren Lichtenstein, Glen Kassan, William Fejes, Jr., Jack Howard, Jeffrey Fenton and Jeffrey Wald, as well as other named defendants (collectively, the “Defendants”), entered into a memorandum of understanding (the “MOU”) with Donald Reith (the “Plaintiff”) in connection with the settlement of the Reith v. Lichtenstein, et al., C.A. No. 2018-0277-MTZ (Del. Ch. 2018) class and derivative action. Pursuant to the MOU, the Defendants agreed to cause their directors’ and officers’ liability insurance carriers to pay to the Company $2.75 million in cash. The payment will be paid into an escrow account within 14 business days of the later of (i) the entry of the scheduling order in connection with the stipulation of the settlement; or (ii) the date on which Plaintiff’s counsel provides to the Defendants’ counsel written payment and wire instructions. Additionally, under the MOU and separate letter agreements between the Company and such individuals (the “Surrender Agreements”), Messrs. Lichtenstein, Howard and Fejes agreed to surrender to the Company an aggregate of 3.3 million shares, which they had initially received in December 2017 in consideration for services to the Company. The surrenders and cancellations are in the following amounts: for Mr. Lichtenstein, 1,833,333 vested shares and 300,000 unvested shares; for Mr. Howard, 916,667 vested shares and 150,000 unvested shares; and for Mr. Fejes, 100,000 vested shares. Such amounts are to be adjusted to give effect to the one-for-ten reverse stock split voted on by the Company’s stockholders at the annual meeting on July 26, 2021 (if such reverse stock split is effected prior to the surrender of such shares). The surrenders and cancellations will be completed no later than seven calendar days following final approval of the settlement by the court and the exhaustion of any appeals therefrom or the expiration of time to appeal. On August 17, 2021, Mr. Lichtenstein and Mr. Howard surrendered the shares required under their respective Surrender Agreements and all such shares were subsequently cancelled. Pursuant to the MOU, the Company has also agreed to pay the Plaintiff’s counsel legal fees for this matter. On February 18, 2022, the parties filed a Stipulation of Settlement, proposed notice to stockholders, proposed scheduling order, and proposed form of final judgment (collectively, the “Stipulation”), setting forth the settlement terms previously set forth in the MOU. On March 17, 2022, the Chancery Court granted, with modifications, a scheduling order (the “Scheduling Order”) in connection with the Stipulation. Pursuant to the Scheduling Order, during April 2022 the insurers completed the wiring of the settlement payments into an account jointly controlled by counsel for the Plaintiff and the Company, where the funds are to remain until final court approval of the settlement. In addition, the Stipulation reflects the parties’ agreement that the amount of the legal fees for which Plaintiff's counsel would apply, and that the Company would pay if approved by the court, would be $2.05 million. The settlement requires court approval, and there can be no assurances that such approval will be granted. Per the Scheduling Order, a settlement hearing is currently scheduled for August 12, 2022, prior to which time the parties may file additional settlement papers. The settlement also provides that the Company will pay the legal fees and costs of Plaintiff's counsel |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Apr. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Disaggregation of Revenue The following table presents the Company's revenues from contracts with customers disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue of the Supply Chain reportable segment. Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Major Goods/Service Lines Supply chain management services $ 51,123 $ 48,906 $ 148,783 $ 177,035 Other 425 528 1,440 1,517 $ 51,548 $ 49,434 $ 150,223 $ 178,552 Timing of Revenue Recognition Services transferred over time 51,548 49,434 150,223 178,552 $ 51,548 $ 49,434 $ 150,223 $ 178,552 Supply Chain Management Services ModusLink's revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to customers under these arrangements include revenue attributable to the services performed as well as for materials procured on the customer's behalf as part of its service to them. The majority of these arrangements consist of two distinct performance obligations (i.e., warehousing/inventory management service and a separate kitting/packaging/assembly service), revenue related to each of which is recognized over time as services are performed using an input method based on the level of efforts expended. Other Other revenue consists of cloud-based software subscriptions, software maintenance and support service contracts, and fees for professional services. Revenue related to these arrangements is recognized on a straight-line basis over the term of the agreement or over the term of the agreement in proportion to the costs incurred in satisfying the obligations under the contract. Contract Balances Timing of revenue recognition may differ from timing of invoicing to customers. The Company records contract assets and liabilities related to its contracts with customers as follows: • Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time. • Contract asset when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees related to supply chain management services. The Company's contract assets are all short-term in nature and are included in prepaid expenses and other current assets in the condensed consolidated balance sheets. • Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in advance. Deferred revenue also includes other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. The deferred revenue balance is classified as a component of other current liabilities and other long-term liabilities on the Company's condensed consolidated balance sheets. The table below presents information for the Company's contract balances: April 30, July 31, (In thousands) Accounts receivable, trade, net $ 43,932 $ 36,547 Contract assets $ 498 $ 627 Deferred revenue - current $ 3,099 $ 2,212 Deferred revenue - long-term 130 108 Total deferred revenue $ 3,229 $ 2,320 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the nine months ended April 30, 2022 and April 30, 2021 were as follows: Nine Months Ended 2022 2021 (In thousands) Balance at beginning of period $ 2,320 $ 2,464 Deferral of revenue 2,049 1,959 Recognition of deferred amounts upon satisfaction of performance obligation (1,140) (1,924) Balance at end of period $ 3,229 $ 2,499 We expect to recognize approximately $3.1 million of deferred revenue over the next twelve months and the remaining $0.1 million beyond that time period. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Apr. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company operates in multiple taxing jurisdictions, both within and outside of the United States. For the nine months ended April 30, 2022, the Company was profitable in certain jurisdictions, resulting in an income tax expense using enacted rates in those jurisdictions. Income tax expense for the third quarter increased $4.7 million as compared to the same period in the prior year and for the nine months increased $3.9 million as compared to the same period in the prior year. These changes are primarily due to the income tax expense associated with an increase in the valuation allowance recorded on deferred tax assets as a result of the IWCO disposal during the three months ended April 30, 2022. As of April 30, 2022 and July 31, 2021, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $0.8 million and $0.7 million, respectively. Uncertain Tax Positions In accordance with the Company's accounting policy, interest related to unrecognized tax benefits is included in the income tax expense line of the condensed consolidated statements of operations. As of April 30, 2022 and July 31, 2021, the liabilities for interest expense related to uncertain tax positions were $0.1 million and $0.1 million, respectively. The Company has accrued $0.1 million for penalties related to income tax positions. The Company does not expect of unrecognized tax benefits and related interest to reverse in the next twelve months. The Company is subject to U.S. federal income tax and various state, local and international income taxes in numerous jurisdictions. The federal and state tax returns are generally subject to tax examinations for the tax years ended July 31, 2018 through July 31, 2021. To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. In addition, a number of tax years remain subject to examination by the appropriate government agencies for certain countries in the Europe and Asia regions. In Europe, the Company's 2013 through 2020 tax years remain subject to examination in most locations, while in Asia the Company's 2009 through 2020 tax years remain subject to examination in most locations. |
LOSS PER SHARE
LOSS PER SHARE | 9 Months Ended |
Apr. 30, 2022 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | LOSS PER SHARE The following table reconciles loss per share for the three and nine months ended April 30, 2022 and 2021: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands, except per share data) Reconciliation of net income (loss) to net income (loss) attributable to common stockholders after assumed conversions: Net income (loss) $ 30,200 $ (27,629) $ (12,271) $ (33,376) Less: Preferred dividends on redeemable preferred stock (537) (519) (1,611) (1,586) Net income (loss) attributable to common stockholders 29,663 (28,148) (13,882) (34,962) Net income (loss) attributable to common stockholders: Continuing operations, net of tax $ (10,232) $ (9,813) $ (13,774) $ (13,067) Discontinued operations, net of tax 39,895 (18,335) (108) (21,895) Net income (loss) attributable to common stockholders $ 29,663 $ (28,148) $ (13,882) $ (34,962) Weighted average common shares outstanding 59,853 62,263 59,961 61,898 Basic and diluted net income (loss) per share attributable to common stockholders: Continuing operations $ (0.17) $ (0.16) $ (0.23) $ (0.21) Discontinued operations, net of tax $ 0.67 $ (0.29) $ — $ (0.35) Net income (loss) attributable to common stockholders $ 0.50 $ (0.45) $ (0.23) $ (0.56) Basic net loss per common share is calculated using the weighted average number of common shares outstanding during the period. Diluted net earnings per common share, if any, gives effect to diluted stock options (calculated based on the treasury stock method), non-vested restricted stock shares purchased under the employee stock purchase plan and shares issuable upon debt or preferred stock conversion (calculated using an as-if converted method). For the three months ended April 30, 2022, approximately 24.2 million common stock equivalent shares (including those related to convertible debt and preferred stock) were excluded from the denominator in the calculation of diluted net loss per share as their inclusion would have been antidilutive. For three months ended April 30, 2021, approximately 24.2 million common stock equivalent shares (including those related to convertible debt and preferred stock) were excluded from the denominator in the calculation of diluted net loss per share as their inclusion would have been antidilutive. For each of the nine months ended April 30, 2022 and 2021, approximately 24.2 million and 24.3 million, respectively, common stock equivalent shares (including those related to convertible debt and preferred stock) were excluded from the denominator in the calculation of diluted net loss per share as their inclusion would have been antidilutive. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Apr. 30, 2022 | |
Equity [Abstract] | |
COMPREHENSIVE INCOME (LOSS) | COMPREHENSIVE INCOME (LOSS)Comprehensive income (loss) combines net income (loss) and other comprehensive items. Other comprehensive items represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheets. Accumulated other comprehensive items consist of the following: Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2021 $ 9,762 $ (2,600) $ 7,162 Foreign currency translation adjustment (2,276) — (2,276) Net current-period other comprehensive income (2,276) — (2,276) Accumulated other comprehensive income (loss) as of April 30, 2022 $ 7,486 $ (2,600) $ 4,886 Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2020 $ 5,025 $ (1,182) $ 3,843 Foreign currency translation adjustment 5,281 — 5,281 Net current-period other comprehensive income 5,281 — 5,281 Accumulated other comprehensive income (loss) as of April 30, 2021 $ 10,306 $ (1,182) $ 9,124 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Apr. 30, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Subsequent to the Company’s disposition of the Direct Marketing reportable segment in the IWCO Direct Disposal, the Company has one reportable segment: Supply Chain. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal, finance and share-based compensation, which are not allocated to the Company's reportable segment. The Corporate-level balance sheet information includes cash and cash equivalents, debt and other assets and liabilities which are not identifiable to the operations of the Company's operating segment. All significant intra-segment amounts have been eliminated. Management evaluates segment performance based on segment net revenue and operating income (loss). Summarized financial information by operating segment is as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Net revenue: Supply Chain $ 51,548 $ 49,434 $ 150,223 $ 178,552 $ 51,548 $ 49,434 $ 150,223 $ 178,552 Operating income (loss): Supply Chain 1,548 (534) 5,894 9,574 Total segment operating income (loss) 1,548 (534) 5,894 9,574 Corporate-level activity (1,517) (1,980) (5,242) (7,038) Total operating income (loss) 31 (2,514) 652 2,536 Total other expense, net 1,306 (465) (745) (5,893) Income (loss) before income taxes $ 1,337 $ (2,979) $ (93) $ (3,357) April 30, July 31, (In thousands) Total assets: Supply Chain $ 107,785 $ 101,159 Corporate 39,514 44,278 $ 147,299 $ 145,437 Summarized financial information of the Company's net revenue by geographic location is as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) United States $ 13,183 $ 13,295 $ 37,336 $ 46,195 China 17,859 15,220 53,248 57,269 Netherlands 6,180 6,149 18,056 19,331 Other 14,326 14,770 41,583 55,757 $ 51,548 $ 49,434 $ 150,223 $ 178,552 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Apr. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS As of April 30, 2022, SPHG Holdings and its affiliates, including Steel Holdings, Handy & Harman Ltd. and Steel Partners Ltd., beneficially owned approximately 53.5% of our outstanding capital stock, including the if-converted value of the SPHG Note and shares of Series C Convertible Preferred Stock that vote on an as-converted basis together with our common stock. Warren G. Lichtenstein, our Interim Chief Executive Officer and the Executive Chairman of our Board, is also the Executive Chairman of Steel Holdings GP Inc. ("Steel Holdings GP"), the manager of Steel Holdings. Jack L. Howard, the President and a director of Steel Holdings GP, was appointed to the Board upon the closing of the Preferred Stock Transaction described below. SPHG Note Transaction On February 28, 2019, the Company entered into a SPHG Note Purchase Agreement with SPHG Holdings, whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for the SPHG Note. As of both April 30, 2022 and July 31, 2021, SPHG Holdings held $14.9 million principal amount of the SPHG Note. As of April 30, 2022 and July 31, 2021, the net carrying value of the SPHG Note was $10.6 million and $9.3 million, respectively. Preferred Stock Transaction On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement with SPHG Holdings, pursuant to which the Company issued 35,000 shares of the Company's newly created Series C Convertible Preferred Stock to SPHG Holdings at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million. The terms, rights, obligations and preferences of the Series C Convertible Preferred Stock are set forth in the Series C Certificate of Designations, which has been filed with the Secretary of State of the State of Delaware. Management Services Agreement On June 14, 2019, the Company entered into an agreement (the "Management Services Agreement") with Steel Services Ltd. ("Steel Services"), an indirect wholly-owned subsidiary of Steel Holdings. The Management Services Agreement was effective as of June 1, 2019. In connection with the IWCO Direct Disposal, the monthly fee under the Management Services Agreement was reduced effective on the Disposal Date by the portion of the fee attributable to IWCO Direct. Total expenses incurred related to the Management Services Agreement for the three months ended April 30, 2022 and 2021 were $0.8 million and $0.9 million, respectively. Total expenses incurred related to the Management Services Agreement for the nine months ended April 30, 2022 and 2021 were $2.5 million and $2.5 million, respectively. As of April 30, 2022 and July 31, 2021, amounts due to Steel Services were $0.4 million and $0.9 million, respectively. Steel Holdings Expression of Interest |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Apr. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTSASC 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following tables present the Company's financial assets measured at fair value on a recurring basis as of April 30, 2022 and July 31, 2021, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) April 30, 2022 Level 1 Level 2 Level 3 Assets: Money market funds $ 34,324 $ 34,324 $ — $ — Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2021 Level 1 Level 2 Level 3 Assets: Money market funds $ 37,320 $ 37,320 $ — $ — There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. When quoted prices in active markets are not available, fair values are determined using pricing models, and the inputs to those pricing models are based on observable market inputs. The inputs to the pricing models are typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis The Company reviews the carrying amounts of these assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the asset group or reporting unit is not recoverable and exceeds its fair value. The Company estimates the fair values of assets subject to impairment based on the Company's own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. Fair Value of Financial Instruments The Company's financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, customer deposits, accounts payable, restricted cash and debt, and are reflected in the consolidated financial statements at carrying value. With the exception of the SPHG Note, carrying value approximates fair value for these items due to their short-term maturities or expected settlement dates of these instruments. The Company believes that the carrying value of the liability component of the SPHG Note approximates fair value because the stated interest rates of this debt is consistent with current market rates. Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets are money market funds. These are valued at quoted market prices in active markets. |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Apr. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended July 31, 2021 (Fiscal Year 2021), which are contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2021, as amended on November 30, 2021 (the "2021 Annual Report'). The results for the nine months ended April 30, 2022 are not necessarily indicative of the results to be expected for the full fiscal year. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. |
Consolidation | All significant intercompany transactions and balances have been eliminated in consolidation. |
Subsequent Events | The Company considers events or transactions that occur after the balance sheet date but before the issuance of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For the nine months ended April 30, 2022, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed. |
Discontinued operations | Discontinued operations As discussed in Note 1, on February 25, 2022, the Company completed its disposition of IWCO Direct. The results of IWCO Direct are reclassified as discontinued operations for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations in the prior year condensed consolidated balance sheet are classified as discontinued operations. |
Reclassification | Reclassification On the statement of cash flows for the nine months ended April 30, 2021, the Company reclassified the non-cash portion of lease expense which totaled $7.5 million from Other Assets and Liabilities to Non-cash Lease Expense. This reclassification was made to prior year balances to conform with current reporting and had no impact on net loss or stockholder's equity. |
Adoption of New Accounting Standards and Accounting Standards Issued and Not Yet Implemented | Adoption of New Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which amends the existing guidance relating to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The new guidance was effective for the Company's first quarter of the fiscal year ending July 31, 2022 (Fiscal Year 2022). The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements. In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope , respectively (collectively, "Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by Topic 848 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted this standard after LIBOR was discontinued on December 31, 2021. The adoption of this standard did not materially impact the Company's condensed consolidated financial statements as the Company did not have any hedging relationships or transactions impacted by the discontinuance of LIBOR. Accounting Standards Issued and Not Yet Implemented In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which was further updated and clarified by the FASB through issuance of additional related ASUs. This guidance requires measurement and recognition of expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU will be effective for the Company beginning in the first quarter of the fiscal year ending July 31, 2024 on a modified retrospective basis, which requires a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) . The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity's financial statements and information about events, conditions and circumstances that can affect the assessment of the amount or timing of an entity's future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning in our fiscal year ending July 31, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance . The ASU requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This guidance is effective for all entities for annual periods beginning after December 15, 2021 and early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
Fair Value of Financial Instruments | ASC 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal groups, including discontinued operations | Three Months Ended Nine Months Ended 2022 2021 2022 2021 (in thousands) Net revenue $ 18,167 $ 102,351 $ 165,542 $ 299,214 Cost of revenue 17,894 80,007 156,697 229,939 Gross profit 273 22,344 8,845 69,275 Operating expenses: Selling, general and administrative 4,517 8,988 30,744 33,319 Amortization of intangible assets 1,218 4,182 9,303 16,076 Impairment of goodwill (a) — 25,658 — 25,658 Total operating expenses 5,735 38,828 40,047 75,053 Operating loss (5,462) (16,484) (31,202) (5,778) Other income (expense): Gain upon deconsolidation of IWCO Direct 38,043 — 38,043 — Interest income — — — 3 Interest expense (1,848) (7,145) (16,111) (21,491) Other losses, net — (1) — (38) Total other expense, net 36,195 (7,146) 21,932 (21,526) Loss from operations of discontinued operations before income taxes 30,733 (23,630) (9,270) (27,304) Income tax benefit (9,162) (5,295) (9,162) (5,409) Income (loss) from discontinued operations, net of tax $ 39,895 $ (18,335) $ (108) $ (21,895) (a) During the three months ended April 30, 2021, the Company recorded a pre-tax goodwill impairment charge of $25,658 for the Direct Marketing reporting unit due to a decline in IWCO Direct’s fair value as a result of customer exits and decreasing demand for direct marketing products. The major classes of assets and liabilities included in discontinued operations related to IWCO Direct are presented in the table below. July 31, (in thousands) ASSETS Cash and cash equivalents $ 38,814 Accounts receivable, trade, net 33,258 Inventories, net 7,186 Other current assets 17,264 Current assets of discontinued operations $ 96,522 Property and equipment, net 54,247 Goodwill 231,470 Other intangible assets, net 115,005 Operating lease right-of-use assets 32,583 Other assets 1,116 Long-term assets of discontinued operations $ 434,421 LIABILITIES Accounts payable $ 25,688 Accrued expenses 74,218 Current lease obligations 4,047 Current portion of long-term debt 5,602 Other current liabilities 13,837 Current liabilities of discontinued operations $ 123,392 Long-term debt, net of current portion 358,189 Lease obligations 30,207 Other long-term liabilities 6,675 Long-term liabilities of discontinued operations $ 395,071 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories, net | The table below presents the components of Inventories, net: April 30, July 31, (In thousands) Raw materials $ 8,709 $ 8,299 Work-in-process 237 76 Finished goods 891 668 $ 9,837 $ 9,043 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Payables and Accruals [Abstract] | |
Components of accrued expenses | The following tables reflect the components of "Accrued expenses" and "Other current liabilities": April 30, July 31, Accrued Expenses (In thousands) Accrued taxes $ 3,631 $ 3,686 Accrued compensation 6,444 7,163 Accrued audit, tax and legal 2,753 3,147 Accrued contract labor 939 930 Accrued other 15,639 17,727 $ 29,406 $ 32,653 |
Components of other current liabilities | April 30, July 31, Other Current Liabilities (In thousands) Accrued pricing liabilities $ 10,295 $ 10,295 Other 4,913 3,969 $ 15,208 $ 14,264 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring and related costs | The table below summarizes restructuring charges in the statements of operations for employee termination costs: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Cost of revenue $ (16) $ 22 $ 664 $ 22 Selling, general and administrative 134 (322) 310 896 $ 118 $ (300) $ 974 $ 918 IWCO Direct's restructuring charges have been reclassified to discontinued operations as a result of the IWCO Direct Disposal. Changes to the restructuring liability during the nine months ended April 30, 2022 were as follows: (In thousands) Balance as of July 31, 2021 $ 1,059 Costs incurred 974 Cash payments (1,385) Change in estimates (88) Balance as of April 30, 2022 $ 560 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Leases [Abstract] | |
Lease cost | The table below presents the components of the Company's lease expense: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Operating lease cost $ 2,596 $ 2,601 $ 7,569 $ 7,963 Short-term lease expense 482 451 1,221 1,254 Variable lease cost 4 (9) 20 10 Interest on finance lease liabilities 1 1 2 4 $ 3,083 $ 3,044 $ 8,812 $ 9,231 Supplemental cash flow information related to the Company's leases was as follows: Nine Months Ended 2022 2021 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 7,450 $ 8,001 Operating cash flows from finance leases $ 2 $ 4 Financing cash flows from finance leases $ 54 $ 52 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Debt Disclosure [Abstract] | |
Components of debt and reconciliation | The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below: April 30, July 31, (In thousands) Unsecured 7.50% Convertible Senior Note due March 1, 2024 $ 14,940 $ 14,940 Credit Facilities Umpqua Revolver — — Less: unamortized discounts and issuance costs (a) (4,459) (5,793) Total debt, net $ 10,481 $ 9,147 (a) Amounts include deferred debt issuance costs related to credit facilities of $91 thousand and $196 thousand as of April 30, 2022 and July 31, 2021, respectively, which are presented in Other Assets. |
Net carrying value of SPG note | The following tables reflect the components of the SPHG Note: April 30, July 31, (In thousands) Carrying amount of equity component $ 8,200 $ 8,200 Principal amount of note $ 14,940 $ 14,940 Unamortized debt discount (4,368) (5,597) Net carrying amount $ 10,572 $ 9,343 Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Interest expense related to contractual interest coupon $ 277 $ 287 $ 849 $ 573 Interest expense related to accretion of the discount 429 313 1,229 930 $ 706 $ 600 $ 2,078 $ 1,503 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Summary of reconciliation of the disaggregated revenue | The following table presents the Company's revenues from contracts with customers disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue of the Supply Chain reportable segment. Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Major Goods/Service Lines Supply chain management services $ 51,123 $ 48,906 $ 148,783 $ 177,035 Other 425 528 1,440 1,517 $ 51,548 $ 49,434 $ 150,223 $ 178,552 Timing of Revenue Recognition Services transferred over time 51,548 49,434 150,223 178,552 $ 51,548 $ 49,434 $ 150,223 $ 178,552 |
Summary of changes in deferred revenue | The table below presents information for the Company's contract balances: April 30, July 31, (In thousands) Accounts receivable, trade, net $ 43,932 $ 36,547 Contract assets $ 498 $ 627 Deferred revenue - current $ 3,099 $ 2,212 Deferred revenue - long-term 130 108 Total deferred revenue $ 3,229 $ 2,320 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the nine months ended April 30, 2022 and April 30, 2021 were as follows: Nine Months Ended 2022 2021 (In thousands) Balance at beginning of period $ 2,320 $ 2,464 Deferral of revenue 2,049 1,959 Recognition of deferred amounts upon satisfaction of performance obligation (1,140) (1,924) Balance at end of period $ 3,229 $ 2,499 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of (loss) earnings per share | The following table reconciles loss per share for the three and nine months ended April 30, 2022 and 2021: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands, except per share data) Reconciliation of net income (loss) to net income (loss) attributable to common stockholders after assumed conversions: Net income (loss) $ 30,200 $ (27,629) $ (12,271) $ (33,376) Less: Preferred dividends on redeemable preferred stock (537) (519) (1,611) (1,586) Net income (loss) attributable to common stockholders 29,663 (28,148) (13,882) (34,962) Net income (loss) attributable to common stockholders: Continuing operations, net of tax $ (10,232) $ (9,813) $ (13,774) $ (13,067) Discontinued operations, net of tax 39,895 (18,335) (108) (21,895) Net income (loss) attributable to common stockholders $ 29,663 $ (28,148) $ (13,882) $ (34,962) Weighted average common shares outstanding 59,853 62,263 59,961 61,898 Basic and diluted net income (loss) per share attributable to common stockholders: Continuing operations $ (0.17) $ (0.16) $ (0.23) $ (0.21) Discontinued operations, net of tax $ 0.67 $ (0.29) $ — $ (0.35) Net income (loss) attributable to common stockholders $ 0.50 $ (0.45) $ (0.23) $ (0.56) |
COMPREHENSIVE INCOME (LOSS) (Ta
COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Equity [Abstract] | |
Accumulated other comprehensive items | Accumulated other comprehensive items consist of the following: Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2021 $ 9,762 $ (2,600) $ 7,162 Foreign currency translation adjustment (2,276) — (2,276) Net current-period other comprehensive income (2,276) — (2,276) Accumulated other comprehensive income (loss) as of April 30, 2022 $ 7,486 $ (2,600) $ 4,886 Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2020 $ 5,025 $ (1,182) $ 3,843 Foreign currency translation adjustment 5,281 — 5,281 Net current-period other comprehensive income 5,281 — 5,281 Accumulated other comprehensive income (loss) as of April 30, 2021 $ 10,306 $ (1,182) $ 9,124 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Segment Reporting [Abstract] | |
Summarized financial information of continuing operations | Summarized financial information by operating segment is as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) Net revenue: Supply Chain $ 51,548 $ 49,434 $ 150,223 $ 178,552 $ 51,548 $ 49,434 $ 150,223 $ 178,552 Operating income (loss): Supply Chain 1,548 (534) 5,894 9,574 Total segment operating income (loss) 1,548 (534) 5,894 9,574 Corporate-level activity (1,517) (1,980) (5,242) (7,038) Total operating income (loss) 31 (2,514) 652 2,536 Total other expense, net 1,306 (465) (745) (5,893) Income (loss) before income taxes $ 1,337 $ (2,979) $ (93) $ (3,357) |
Total assets of continuing operations | April 30, July 31, (In thousands) Total assets: Supply Chain $ 107,785 $ 101,159 Corporate 39,514 44,278 $ 147,299 $ 145,437 |
Summarized financial information of net revenue from external customers by group of services | Summarized financial information of the Company's net revenue by geographic location is as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 (In thousands) United States $ 13,183 $ 13,295 $ 37,336 $ 46,195 China 17,859 15,220 53,248 57,269 Netherlands 6,180 6,149 18,056 19,331 Other 14,326 14,770 41,583 55,757 $ 51,548 $ 49,434 $ 150,223 $ 178,552 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Apr. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Financial assets measured at fair value on recurring basis and classified by fair value hierarchy | The following tables present the Company's financial assets measured at fair value on a recurring basis as of April 30, 2022 and July 31, 2021, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) April 30, 2022 Level 1 Level 2 Level 3 Assets: Money market funds $ 34,324 $ 34,324 $ — $ — Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2021 Level 1 Level 2 Level 3 Assets: Money market funds $ 37,320 $ 37,320 $ — $ — |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 12, 2022 | May 31, 2022 | May 27, 2022 | Mar. 24, 2022 | Mar. 23, 2022 | Nov. 19, 2020 | Nov. 18, 2020 | Apr. 30, 2022 | Mar. 16, 2022 | Jan. 31, 2022 | Jul. 31, 2021 |
Nature Of Operations [Line Items] | |||||||||||
Cash and cash equivalents | $ 49.9 | $ 58.1 | |||||||||
Working capital deficit | $ 23.4 | ||||||||||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 | |||||||||
Enhanced Proposal | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Share repurchase, cash consideration paid (in usd per share) | $ 1.30 | ||||||||||
Share repurchase, premium percentage paid over closing price of common stock | 10.00% | 83.00% | |||||||||
Further Enhanced Proposal | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Share repurchase, premium percentage paid over closing price of common stock | 92.80% | ||||||||||
Business acquisition, pro rata share of proceeds exceed amount | $ 80 | ||||||||||
Business acquisition, proposed combination period | 2 years | ||||||||||
Subsequent Event | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Business acquisition, closing period | 2 years | ||||||||||
Subsequent Event | Steel Holdings | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Business acquisition, share price | $ 1.35 | ||||||||||
Business combination, consideration transferred | $ 80 | ||||||||||
Subsequent Event | Further Enhanced Proposal | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Share repurchase, cash consideration paid (in usd per share) | $ 1.35 | ||||||||||
Share repurchase, premium percentage paid over closing price of common stock | 12.50% | ||||||||||
Series A Preferred Stock | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Preferred stock, dividend rate, percentage | 6.00% | ||||||||||
Common Stock | Minimum | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Preferred stock, par value (in usd per share) | $ 0.65 | ||||||||||
Common Stock | Maximum | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Preferred stock, par value (in usd per share) | $ 0.72 | ||||||||||
IWCO Direct Holdings, Inc. | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Outstanding balance | $ 361.3 | ||||||||||
Umpqua Revolver | |||||||||||
Nature Of Operations [Line Items] | |||||||||||
Line of credit facility, maximum credit commitment | $ 12.5 | $ 12.5 | |||||||||
Line of credit facility, sublimit borrowing capacity | $ 5 | $ 5 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 30, 2022 | Apr. 30, 2021 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Non-cash lease expense | $ (7,083) | $ (7,505) |
Other assets and liabilities | $ 5,489 | (17,545) |
Revision of prior period, reclassification, adjustment | Reclassification adjustment to confirm with current reporting | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Non-cash lease expense | 7,500 | |
Other assets and liabilities | $ 7,500 |
DISCONTINUED OPERATIONS - Narra
DISCONTINUED OPERATIONS - Narrative (Details) | Feb. 25, 2022USD ($) |
Discontinued Operations and Disposal Groups [Abstract] | |
Proceeds from divestiture of businesses | $ 0 |
Disposal groups, including discontinued operations, notes receivable from divestiture of business | 6,900,000 |
Disposal group, including discontinued operation, accounts, notes and loans receivable, net | $ 0 |
DISCONTINUED OPERATIONS - Summa
DISCONTINUED OPERATIONS - Summary of Statement of Discontinued Operation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income (loss) from discontinued operations, net of tax | $ 39,895,000 | $ (18,335,000) | $ (108,000) | $ (21,895,000) |
Goodwill, impairment loss | 25,658,000 | |||
Discontinued Operations, Disposed of by Sale | IWCO Direct Holdings, Inc. | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net revenue | 18,167,000 | 102,351,000 | 165,542,000 | 299,214,000 |
Cost of revenue | 17,894,000 | 80,007,000 | 156,697,000 | 229,939,000 |
Gross profit | 273,000 | 22,344,000 | 8,845,000 | 69,275,000 |
Selling, general and administrative | 4,517,000 | 8,988,000 | 30,744,000 | 33,319,000 |
Amortization of intangible assets | 1,218,000 | 4,182,000 | 9,303,000 | 16,076,000 |
Impairment of goodwill | 0 | 25,658,000 | 0 | 25,658,000 |
Total operating expenses | 5,735,000 | 38,828,000 | 40,047,000 | 75,053,000 |
Operating loss | (5,462,000) | (16,484,000) | (31,202,000) | (5,778,000) |
Gain upon deconsolidation of IWCO Direct | 38,043,000 | 0 | 38,043,000 | 0 |
Interest income | 0 | 0 | 0 | 3,000 |
Interest expense | (1,848,000) | (7,145,000) | (16,111,000) | (21,491,000) |
Other losses, net | 0 | (1,000) | 0 | (38,000) |
Total other expense, net | 36,195,000 | (7,146,000) | 21,932,000 | (21,526,000) |
Loss from operations of discontinued operations before income taxes | 30,733,000 | (23,630,000) | (9,270,000) | (27,304,000) |
Income tax benefit | (9,162,000) | (5,295,000) | (9,162,000) | (5,409,000) |
Income (loss) from discontinued operations, net of tax | $ 39,895,000 | $ (18,335,000) | $ (108,000) | $ (21,895,000) |
DISCONTINUED OPERATIONS - Dispo
DISCONTINUED OPERATIONS - Disposal Groups, Including Discontinued Operations (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
ASSETS | ||
Current assets of discontinued operations | $ 0 | $ 96,522 |
Long-term assets of discontinued operations | 0 | 434,421 |
Liabilities [Abstract] | ||
Current liabilities of discontinued operations | 0 | 123,392 |
Long-term liabilities of discontinued operations | $ 0 | 395,071 |
IWCO Direct Holdings, Inc. | Discontinued Operations, Disposed of by Sale | ||
ASSETS | ||
Cash and cash equivalents | 38,814 | |
Accounts receivable, trade, net | 33,258 | |
Inventories, net | 7,186 | |
Other current assets | 17,264 | |
Current assets of discontinued operations | 96,522 | |
Property and equipment, net | 54,247 | |
Goodwill | 231,470 | |
Other intangible assets, net | 115,005 | |
Operating lease right-of-use assets | 32,583 | |
Other assets | 1,116 | |
Long-term assets of discontinued operations | 434,421 | |
Liabilities [Abstract] | ||
Accounts payable | 25,688 | |
Accrued expenses | 74,218 | |
Current lease obligations | 4,047 | |
Current portion of long-term debt | 5,602 | |
Other current liabilities | 13,837 | |
Current liabilities of discontinued operations | 123,392 | |
Long-term debt, net of current portion | 358,189 | |
Lease obligations | 30,207 | |
Other long-term liabilities | 6,675 | |
Long-term liabilities of discontinued operations | $ 395,071 |
INVENTORIES, NET - Components o
INVENTORIES, NET - Components of Inventories (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 8,709 | $ 8,299 |
Work-in-process | 237 | 76 |
Finished goods | 891 | 668 |
Inventories, net | $ 9,837 | $ 9,043 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Components of Accrued Expenses (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued taxes | $ 3,631 | $ 3,686 |
Accrued compensation | 6,444 | 7,163 |
Accrued audit, tax and legal | 2,753 | 3,147 |
Accrued contract labor | 939 | 930 |
Accrued other | 15,639 | 17,727 |
Accrued expenses | $ 29,406 | $ 32,653 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Components of Other Current Liabilities (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued pricing liabilities | $ 10,295 | $ 10,295 |
Other | 4,913 | 3,969 |
Other current liabilities | $ 15,208 | $ 14,264 |
ACCRUED EXPENSES AND OTHER CU_5
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Narrative (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued pricing liabilities | $ 10,295 | $ 10,295 |
RESTRUCTURING - Narrative (Deta
RESTRUCTURING - Narrative (Details) - IWCO Direct's Competitive Improvement Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Apr. 30, 2022 | Apr. 30, 2021 | Jan. 31, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | |||||
Costs incurred | $ 118 | $ (300) | $ 974 | $ 918 | |
Supply Chain | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Costs incurred | $ 900 |
RESTRUCTURING - Schedule of Res
RESTRUCTURING - Schedule of Restructuring Charges by Type (Details) - IWCO Direct's Competitive Improvement Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | $ 118 | $ (300) | $ 974 | $ 918 |
Cost of revenue | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | (16) | 22 | 664 | 22 |
Selling, general and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | $ 134 | $ (322) | $ 310 | $ 896 |
RESTRUCTURING - Restructuring L
RESTRUCTURING - Restructuring Liability Rollforward (Details) - IWCO Direct's Competitive Improvement Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Restructuring Reserve [Roll Forward] | ||||
Costs incurred | $ 118 | $ (300) | $ 974 | $ 918 |
IWCO Direct Holdings, Inc. | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 1,059 | |||
Costs incurred | 974 | |||
Cash payments | (1,385) | |||
Change in estimates | (88) | |||
Ending balance | $ 560 | $ 560 |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Lease, Cost [Abstract] | ||||
Operating lease cost | $ 2,596 | $ 2,601 | $ 7,569 | $ 7,963 |
Short-term lease expense | 482 | 451 | 1,221 | 1,254 |
Variable lease cost | 4 | (9) | 20 | 10 |
Interest on finance lease liabilities | 1 | 1 | 2 | 4 |
Total lease cost | $ 3,083 | $ 3,044 | $ 8,812 | $ 9,231 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 30, 2022 | Apr. 30, 2021 | |
Cash paid for amounts included in measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 7,450 | $ 8,001 |
Operating cash flows from finance leases | 2 | 4 |
Financing cash flows from finance leases | $ 54 | $ 52 |
DEBT - Component of Debt and Re
DEBT - Component of Debt and Reconciliation (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 | Feb. 28, 2019 |
Line of Credit Facility [Line Items] | |||
Less: unamortized discounts and issuance costs (a) | $ (4,459) | $ (5,793) | |
Total debt, net | 10,481 | 9,147 | |
Debt issuance costs, net | 91 | 196 | |
Umpqua Revolver | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility | 0 | 0 | |
7.50% Convertible Senior Note due March 1, 2024 | |||
Line of Credit Facility [Line Items] | |||
Principal amount of long term debt | 14,940 | 14,940 | |
7.50% Convertible Senior Note due March 1, 2024 | SPHG Holdings | |||
Line of Credit Facility [Line Items] | |||
Total debt, net | $ 10,572 | $ 9,343 | |
Debt instrument, stated interest rate | 7.50% |
DEBT - Additional Information (
DEBT - Additional Information (Details) | Feb. 28, 2019USD ($)$ / shares | Apr. 30, 2022USD ($) | Mar. 16, 2022USD ($) | Jul. 31, 2021USD ($) |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 10,481,000 | $ 9,147,000 | ||
Debt instrument, interest rate, effective percentage | 27.80% | |||
Umpqua Revolver | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum credit commitment | $ 12,500,000 | $ 12,500,000 | ||
Line of credit facility, sublimit borrowing capacity | 5,000,000 | 5,000,000 | ||
MidCap Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, termination amount | $ 12,500,000 | |||
Credit facility, readily available borrowing capacity | 12,200,000 | |||
SPHG Holdings | ||||
Debt Instrument [Line Items] | ||||
Conversion to common stock | $ 1,000 | |||
Conversion ratio (shares) | 0.4212655 | |||
Initial conversion price (in usd per share) | $ / shares | $ 2.37 | |||
7.50% Convertible Senior Note due March 1, 2024 | SPHG Holdings | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, stated interest rate | 7.50% | |||
Principal amount of note | $ 14,900,000 | $ 14,940,000 | 14,940,000 | |
Debt instrument amortization period | 22 months | |||
Long-term debt | $ 10,572,000 | $ 9,343,000 |
DEBT - Net Carrying Value of th
DEBT - Net Carrying Value of the Notes (Details) - USD ($) | Apr. 30, 2022 | Jul. 31, 2021 | Feb. 28, 2019 |
Debt Instrument [Line Items] | |||
Carrying amount of equity component | $ 8,200,000 | $ 8,200,000 | |
Total debt, net | 10,481,000 | 9,147,000 | |
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||
Debt Instrument [Line Items] | |||
Principal amount of note | 14,940,000 | 14,940,000 | $ 14,900,000 |
Unamortized debt discount | (4,368,000) | (5,597,000) | |
Total debt, net | $ 10,572,000 | $ 9,343,000 |
DEBT - Summary of Interest Expe
DEBT - Summary of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | $ 706 | $ 600 | $ 2,078 | $ 1,503 |
SPHG Holdings | Interest expense related to contractual interest coupon | ||||
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | 277 | 287 | 849 | 573 |
SPHG Holdings | Interest expense related to accretion of the discount | ||||
Interest Expense, Debt [Line Items] | ||||
Debt instrument, interest expense | $ 429 | $ 313 | $ 1,229 | $ 930 |
CONTINGENCIES - Additional Info
CONTINGENCIES - Additional Information (Details) - USD ($) $ in Thousands | Feb. 18, 2022 | Aug. 13, 2021 | Dec. 15, 2017 |
Reith v. Lichtenstein | |||
Contingencies [Line Items] | |||
Cash paid to plaintiff | $ 2,750 | ||
Legal fees | $ 2,050 | ||
Litigation settlement, amount awarded from other party | $ 2,750 | ||
Reith v. Lichtenstein | Director | Restricted Stock | |||
Contingencies [Line Items] | |||
Number of shares surrendered | 3,300,000 | ||
Reith v. Lichtenstein | Director | Restricted Stock | Warren Lichtenstein | |||
Contingencies [Line Items] | |||
Number of vested shares surrendered (in shares) | 1,833,333 | ||
Number of nonvested shares surrendered (in shares) | 300,000 | ||
Reith v. Lichtenstein | Director | Restricted Stock | Jack Howard | |||
Contingencies [Line Items] | |||
Number of vested shares surrendered (in shares) | 916,667 | ||
Number of nonvested shares surrendered (in shares) | 150,000 | ||
Reith v. Lichtenstein | Director | Restricted Stock | William Fejes | |||
Contingencies [Line Items] | |||
Number of vested shares surrendered (in shares) | 100,000 | ||
Purchase agreement | SPHG Holdings | Series C convertible preferred stock | |||
Contingencies [Line Items] | |||
Proceeds from issuance of preferred stock | $ 35,000 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 51,548 | $ 49,434 | $ 150,223 | $ 178,552 |
Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 51,548 | 49,434 | 150,223 | 178,552 |
Supply chain management services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 51,123 | 48,906 | 148,783 | 177,035 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 425 | 528 | 1,440 | 1,517 |
Services transferred over time | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 51,548 | $ 49,434 | $ 150,223 | $ 178,552 |
REVENUE RECOGNITION - Summary o
REVENUE RECOGNITION - Summary of Changes in Deferred Revenue (Detail) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 | Apr. 30, 2021 | Jul. 31, 2020 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Contract assets | $ 498 | $ 627 | ||
Deferred revenue - current | 3,099 | 2,212 | ||
Deferred revenue - long-term | 130 | 108 | ||
Total deferred revenue | 3,229 | 2,320 | $ 2,499 | $ 2,464 |
Accounts receivable, trade, net | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Accounts receivable, trade, net | $ 43,932 | $ 36,547 |
REVENUE RECOGNITION - Performan
REVENUE RECOGNITION - Performance Obligations (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 30, 2022 | Apr. 30, 2021 | |
Change in Deferred Revenue | ||
Balance at beginning of period | $ 2,320 | $ 2,464 |
Deferral of revenue | 2,049 | 1,959 |
Recognition of deferred amounts upon satisfaction of performance obligation | (1,140) | (1,924) |
Balance at end of period | $ 3,229 | $ 2,499 |
REVENUE RECOGNITION - Additiona
REVENUE RECOGNITION - Additional Information (Details) $ in Millions | Apr. 30, 2022USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-05-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations | $ 3.1 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-05-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations | $ 0.1 |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
INCOME TAXES (Detail)
INCOME TAXES (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Apr. 30, 2022 | Apr. 30, 2022 | Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate reconciliation, change in enacted tax rate, amount | $ 4.7 | $ 3.9 | |
Unrecognized tax benefits related to federal, state and foreign taxes | 0.8 | 0.8 | $ 0.7 |
Liabilities for interest expense related to uncertain tax positions | 0.1 | 0.1 | $ 0.1 |
Income tax penalties accrued | $ 0.1 | $ 0.1 |
LOSS PER SHARE - Reconciliation
LOSS PER SHARE - Reconciliation of (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 30,200 | $ (27,629) | $ (12,271) | $ (33,376) |
Less: Preferred dividends on redeemable preferred stock | (537) | (519) | (1,611) | (1,586) |
Net income (loss) attributable to common stockholders | 29,663 | (28,148) | (13,882) | (34,962) |
Continuing operations, net of tax | (10,232) | (9,813) | (13,774) | (13,067) |
Discontinued operations, net of tax | $ 39,895 | $ (18,335) | $ (108) | $ (21,895) |
Weighted average common shares outstanding (in shares) | 59,853 | 62,263 | 59,961 | 61,898 |
Basic and diluted net income (loss) per share attributable to common stockholders: | ||||
Continuing operations (in usd per share) | $ (0.17) | $ (0.16) | $ (0.23) | $ (0.21) |
Discontinued operations, net of tax (in usd per share) | 0.67 | (0.29) | 0 | (0.35) |
Total income (loss) per share (in usd per share) | $ 0.50 | $ (0.45) | $ (0.23) | $ (0.56) |
LOSS PER SHARE - Additional Inf
LOSS PER SHARE - Additional Information (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Common stock equivalent shares excluded from the denominator in the calculation of diluted loss per share (in shares) | 24.2 | 24.2 | 24.2 | 24.3 |
COMPREHENSIVE INCOME (LOSS) - A
COMPREHENSIVE INCOME (LOSS) - Accumulated Other Comprehensive Income Items (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ (36,740) | $ 47,747 | $ 6,212 | $ 48,818 |
Foreign currency translation adjustment | (2,461) | (112) | (2,276) | 5,281 |
Total other comprehensive (loss) income | (2,461) | (112) | (2,276) | 5,281 |
Ending balance | (9,427) | 19,584 | (9,427) | 19,584 |
Accumulated Other Comprehensive Income | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 7,347 | 9,236 | 7,162 | 3,843 |
Foreign currency translation adjustment | (2,276) | 5,281 | ||
Total other comprehensive (loss) income | (2,276) | 5,281 | ||
Ending balance | 4,886 | 9,124 | 4,886 | 9,124 |
Foreign Currency Items | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 9,762 | 5,025 | ||
Foreign currency translation adjustment | (2,276) | 5,281 | ||
Total other comprehensive (loss) income | (2,276) | 5,281 | ||
Ending balance | 7,486 | 10,306 | 7,486 | 10,306 |
Pension Items | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (2,600) | (1,182) | ||
Foreign currency translation adjustment | 0 | 0 | ||
Total other comprehensive (loss) income | 0 | 0 | ||
Ending balance | $ (2,600) | $ (1,182) | $ (2,600) | $ (1,182) |
SEGMENT INFORMATION - Additiona
SEGMENT INFORMATION - Additional Information (Details) | 9 Months Ended |
Apr. 30, 2022segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
SEGMENT INFORMATION - Summarize
SEGMENT INFORMATION - Summarized Financial Information of Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Revenue from contracts with customers | $ 51,548 | $ 49,434 | $ 150,223 | $ 178,552 |
Operating income (loss) | 31 | (2,514) | 652 | 2,536 |
Total other expense, net | 1,306 | (465) | (745) | (5,893) |
Income (loss) from continuing operations before income taxes | 1,337 | (2,979) | (93) | (3,357) |
Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | 1,548 | (534) | 5,894 | 9,574 |
Operating segments | Supply Chain | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contracts with customers | 51,548 | 49,434 | 150,223 | 178,552 |
Operating income (loss) | 1,548 | (534) | 5,894 | 9,574 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ (1,517) | $ (1,980) | $ (5,242) | $ (7,038) |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets of Continuing Operations (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Segment Reporting Information [Line Items] | ||
Assets | $ 147,299 | $ 676,381 |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Assets | 147,299 | 145,437 |
Operating segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Assets | 107,785 | 101,159 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 39,514 | $ 44,278 |
SEGMENT INFORMATION - Summari_2
SEGMENT INFORMATION - Summarized Financial Information of Net Revenue from External Customers by Group of Services (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue from contracts with customers | $ 51,548 | $ 49,434 | $ 150,223 | $ 178,552 |
United States | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue from contracts with customers | 13,183 | 13,295 | 37,336 | 46,195 |
China | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue from contracts with customers | 17,859 | 15,220 | 53,248 | 57,269 |
Netherlands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue from contracts with customers | 6,180 | 6,149 | 18,056 | 19,331 |
Other | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue from contracts with customers | $ 14,326 | $ 14,770 | $ 41,583 | $ 55,757 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Dec. 15, 2017 | Apr. 30, 2022 | Apr. 30, 2021 | Apr. 30, 2022 | Apr. 30, 2021 | Jul. 31, 2021 | Feb. 28, 2019 |
Related Party Transaction [Line Items] | |||||||
Long-term debt | $ 10,481,000 | $ 10,481,000 | $ 9,147,000 | ||||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | ||||
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||||||
Related Party Transaction [Line Items] | |||||||
Principal amount convertible senior notes held of | $ 14,940,000 | $ 14,940,000 | $ 14,940,000 | $ 14,900,000 | |||
Long-term debt | 10,572,000 | 10,572,000 | 9,343,000 | ||||
Steel Holdings | Convertible debt | |||||||
Related Party Transaction [Line Items] | |||||||
Principal amount convertible senior notes held of | 14,900,000 | 14,900,000 | 14,900,000 | $ 14,900,000 | |||
SPHG Holdings | Purchase agreement | Series C convertible preferred stock | |||||||
Related Party Transaction [Line Items] | |||||||
Preferred stock, shares issued (in shares) | 35,000 | ||||||
Price per share (in usd per share) | $ 1,000 | ||||||
Proceeds from issuance of preferred stock | $ 35,000,000 | ||||||
Steel Services Ltd. | Management Services Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Total expenses incurred related to Management Services Agreement and Transfer Agreement | 800,000 | $ 900,000 | 2,500,000 | $ 2,500,000 | |||
SP Corporate Services Llc and Steel Services Limited | Management Services Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Due to related parties | $ 400,000 | $ 400,000 | $ 900,000 | ||||
Steel Connect, Inc. | SPHG Holdings | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage in capital stock | 53.50% | 53.50% |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy (Details) - Fair value, measurements, recurring - Money market funds - USD ($) $ in Thousands | Apr. 30, 2022 | Jul. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | $ 34,324 | $ 37,320 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | 34,324 | 37,320 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | $ 0 | $ 0 |