EVINE LIVE INC., 10-Q filed on 12/4/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Oct. 28, 2017
Nov. 28, 2017
Document Information [Line Items]
 
 
Entity Registrant Name
EVINE Live Inc. 
 
Entity Central Index Key
0000870826 
 
Current Fiscal Year End Date
--02-03 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Oct. 28, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
65,262,801 
Entity Well-known Seasoned Issuer
No 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Oct. 28, 2017
Jan. 28, 2017
Current assets:
 
 
Cash
$ 23,334 
$ 32,647 
Restricted cash and investments
450 
450 
Accounts receivable, net
84,245 
99,062 
Inventories
77,068 
70,192 
Prepaid expenses and other
5,253 
5,510 
Total current assets
190,350 
207,861 
Property & equipment, net
53,135 
52,715 
FCC broadcasting license
9,500 
12,000 
Other assets
2,188 
2,204 
TOTAL ASSETS
255,173 
274,780 
Current liabilities:
 
 
Accounts payable
63,527 
65,796 
Accrued liabilities
33,249 
37,858 
Current portion of long term credit facilities
3,440 
3,242 
Deferred revenue
35 
85 
Total current liabilities
100,251 
106,981 
Other long term liabilities
327 
428 
Deferred tax liability
3,256 
3,522 
Long term credit facilities
74,630 
82,146 
Total liabilities
178,464 
193,077 
Commitments and Contingencies
   
   
Shareholders' equity:
 
 
Preferred stock, $.01 per share par value, 400,000 shares authorized; zero shares issued and outstanding
Common stock, $.01 per share par value, 99,600,000 shares authorized; 65,261,231 and 65,192,314 shares issued and outstanding
653 
652 
Additional paid-in capital
438,257 
436,962 
Accumulated deficit
(362,201)
(355,911)
Total shareholders’ equity
76,709 
81,703 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 255,173 
$ 274,780 
Consolidated Balance Sheets (Parentheticals) (USD $)
Oct. 28, 2017
Jan. 28, 2017
Statement of Financial Position [Abstract]
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
400,000 
400,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
99,600,000 
99,600,000 
Common stock, shares issued
65,261,231 
65,192,314 
Common stock, shares outstanding
65,261,231 
65,192,314 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Income Statement [Abstract]
 
 
 
 
Net sales
$ 150,212 
$ 151,636 
$ 455,504 
$ 475,695 
Cost of sales
92,918 
96,205 
285,444 
298,988 
Gross profit
57,294 
55,431 
170,060 
176,707 
Operating expense:
 
 
 
 
Distribution and selling
48,501 
49,161 
145,918 
154,191 
General and administrative
6,779 
5,690 
18,786 
17,337 
Depreciation and amortization
1,475 
1,941 
4,791 
6,025 
Executive and management transition costs
893 
568 
1,971 
4,411 
Distribution facility consolidation and technology upgrade costs
150 
530 
Total operating expense
57,648 
57,510 
171,466 
182,494 
Operating loss
(354)
(2,079)
(1,406)
(5,787)
Other income (expense):
 
 
 
 
Interest income
10 
Interest expense
(1,158)
(1,586)
(3,966)
(4,397)
Loss on debt extinguishment
(221)
(1,134)
Total other expense, net
(1,373)
(1,583)
(5,090)
(4,390)
Loss before income taxes
(1,727)
(3,662)
(6,496)
(10,177)
Income tax benefit (provision)
624 
(205)
206 
(615)
Net loss
$ (1,103)
$ (3,867)
$ (6,290)
$ (10,792)
Net loss per common share
$ (0.02)
$ (0.06)
$ (0.10)
$ (0.19)
Net loss per common share — assuming dilution
$ (0.02)
$ (0.06)
$ (0.10)
$ (0.19)
Weighted average number of common shares outstanding:
 
 
 
 
Basic
65,191,367 
60,513,215 
63,400,368 
58,317,681 
Diluted
65,191,367 
60,513,215 
63,400,368 
58,317,681 
Consolidated Statement of Shareholders' Equity (USD $)
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit
Total Shareholders' Equity period beginning at Jan. 28, 2017
$ 81,703,000 
$ 652,000 
$ 436,962,000 
$ (355,911,000)
Common Stock, Shares, Outstanding period beginning at Jan. 28, 2017
65,192,314 
65,192,314.000 
 
 
Net loss
(6,290,000)
(6,290,000)
Repurchases of common stock, Shares
 
(4,400,000)
 
 
Repurchases of common stock, Value
(5,055,000)
(44,000)
(5,011,000)
Common stock issuances pursuant to equity compensation plans, Shares
 
360,644 
 
 
Common stock issuances pursuant to equity compensation plans, Value
11,000 
4,000 
7,000 
Share-based payment compensation, Shares
 
 
 
Share-based payment compensation, Value
2,057,000 
2,057,000 
Common stock and warrant issuance, Shares
 
4,108,273 
 
 
Common stock and warrant issuance, Value
4,283,000 
41,000 
4,242,000 
Total Shareholders' Equity period end at Oct. 28, 2017
$ 76,709,000 
$ 653,000 
$ 438,257,000 
$ (362,201,000)
Common Stock, Shares, Outstanding period end at Oct. 28, 2017
65,261,231 
65,261,231.000 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
OPERATING ACTIVITIES:
 
 
Net loss
$ (6,290)
$ (10,792)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation and amortization
7,710 
9,204 
Share-based payment compensation
2,057 
1,432 
Amortization of deferred revenue
(51)
(64)
Amortization of deferred financing costs
301 
410 
Loss on debt extinguishment
(1,134)
Deferred income taxes
(266)
592 
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
14,817 
25,361 
Inventories
(6,876)
(15,347)
Prepaid expenses and other
257 
645 
Accounts payable and accrued liabilities
(6,085)
826 
Net cash provided by operating activities
6,708 
12,267 
INVESTING ACTIVITIES:
 
 
Property and equipment additions
(8,794)
(7,313)
Proceeds from the sale of assets
2,500 
Net cash used for investing activities
(6,294)
(7,313)
FINANCING ACTIVITIES:
 
 
Proceeds from issuance of revolving loan
51,100 
Proceeds of term loans
6,000 
17,000 
Proceeds from issuance of common stock and warrants
4,628 
10,000 
Proceeds from exercise of stock options
53 
Payments on revolving loan
(51,100)
Payments on term loans
(14,352)
(2,102)
Payments for repurchases of common stock
(5,055)
Payments for common stock issuance costs
(452)
(585)
Payments for deferred financing costs
(258)
(1,432)
Payments for debt extinguishment costs
(249)
Payments for restricted stock issuance
(42)
(13)
Payments on capital leases
(39)
Net cash provided by (used for) financing activities
(9,727)
22,829 
Net increase (decrease) in cash
(9,313)
27,783 
BEGINNING CASH
32,647 
11,897 
ENDING CASH
23,334 
39,680 
SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
Interest paid
3,728 
3,363 
Income taxes paid
35 
51 
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 
Property and equipment purchases included in accounts payable
272 
803 
Deferred financing costs included in accrued liabilities
15 
Common stock issuance costs included in accrued liabilities
$ 14 
$ 283 
General
General
General
EVINE Live Inc. and its subsidiaries ("we," "our," "us," "Evine," or the "Company") are collectively a multiplatform video commerce company that offers a mix of proprietary, exclusive and name brand merchandise directly to consumers in an engaging and informative shopping experience through TV, online and mobile devices. The Company operates a 24-hour television shopping network, Evine, through which it offers proprietary, exclusive and name brand merchandise in the categories of jewelry & watches; home & consumer electronics; beauty; and fashion & accessories. Orders are taken via telephone, online and mobile channels. The television network is distributed in over 87 million homes, primarily through cable and satellite affiliation agreements and agreements with telecommunications companies. The network is also streamed live online at evine.com, is available on mobile channels and is also distributed through a Company-owned full-power television station in Boston, Massachusetts and through leased carriage on a full-power television station in Seattle, Washington.
The Company also operates evine.com, a comprehensive digital commerce platform that sells products which appear on its television shopping network as well as an extended assortment of online-only merchandise. The live programming and products are also marketed via mobile devices, including smartphones and tablets, and through the leading social media channels.
Basis of Financial Statement Presentation
Basis of Financial Statement Presentation
Basis of Financial Statement Presentation
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America have been condensed or omitted in accordance with these rules and regulations. The accompanying condensed consolidated balance sheet as of January 28, 2017 has been derived from the Company's audited financial statements for the fiscal year ended January 28, 2017. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of these financial statements. Although management believes the disclosures and information presented are adequate, these interim condensed consolidated financial statements should be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its annual report on Form 10-K for the fiscal year ended January 28, 2017. Operating results for the nine-month period ended October 28, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending February 3, 2018.
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to January 31 and results in either a 52-week or 53-week fiscal year. References to years in this report relate to fiscal years, rather than to calendar years. The Company’s most recently completed fiscal year, fiscal 2016, ended on January 28, 2017, and consisted of 52 weeks. Fiscal 2017 will end on February 3, 2018, and will contain 53 weeks. The quarters ended October 28, 2017 and October 29, 2016 each consisted of 13 weeks.
Recently Adopted Accounting Standards
In July 2015, the Financial Accounting Standards Board issued Simplifying the Measurement of Inventory, Topic 330 (ASU No 2015-11). ASU 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost or net realizable value. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. The Company adopted this standard in the first quarter of fiscal 2017, applying it prospectively. The adoption of ASU 2015-11 did not have a material impact on the Company's consolidated financial statements.
In March 2016, the Financial Accounting Standards Board issued Compensation-Stock Compensation, Topic 718 (ASU No. 2016-09). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. In addition, the ASU also clarifies the statement of cash flows presentation for certain components of share-based awards. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2016-09 in the first quarter of fiscal 2017 and has elected to continue estimating forfeitures each period. Prospectively, beginning January 29, 2017, excess tax benefits/deficiencies, along with the full valuation allowance, have been reflected as income tax benefit/expense in the statement of operations resulting in no impact on the tax provision in fiscal 2017. Additionally, the statement of cash flows classification of prior periods has not changed as a result of adoption.
In August 2016, the Financial Accounting Standards Board issued Statement of Cash Flows, Topic 230 (ASU No. 2016-15). This amendment provides guidance on the presentation and classification of specific cash flow items to improve consistency in practice. The standard provides guidance in a number of situations including, among others, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and debt prepayment or extinguishment costs. The new standard is effective retrospectively for the Company for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. The Company elected to early adopt this standard in the first quarter of fiscal 2017, applying it retrospectively. The adoption of ASU 2016-15 had no impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Revenue from Contracts with Customers, Topic 606 (ASU No. 2014-09), which provides a framework for the recognition of revenue, with the objective that recognized revenues properly reflect amounts an entity is entitled to receive in exchange for goods and services. The guidance also includes additional disclosure requirements regarding revenue, cash flows and obligations related to contracts with customers. In July 2015, the Financial Accounting Standards Board approved a one year deferral of the effective date of ASU 2014-09. The standard will now become effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.
The Company is continuing to evaluate the impact of ASU 2014-09, related amendments and interpretive guidance will have on the Company's consolidated financial statements, financial systems and controls. In addition, the Company is in the process of finalizing its conclusions and determining the application of several aspects of ASU 2014-09, including: principal versus agent and the determination of when control of goods transfers to our customers. The Company expects certain changes to be made to its accounting policies, including the presentation of estimated merchandise returns as both an asset (equal to the inventory value expected to be returned) and a corresponding return liability, compared to the current practice of recording an estimated net return liability. In addition, the Company intends to elect the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when its payment terms are less than one year. The Company will apply the modified retrospective method of transition, which may result in a cumulative adjustment to retained earnings. Based on our analysis thus far, we believe the impact of adopting the new guidance will be immaterial to our annual and interim financial statements. We continue to assess the impact on all areas of our revenue recognition and related disclosure requirements.
In February 2016, the Financial Accounting Standards Board issued Leases, Topic 842 (ASU No 2016-02). ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2016-02 on the Company's consolidated financial statements.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
GAAP utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1 measurement), then priority to quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
As of October 28, 2017 and January 28, 2017 the Company had $450,000 in Level 2 investments in the form of bank certificates of deposit. The Company's investments in certificates of deposits were measured using inputs based upon quoted prices for similar instruments in active markets and, therefore, were classified as Level 2 investments. As of October 28, 2017 and January 28, 2017 the Company also had long-term variable rate Credit Facilities, classified as Level 2, with carrying values of $78,070,000 and $85,388,000. As of October 28, 2017 and January 28, 2017, $3,440,000 and $3,242,000 was classified as current. The fair value of the variable rate Credit Facilities approximates and is based on its carrying value. The Company has no Level 3 investments that use significant unobservable inputs.
Intangible Assets
Intangible Assets
Intangible Assets
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
 
 
Estimated Useful Life
(In Years)
 
October 28, 2017
 
January 28, 2017
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets
 
5-15
 
$
1,786,000

 
$
(295,000
)
 
$
1,786,000

 
$
(171,000
)
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  FCC broadcast license
 
 
 
$
9,500,000

 
 
 
$
12,000,000

 
 
Finite-lived Intangible Assets
The finite-lived intangible assets are included in Other Assets in the accompanying balance sheets and consist of the Evine trademark and the Princeton Watches trade name and customer list. Amortization expense related to the finite-lived intangible assets was $41,000 and $18,000 for the three-month periods ended October 28, 2017 and October 29, 2016 and $124,000 and $61,000 for the nine-month periods ended October 28, 2017 and October 29, 2016. Estimated amortization expense is $165,000 for fiscal 2017 and each fiscal year through fiscal 2020 and $157,000 for fiscal 2021.
FCC Broadcast License and Sale of Boston Television Station, WWDP
As of January 28, 2017, the Company had an intangible FCC broadcasting license with a carrying value of $12,000,000 and an estimated fair value of $13,400,000. On August 28, 2017, the Company entered into two agreements with unrelated parties to sell its Boston television station, WWDP, including the Company's FCC broadcast license, for an aggregate of $13,500,000.
On August 28, 2017, the Company entered into a channel sharing and facilities agreement (the “Channel Sharing Agreement”) with NRJ Boston OpCo, LLC and NRJ TV Boston License Co., LLC (collectively, “NRJ”) to allow NRJ to operate its local Boston television station on one-third of the spectrum used in the operation of the Company's television broadcast station, WWDP(TV), Norwell, Massachusetts (the “Station”), in perpetuity. The total consideration payable to the Company under the Channel Sharing Agreement is $3,500,000, of which $2,500,000 was paid in October 2017 upon the grant of a required construction permit by the FCC. The balance is payable upon the closing of the sale of substantially all of the remaining assets used by the Company in the operation of the Station or the transfer of the equipment necessary for channel sharing among the Company and NRJ to a newly formed entity.
On August 28, 2017, the Company also entered into an asset purchase agreement to sell substantially all of the assets primarily related to the Station to affiliates of WRNN-TV Associates Limited Partnership (“Buyers”). The purchase price for the Station's assets is $10,000,000 in cash, subject to an escrow holdback amount of $1,000,000, which is payable to the Company when the Station is being carried by certain designated carriers at or following the closing of the transaction. The escrow holdback is payable back to the Buyers in monthly installments beginning approximately 14 months after the closing if the station is not being carried by certain designated carriers. The asset purchase agreement includes customary representations, warranties, covenants and indemnification obligations of the parties. The sale of assets pursuant to the purchase agreement is expected to close in the fourth quarter of fiscal 2017 or the first quarter of fiscal 2018 following receipt of specified regulatory approvals from the FCC and satisfaction of other closing conditions in the asset purchase agreement. The Company plans to use the proceeds received from the transaction to pay in full the remaining amounts due under the Company's term loan with GACP Finance Co., LLC, with the remaining proceeds used for general working capital purposes.
Credit Agreements
Credit Agreements
Credit Agreements
The Company's long-term credit facilities consist of:
 
 
October 28, 2017
 
January 28, 2017
PNC Credit Facility
 
 
 
 
PNC revolving loan due March 21, 2022, principal amount
 
$
59,900,000

 
$
59,900,000

 
 
 
 
 
PNC term loan due March 21, 2022, principal amount
 
14,924,000

 
10,637,000

Less unamortized debt issuance costs
 
(163,000
)
 
(181,000
)
PNC term loan due March 21, 2022, carrying amount
 
14,761,000

 
10,456,000

 
 
 
 
 
GACP Credit Agreement
 
 
 
 
GACP term loan due March 9, 2021, principal amount
 
3,654,000

 
16,292,000

Less unamortized debt issuance costs
 
(245,000
)
 
(1,260,000
)
GACP term loan due March 9, 2021, carrying amount
 
3,409,000

 
15,032,000

 
 
 
 
 
Total long-term credit facilities
 
78,070,000

 
85,388,000

Less current portion of long-term credit facilities
 
(3,440,000
)
 
(3,242,000
)
Long-term credit facilities, excluding current portion
 
$
74,630,000

 
$
82,146,000


PNC Credit Facility
On February 9, 2012, the Company entered into a credit and security agreement (as amended through September 25, 2017, the "PNC Credit Facility") with PNC Bank, N.A. ("PNC"), a member of The PNC Financial Services Group, Inc., as lender and agent. The PNC Credit Facility, which includes CIBC Bank USA (formerly known as The Private Bank) as part of the facility, provides a revolving line of credit of $90.0 million and provides for a term loan on which the Company had originally drawn to fund improvements at the Company's distribution facility in Bowling Green, Kentucky and subsequently, to pay down the Company's GACP Term Loan (as defined below). The PNC Credit Facility also provides an accordion feature that would allow the Company to expand the size of the revolving line of credit by another $25.0 million at the discretion of the lenders and upon certain conditions being met. On March 21, 2017, the Company entered into the Eighth Amendment to the PNC Credit Facility, which among other things, increased the term loan by $6,000,000, extended the term of the PNC Credit Facility from May 1, 2020 to March 21, 2022, and authorized the proceeds from the term loan to be used as part of a voluntary prepayment of $9,500,000 on its GACP Term Loan.
All borrowings under the PNC Credit Facility mature and are payable on March 21, 2022. Subject to certain conditions, the PNC Credit Facility also provides for the issuance of letters of credit in an aggregate amount up to $6.0 million which, upon issuance, would be deemed advances under the PNC Credit Facility. Maximum borrowings and available capacity under the revolving line of credit under the PNC Credit Facility are equal to the lesser of $90.0 million or a calculated borrowing base comprised of eligible accounts receivable and eligible inventory. The PNC Credit Facility is secured by a first security interest in substantially all of the Company’s personal property, as well as the Company’s real properties located in Eden Prairie, Minnesota and Bowling Green, Kentucky up to $19 million. Under certain circumstances, the borrowing base may be adjusted if there were to be a significant deterioration in value of the Company’s accounts receivable and inventory.
The revolving line of credit under the PNC Credit Facility bears interest at LIBOR plus a margin of between 3% and 4.5% based on the Company's trailing twelve-month reported EBITDA (as defined in the PNC Credit Facility) measured quarterly in fiscal 2016 and semi-annually thereafter as demonstrated in its financial statements. The term loan bears interest at either a Base Rate or LIBOR plus a margin consisting of between 4% and 5% on Base Rate term loans and 5% to 6% on LIBOR Rate term loans based on the Company’s leverage ratio as demonstrated in its audited financial statements.
As of October 28, 2017, the Company had borrowings of $59.9 million under its revolving credit facility. Remaining available capacity under the revolving credit facility as of October 28, 2017 is approximately $12.9 million, and provides liquidity for working capital and general corporate purposes. The PNC Credit Facility also provides for a term loan on which the Company has drawn to fund an expansion and improvements at the Company's distribution facility in Bowling Green, Kentucky and to partially pay down the Company's GACP Term Loan. As of October 28, 2017, there was approximately $14.9 million outstanding under the PNC Credit Facility term loan of which $2.5 million was classified as current in the accompanying balance sheet.
Principal borrowings under the term loan are to be payable in monthly installments over an 84 month amortization period commencing on April 1, 2017 and are also subject to mandatory prepayment in certain circumstances, including, but not limited to, upon receipt of certain proceeds from dispositions of collateral. Borrowings under the term loan are also subject to mandatory prepayment in an amount equal to fifty percent (50%) of excess cash flow for such fiscal year, with any such payment not to exceed $2.0 million in any such fiscal year. The PNC Credit Facility is also subject to other mandatory prepayment in certain circumstances. In addition, if the total PNC Credit Facility is terminated prior to maturity, the Company would be required to pay an early termination fee of 3.0% if terminated on or before March 21, 2018, 1.0% if terminated on or before March 21, 2019, 0.5% if terminated on or before March 21, 2020, and no fee if terminated after March 21, 2020. As of October 28, 2017, the imputed effective interest rate on the PNC term loan was 7.7%.
Interest expense recorded under the PNC Credit Facility for the three and nine-month periods ended October 28, 2017 was $934,000 and $3,076,000 and $997,000 and $2,864,000 for the three and nine-month periods ended October 29, 2016.
The PNC Credit Facility contains customary covenants and conditions, including, among other things, maintaining a minimum of unrestricted cash plus unused line availability of $10.0 million at all times and limiting annual capital expenditures. As the Company's unused line availability was greater than $10.0 million at October 28, 2017, no additional cash was required to be restricted. Certain financial covenants, including minimum EBITDA levels (as defined in the PNC Credit Facility) and a minimum fixed charge coverage ratio of 1.1 to 1.0, become applicable only if unrestricted cash plus unused line availability falls below $10.8 million. As of October 28, 2017, the Company's unrestricted cash plus unused line availability was $36.3 million and the Company was in compliance with applicable financial covenants of the PNC Credit Facility and expects to be in compliance with applicable financial covenants over the next twelve months. In addition, the PNC Credit Facility places restrictions on the Company’s ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to common shareholders.
Costs incurred to obtain amendments to the PNC Credit Facility totaling $1,405,000 and unamortized costs incurred to obtain the original PNC Credit Facility totaling $466,000 have been deferred and are being expensed as additional interest over the five-year term of the PNC Credit Facility.
Great American Capital Partners Credit Agreement
On March 10, 2016, the Company entered into a term loan credit and security agreement (as amended through September 25, 2017, the "GACP Credit Agreement") with GACP Finance Co., LLC ("GACP") for a term loan of $17.0 million. Proceeds from the GACP Term Loan have been used to provide for working capital and general corporate purposes and to help strengthen the Company's total liquidity position. The term loan under the GACP Credit Agreement (the "GACP Term Loan") is secured on a first lien priority basis by the proceeds of any sale of the Company's Boston television station FCC license and on a second lien priority basis by the Company's accounts receivable, equipment, inventory and certain real estate as well as other assets as described in the GACP Credit Agreement. The Company has also pledged the stock of certain subsidiaries to secure such obligations on a second lien priority basis. As of October 28, 2017, the GACP Term Loan had $3,654,000 outstanding, of which $921,000 was classified as current in the accompanying balance sheet.
On March 21, 2017, the Company made a voluntary principal prepayment of $9,500,000 on its GACP Term Loan. The principal payment was funded by a combination of cash on hand and proceeds of $6,000,000 from the Company’s lower interest PNC Credit Facility term loan. The Company recorded a loss on extinguishment of debt totaling $913,000 in connection with the principal prepayment, which includes early termination and lender fees of $199,000 and unamortized debt issuance costs of $714,000, which represents the proportionate amount of unamortized debt issuance costs attributable to the extinguished debt.
On October 18, 2017, the Company made a voluntary principal prepayment of $2,500,000 on its GACP Term Loan. The principal payment was funded by proceeds received by the Company under the Channel Sharing Agreement, as discussed in Note 4 - Intangible Assets. The Company recorded a loss on extinguishment of debt totaling $221,000 in connection with the principal prepayment, which includes early termination and lender fees of $50,000 and unamortized debt issuance costs of $171,000, which represents the proportionate amount of unamortized debt issuance costs attributable to the extinguished debt.
The GACP Credit Agreement matures on March 9, 2021. The GACP Term Loan bears interest at either (i) a fixed rate based on the greater of LIBOR for interest periods of one, two or three months or 1% plus a margin of 11.0%, or (ii) a daily floating Alternate Base Rate plus a margin of 10.0%. As of October 28, 2017, the imputed effective interest rate on the GACP term loan was 16.3%.
Principal borrowings under the GACP Term Loan are payable in consecutive monthly installments of $70,833 each, commencing on April 1, 2016, with a final installment due at the end of the five-year term equal to the aggregate principal amount of all loans outstanding on such date. The GACP Term Loan is also subject to mandatory prepayment in certain circumstances, including, but without limitation, from the proceeds of the sale of collateral assets and from 50% of annual excess cash flow as defined in the GACP Credit Agreement. The GACP Term Loan can be prepaid voluntarily at any time and, if terminated prior to maturity, the Company would be required to pay an early termination fee of 2.0% if terminated on or before March 10, 2018; 1.0% if terminated on or before March 10, 2019; and no fee if terminated after March 10, 2019. Interest expense recorded under the GACP Credit Agreement for the three and nine-month periods ended October 28, 2017 was $219,000 and $880,000 and $585,000 and $1,519,000 for the three and nine-month periods ended October 29, 2016.
The GACP Credit Agreement contains customary covenants and conditions, including, among other things, maintaining a minimum of unrestricted cash plus revolving line of credit availability under the PNC Credit Facility of $10.0 million at all times and limiting annual capital expenditures. Certain financial covenants, including minimum EBITDA levels (as defined in the GACP Credit Agreement) and a minimum fixed charge coverage ratio of 1.1 to 1.0, become applicable only if unrestricted cash plus revolving line of credit availability under the PNC Credit Facility falls below $10.8 million. As of October 28, 2017, the Company's unrestricted cash plus unused line availability was $36.3 million and the Company was in compliance with applicable financial covenants of the GACP Credit Agreement and expects to be in compliance with applicable financial covenants over the next twelve months. In addition, the GACP Credit Agreement places restrictions on the Company’s ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to common shareholders.
Costs incurred to obtain the GACP Credit Agreement totaling $1,559,000 less the costs written-off for the March 21, 2017 and October 18, 2017 partial debt extinguishments totaling $885,000 have been deferred and are being expensed as additional interest over the five-year term of the GACP Credit Agreement.
The aggregate maturities of the Company's long-term credit facilities as of October 28, 2017 are as follows:
 
 
PNC Credit Facility
 
 
 
 
Fiscal year
 
Term loan
 
Revolving loan
 
GACP Term Loan
 
Total
2017
 
$
776,000

 
$

 
$
283,000

 
$
1,059,000

2018
 
2,326,000

 

 
850,000

 
3,176,000

2019
 
2,132,000

 

 
779,000

 
2,911,000

2020
 
2,326,000

 

 
850,000

 
3,176,000

2021
 
2,326,000

 

 
892,000

 
3,218,000

2022
 
5,038,000

 
59,900,000

 

 
64,938,000

 
 
$
14,924,000

 
$
59,900,000

 
$
3,654,000

 
$
78,478,000

Shareholders' Equity
Shareholders' Equity [Text Block]
Shareholders' Equity
Registered Direct Offering
On May 23, 2017, the Company entered into Common Stock Purchase Agreements with certain accredited investors to which the Company sold, in the aggregate, 4,008,273 shares of common stock in a registered direct offering pursuant to a shelf registration statement on Form S-3 (File No. 333-203209), filed with the SEC on May 13, 2015. The shares were sold at a price of $1.12 per share, except for shares purchased by investors who are directors or executive officers of the Company, which were sold at a price of $1.15 per share. The closing of this sale occurred on May 30, 2017 and the Company received gross proceeds of approximately $4.5 million and incurred approximately $323,000 of issuance costs. The Company has used the proceeds for general working capital purposes.
Private Placement Securities Purchase Agreements
On September 14, 2016, the Company entered into private placement securities purchase agreements ("Purchase Agreements") with certain accredited investors to which the Company: (a) sold, in the aggregate, 5,952,381 shares of the Company's common stock at a price of $1.68 per share; (b) issued five-year warrants ("Warrants") to purchase 2,976,190 shares of the Company's common stock at an exercise price of $2.90 per share, and (c) issued an option by which certain investors may purchase additional shares of Company's common stock and additional warrants to purchase shares of common stock ("Options").
The Company received gross proceeds of $10.0 million and incurred approximately $852,000 of issuance costs. The Warrants will expire on September 19, 2021 and were not exercisable until March 19, 2017. Except as noted below, the term of each option was six months and expired on March 19, 2017. The option exercise price was equal to the five-day volume weighted average price per share of the Company's common stock as of the day immediately prior to exercise. Upon exercise of the Options, two-thirds of the option securities would be issued in the form of common stock, and one-third would be issued in the form of warrants ("Option Warrants"). These Option Warrants have an exercise price at a 50% premium to the Company's closing stock price one-day prior to the option exercise and will expire five years after issuance. If all of the Warrants, Options and Option Warrants issued by the Company are all exercised, the total shares of common stock issued in connection with this offering cannot be more than approximately 19.99% of the Company's total issued and outstanding shares following such exercises.
The Company allocated the $10 million proceeds of the stock offering to each of the issued freestanding financial instruments based on their fair value at the time of issuance. The Warrants are indexed to the Company's publicly traded stock and were classified as equity. As a result, the portion of the proceeds allocated to the fair value of the Warrants was recorded as an increase to additional paid-in capital. The fair value of the Options was determined to be nominal. The par value of the shares issued was recorded within common stock, with the remainder of the proceeds, less offering costs, recorded as additional paid in capital in the Company's balance sheet. The Company has used the proceeds for general working capital purposes.
As part of the Purchase Agreements, the Company agreed to register the shares of common stock sold in the private placement and the shares of common stock issuable upon exercise of the Warrants, Options and certain of the Option Warrants. The Company has filed registration statements on Form S-3 to register the common stock sold in the private placement and issuable upon exercise of the Warrants, Options and the outstanding Option Warrants. The Company agreed to keep the shelf registration statement effective until the earlier of the second anniversary of the closing or such time as all registrable securities may be sold pursuant to Rule 144 under the Securities Act of 1933, without the need for current public information or other restriction.
During the fourth quarter of fiscal 2016, three investors exercised their Options. These exercises resulted in the Company's issuance, in the aggregate, of (a) 1,646,350 shares of the Company's common stock at a price ranging from $1.20 - $1.94 per share, resulting in aggregate proceeds of $2.5 million; and (b) five-year Option Warrants to purchase an additional 823,175 shares of the Company's common stock at an exercise price ranging from $1.76 - $3.00 per share and expire between November 10, 2021 and January 23, 2022. The Company incurred, in the aggregate, approximately $49,000 of issuance costs related to the Options exercised during the fourth quarter of fiscal 2016.
On March 16, 2017, the Company entered into the First Amendment and Restated Option (the "Amended Option") with TH Media Partners, LLC, one of the September 14, 2016 Securities Purchase Agreement investors. Under the terms of the Amended Option, the investor has the right to exercise its Option in two tranches. The first tranche reflects rights to purchase 150,000 shares of the Company’s common stock, which were issuable in the form of 100,000 common shares and a warrant to purchase an additional 50,000 common shares and was exercised on March 16, 2017. The exercise resulted in the issuance of (a) 100,000 shares of the Company's common stock at a price of $1.33 per share, resulting in aggregate proceeds of $133,000; and (b) a five-year Option Warrant to purchase an additional 50,000 shares of the Company's common stock at an exercise price of $1.92 per share and expiring on March 16, 2022. The second tranche reflected the right to purchase up to 1,073,945 shares of the Company’s common stock issuable in the form of 715,963 common shares and an Option Warrant to purchase an additional 357,982 common shares. The second tranche expired unexercised on September 19, 2017. The exercise price of the Option and Option Warrants for the first and second tranches were not modified by the Amended Option. The Company incurred, in the aggregate, approximately $23,000 of issuance costs related to the Options exercised during the first quarter of fiscal 2017.
Stock Purchase from NBCU
On January 31, 2017, the Company purchased from NBCUniversal Media, LLC (“NBCU”) 4,400,000 shares of the Company’s common stock for approximately $5 million or $1.12 per share pursuant to the Repurchase Letter Agreement. Following the Company's share purchase, the direct equity ownership of NBCU in the Company consisted of 2,741,849 shares of common stock, or 4.5% of the Company's outstanding common stock. Upon the settlement, the NBCU Shareholder Agreement was terminated pursuant to the Repurchase Letter Agreement. See Note 11 for additional information.
Stock-Based Compensation - Stock Options
Compensation is recognized for all stock-based compensation arrangements by the Company. Stock-based compensation expense for the third quarters of fiscal 2017 and fiscal 2016 related to stock option awards was $247,000 and $119,000. Stock-based compensation expense for the first nine months of fiscal 2017 and fiscal 2016 related to stock option awards was $670,000 and $374,000. The Company has not recorded any income tax benefit from the exercise of stock options due to the uncertainty of realizing income tax benefits in the future.
As of October 28, 2017, the Company had one omnibus stock plan for which stock awards can be currently granted: the 2011 Omnibus Incentive Plan that provides for the issuance of up to 9,500,000 shares of the Company's stock. The 2004 Omnibus Stock Plan expired on June 22, 2014. No further awards may be made under the 2004 Omnibus Plan, but any award granted under the 2004 Omnibus Plan and outstanding on June 22, 2014 will remain outstanding in accordance with its terms. The 2001 Omnibus Stock Plan expired on June 21, 2011 and as of October 28, 2017, there were no stock awards outstanding under the 2001 Omnibus Plan. The 2011 plan is administered by the human resources and compensation committee of the board of directors and provides for awards for employees, directors and consultants. All employees and directors of the Company and its affiliates are eligible to receive awards under the plan. The types of awards that may be granted under this plan include restricted and unrestricted stock, restricted stock units, incentive and nonstatutory stock options, stock appreciation rights, performance units, and other stock-based awards. Incentive stock options may be granted to employees at such exercise prices as the human resources and compensation committee may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. No incentive stock option may be granted more than 10 years after the effective date of the respective plan's inception or be exercisable more than 10 years after the date of grant. Options granted to outside directors are nonstatutory stock options with an exercise price equal to 100% of the fair market value of the underlying stock as of the date of grant. With the exception of market-based options, options granted generally vest over three years in the case of employee stock options and vest immediately on the date of grant in the case of director options, and have contractual terms of 10 years from the date of grant.
The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company's stock. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company uses the simplified method in estimating its expected option term because it believes that historical exercise data cannot be accurately relied upon at this time to provide a reasonable basis for estimating an expected term due to the extreme volatility of its stock price and the resulting unpredictability of its stock option exercises. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
 
Fiscal 2017
 
Fiscal 2016
Expected volatility:
81%
 
82
%
-
84%
Expected term (in years):
6 years
 
5

-
6 years
Risk-free interest rate:
2.0
%
-
2.2%
 
1.4
%
-
1.7%

A summary of the status of the Company’s stock option activity as of October 28, 2017 and changes during the nine months then ended is as follows:
 
2011
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2004
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2001
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
Balance outstanding, January 28, 2017
2,543,000

 
$
2.19

 
301,000

 
$
5.41

 
77,000

 
$
10.73

Granted
1,627,000

 
$
1.31

 

 
$

 

 
$

Exercised
(52,000
)
 
$
0.99

 

 
$

 

 
$

Forfeited or canceled
(636,000
)
 
$
3.05

 
(14,000
)
 
$
4.88

 
(77,000
)
 
$
10.73

Balance outstanding, October 28, 2017
3,482,000

 
$
1.64

 
287,000

 
$
5.44

 

 
$

Options exercisable at October 28, 2017
879,000

 
$
2.26

 
287,000

 
$
5.44

 

 
$


The following table summarizes information regarding stock options outstanding at October 28, 2017:
 
Options Outstanding
 
Options Vested or Expected to Vest
Option Type
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
2011 Incentive:
3,482,000

 
$
1.64

 
8.7
 
$
31,000

 
3,119,000

 
$
1.68

 
8.3
 
$
29,000

2004 Incentive:
287,000

 
$
5.44

 
2.5
 
$

 
287,000

 
$
5.44

 
2.5
 
$

2001 Incentive:

 
$

 
0.0
 
$

 

 
$

 
0.0
 
$


The weighted average grant-date fair value of options granted in the first nine-months of fiscal 2017 and fiscal 2016 was $0.91 and $0.94. The total intrinsic value of options exercised during the first nine-months of fiscal 2017 and fiscal 2016 was $10,000 and $0. As of October 28, 2017, total unrecognized compensation cost related to stock options was $1,690,000 and is expected to be recognized over a weighted average period of approximately 2.1 years.
Stock-Based Compensation - Restricted Stock
Compensation expense recorded for the third quarters of fiscal 2017 and fiscal 2016 relating to restricted stock grants was $543,000 and $678,000. Compensation expense recorded for the first nine-months of fiscal 2017 and fiscal 2016 relating to restricted stock grants was $1,387,000 and $1,058,000. As of October 28, 2017, there was $2,268,000 of total unrecognized compensation cost related to non-vested restricted stock grants. That cost is expected to be recognized over a weighted average expected life of 1.6 years. The total fair value of restricted stock vested during the first nine months of fiscal 2017 and fiscal 2016 was $392,000 and $653,000.
During the third quarter of fiscal 2017 the Company granted a total of 3,000 shares of time-based restricted stock awards which will vest in three equal annual installments beginning one year from the grant date. The aggregate market value of the restricted stock at the date of the award was $3,000 and is being amortized as compensation expense over the three-year vesting period. During the third quarter of fiscal 2016, the Company granted a total of 34,563 shares of time-based restricted stock awards to certain key employees as part of the Company's long-term incentive program. The restricted stock will vest in three equal annual installments beginning one year from the grant date. The aggregate market value of the restricted stock at the date of the award was $57,000. The awards are being amortized as compensation expense over the three-year vesting period. During the third quarter of fiscal 2016, the Company also granted a total of 28,119 shares of restricted stock to a board member as part of the Company's annual director compensation program. This restricted stock award vested on June 13, 2017, the day immediately preceding the Company's 2017 annual meeting of shareholders. The aggregate market value of the restricted stock at the date of the award was $51,000 and was amortized as director compensation expense over the vesting period.
During the third quarter of fiscal 2016, Robert Rosenblatt was appointed as permanent Chief Executive Officer and entered into an executive employment agreement. In conjunction with the employment agreement, the Company granted, to Mr. Rosenblatt, 231,799 shares of market-based restricted stock performance units as part of the Company's long-term incentive program. The number of restricted stock units earned is based on the Company's total shareholder return ("TSR") relative to a group of industry peers over a three-year performance measurement period. The total grant date fair value was estimated to be $422,000, or $1.82 per share and is being amortized over the three-year performance period. Grant date fair values were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of 0.76%, a weighted average expected life of three years and an implied volatility of 77%. The percent of the target market-based performance vested restricted stock unit award that will be earned based on the Company's TSR relative to the peer group is as follows:
Percentile Rank
 
Percentage of
Units Vested
< 33%
 
0%
33%
 
50%
50%
 
100%
100%
 
150%
On August 18, 2016, the Company granted an additional 625,000 shares of restricted stock in conjunction with Mr. Rosenblatt's employment agreement. The restricted stock award vests in three tranches. Tranche 1 (one-third of the shares subject to the award) vested on the date of grant. Tranche 2 (one-third) will vest on the date the Company's average closing stock price for 20 consecutive trading days equals or exceeds $4.00 per share and the executive has been continuously employed at least one year. Tranche 3 (one-third) will vest on the date the Company's average closing stock price for 20 consecutive trading days equals or exceeds $6.00 per share and the executive has been continuously employed at least two years. The vesting of the second and third tranches can occur any time on or before the tenth anniversary of the grant date. The total grant date fair value was estimated to be $958,000 and is being amortized over the derived service periods for each tranche.
Grant date fair values and derived service periods for each tranche were determined using a Monte Carlo valuation model based on assumptions, which included a weighted average risk-free interest rate of 1.5%, a weighted average expected life of 1.2 years and an implied volatility of 86% and were as follows for each tranche:
 
 
Fair Value (Per Share)
 
Derived Service Period
Tranche 1 (immediate)
 
$1.60
 
0 Years
Tranche 2 ($4.00/share)
 
$1.52
 
1.46 Years
Tranche 3 ($6.00/share)
 
$1.48
 
2.22 Years
During the second quarters of fiscal 2017 and fiscal 2016, the Company granted a total of 472,720 and 167,142 shares of restricted stock to non-employee directors as part of the Company's annual director compensation program. Each restricted stock award vests or did vest on the day immediately preceding the next annual meeting of shareholders following the date of grant. The aggregate market value of the restricted stock at the date of the awards was $520,000 and $292,000 for the second quarters of fiscal 2017 and fiscal 2016. The awards are being amortized as director compensation expense over the twelve-month vesting period. During the second quarters of fiscal 2017 and fiscal 2016, the Company also granted a total of 318,360 and 60,916 shares of time-based restricted stock awards to certain key employees as part of the Company's long-term incentive program. The restricted stock vests in three equal annual installments beginning one year from the grant date. The aggregate market value of the restricted stock at the date of the award was $395,000 and $78,000 for the second quarters of fiscal 2017 and fiscal 2016. The awards are being amortized as compensation expense over the three-year vesting period.
During the first quarters of fiscal 2017 and fiscal 2016, the Company granted a total of 317,219 and 188,991 shares of time-based restricted stock awards to certain key employees as part of the Company's long-term incentive program. The restricted stock vests in three equal annual installments beginning one year from the grant date. The aggregate market value of the restricted stock at the date of the award was $422,000 and $187,000 for the first quarters of fiscal 2017 and fiscal 2016. The awards are being amortized as compensation expense over the three-year vesting period. During the first quarter of fiscal 2017, the Company also granted a total of 327,738 shares of time-based restricted stock awards to employees as part of the Company's annual merit process. The restricted stock vests one year after the date of the grant on April 24, 2018. The aggregate market value of the restricted stock at the date of the award was $446,000 and is being amortized as compensation expense over the one-year vesting period.
During the first quarter of fiscal 2017, the Company also granted a total of 7,096 shares of restricted stock to a newly appointed board member as part of the Company's annual director compensation program. This award vested on June 13, 2017, the day immediately preceding the Company's 2017 annual meeting of shareholders. The aggregate market value of the restricted stock at the date of the award was $9,000 and was amortized as director compensation expense over the vesting period.
During the first quarters of fiscal 2017 and fiscal 2016, the Company granted a total of 561,981 and 179,156 shares of market-based restricted stock performance units to certain executives as part of the Company's long-term incentive program. The number of restricted stock units earned is based on the Company's total shareholder return ("TSR") relative to a group of industry peers over a three-year performance measurement period. Grant date fair values were determined using a Monte Carlo valuation model based on assumptions as follows:
 
Fiscal 2017
 
Fiscal 2016
Total grant date fair value
$860,000
 
$224,000
Total grant date fair value per share
$1.53
 
$0.98
-
$1.72
Expected volatility
75%
 
71
%
-
73%
Weighted average expected life (in years)
3 years
 
3 years
Risk-free interest rate
1.5%
 
0.9
%
-
1.0%

The percent of the target market-based performance vested restricted stock unit award that will be earned based on the Company's TSR relative to the peer group is as follows:
Percentile Rank
 
Percentage of
Units Vested
< 33%
 
0%
33%
 
50%
50%
 
100%
100%
 
150%

A summary of the status of the Company’s non-vested restricted stock activity as of October 28, 2017 and changes during the nine-month period then ended is as follows:
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, January 28, 2017
1,620,000

 
$2.00
Granted
2,008,000

 
$1.32
Vested
(339,000
)
 
$1.94
Forfeited
(367,000
)
 
$2.41
Non-vested outstanding, October 28, 2017
2,922,000

 
$1.49

Shareholder Cooperation and Standstill Agreement
On March 24, 2017, the Company entered into a Cooperation Agreement with the Clinton Group, Inc. and GlassBridge Enterprises, Inc. (collectively "the Investor Group"). Pursuant to the Cooperation Agreement, the Company agreed (i) to have the Company's Board of Directors (the "Board") appoint, within 30 calendar days, one new independent director, from a list of candidates, to serve on the Board until the 2017 Annual Meeting of Shareholders (the "2017 Annual Meeting"), (ii) to nominate the new independent director for election to the Board at the 2017 Annual Meeting for a term expiring at the 2018 Annual Meeting of Shareholders, (iii) to recommend in the Company's 2017 definitive proxy statement that the shareholders of the Company vote to elect the new independent director to the Board at the 2017 Annual Meeting, and (iv) to solicit, obtain proxies in favor of and otherwise support the election of the new independent director to the board at the 2017 Annual Meeting in a manner no less favorable than the manner in which the Company supports other nominees for election at the 2017 Annual Meeting. The Company has complied with each of these requirements. Under the terms of the Cooperation Agreement, the Investor Group agreed to certain standstill provisions with respect to the Investor Group's actions with regard to the Company and its common stock. Such standstill provisions will be in effect for a period commencing on March 24, 2017 and ending on the date that is the earlier of (x) ten (10) business days prior to the expiration of the advance notice period for the submission by shareholders of director nominations for consideration at the 2018 Annual Meeting, (y) one hundred (100) calendar days prior to the first anniversary of the 2017 Annual Meeting, or (z) upon ten (10) calendar days' prior written notice delivered by any of the Investor Group to the Company following a material breach of the Cooperation Agreement by the Company if such breach has not been cured within a notice period, provided that any member of the Investor Group is not then in material breach of the Cooperation Agreement.
Net Loss Per Common Share
Net Loss Per Common Share
Net Loss Per Common Share
Basic net loss per share is computed by dividing reported loss by the weighted average number of shares of common stock outstanding for the reported period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock of the Company during reported periods.
A reconciliation of net loss per share calculations and the number of shares used in the calculation of basic loss per share and diluted loss per share is as follows:    
 
 
Three-Month Periods Ended
 
Nine-Month Periods Ended
 
 
October 28,
2017
 
October 29,
2016
 
October 28,
2017
 
October 29,
2016
Net loss (a)
 
$
(1,103,000
)
 
$
(3,867,000
)
 
$
(6,290,000
)
 
$
(10,792,000
)
Weighted average number of shares of common stock outstanding — Basic
 
65,191,367

 
60,513,215

 
63,400,368

 
58,317,681

Dilutive effect of stock options, non-vested shares and warrants (b)
 

 

 

 

Weighted average number of shares of common stock outstanding — Diluted
 
65,191,367

 
60,513,215

 
63,400,368

 
58,317,681

Net loss per common share
 
$
(0.02
)
 
$
(0.06
)
 
$
(0.10
)
 
$
(0.19
)
Net loss per common share — assuming dilution
 
$
(0.02
)
 
$
(0.06
)
 
$
(0.10
)
 
$
(0.19
)
(a) The net loss for the three and nine-month periods ended October 28, 2017 includes costs related to executive and management transition of $893,000 and $1,971,000 and loss on debt extinguishment of $221,000 and $1,134,000. The net loss for the three and nine-month periods ended October 29, 2016 includes costs related to executive and management transition of $568,000 and $4,411,000 and distribution facility consolidation and technology upgrade costs totaling $150,000 and $530,000.
(b) For the three and nine-month periods ended October 28, 2017, there were -0- incremental in-the-money potentially dilutive common shares outstanding, and approximately 796,000 and 58,000 for the three and nine-month periods ended October 29, 2016. Incremental in-the-money potentially dilutive common shares are excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive.
Business Segments and Sales by Product Group
Business Segments and Sales by Product Group
Business Segments and Sales by Product Group
The Company has one reporting segment, which encompasses its video commerce retailing. The Company markets, sells and distributes its products to consumers primarily through its video commerce television, online website, evine.com, and mobile platforms. The Company's television shopping, online and mobile platforms have similar economic characteristics with respect to products, product sourcing, vendors, marketing and promotions, gross margins, customers, and methods of distribution. In addition, the Company believes that its television shopping program is a key driver of traffic to both the evine.com website and mobile applications whereby many of the online sales originate from customers viewing the Company's television program and then placing their orders online or through mobile devices. All of the Company's sales are made to customers residing in the United States. The chief operating decision maker is the Chief Executive Officer of the Company.
Information on net sales by significant product groups are as follows (in thousands):
 
 
Three-Month Periods Ended
 
Nine-Month Periods Ended
 
 
October 28,
2017
 
October 29,
2016
 
October 28,
2017
 
October 29,
2016
Jewelry & Watches
 
$
53,586

 
$
57,138

 
$
165,359

 
$
179,284

Home & Consumer Electronics
 
36,240

 
34,083

 
97,564

 
98,647

Beauty
 
20,566

 
18,718

 
63,445

 
65,082

Fashion & Accessories
 
26,468

 
26,335

 
84,231

 
84,854

All other (primarily shipping & handling revenue)
 
13,352

 
15,362

 
44,905

 
47,828

Total
 
$
150,212

 
$
151,636

 
$
455,504

 
$
475,695

Income Taxes
Income Taxes
Income Taxes
At January 28, 2017, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $326 million, and state NOLs of approximately $262 million which are available to offset future taxable income.  The Company's federal NOLs expire in varying amounts each year from 2023 through 2036 in accordance with applicable federal tax regulations and the timing of when the NOLs were incurred. 
In the first quarter of fiscal 2011, the Company had a change in ownership (as defined in Section 382 of the Internal Revenue Code) as a result of the issuance of common stock coupled with the redemption of all the Series B preferred stock held by GE Capital Equity Investments, Inc. (“GE Equity”).  Sections 382 and 383 limit the annual utilization of certain tax attributes, including NOL carryforwards, incurred prior to a change in ownership. Currently, the limitations imposed by Sections 382 and 383 are not expected to impair the Company's ability to fully realize its NOLs; however, the annual usage of NOLs incurred prior to the change in ownership is limited.  In addition, if the Company were to experience another ownership change, as defined by Sections 382 and 383, its ability to utilize its NOLs could be further substantially limited and depending on the severity of the annual NOL limitation, the Company could permanently lose its ability to use a significant amount of its accumulated NOLs. The Company currently has recorded a full valuation allowance for its net deferred tax assets.  The ultimate realization of these deferred tax assets and related limitations depend on the ability of the Company to generate sufficient taxable income in the future, as well as the timing of such income.
For the three and nine month periods ended October 28, 2017, the income tax benefit included a non-cash tax charge of approximately $197,000 and $591,000 relating to changes in the Company's long-term deferred tax liability related to the tax amortization of the Company's indefinite-lived intangible FCC license asset that is not available to offset existing deferred tax assets in determining changes to the Company's income tax valuation allowance. Further, for the three and nine month periods ended October 28, 2017, the income tax benefit also included a net, non-cash benefit of approximately $833,000 generated by a partial reversal of the Company’s long-term deferred tax liability relating to the Company's FCC license asset. This deferred tax reversal was the result of a $2,500,000 payment received in October 2017 in connection with the sale of the Company's television broadcast station, WWDP(TV), discussed further in Note 4 - Intangible Assets. The Company recognized a tax gain in conjunction with this transaction which will be largely offset with the Company’s available NOLs.
For the three and nine month periods ended October 29, 2016, the income tax provision included a non-cash tax charge of approximately $197,000 and $592,000. The Company expects the continued tax amortization of its indefinite-lived intangible asset and resulting book versus tax asset carrying value difference to result in approximately $156,000 of additional non-cash income tax expense over the remainder of fiscal 2017.
Shareholder Rights Plan
During the second quarter of fiscal 2015, the Company adopted a Shareholder Rights Plan to preserve the value of certain deferred tax benefits, including those generated by net operating losses. On July 10, 2015, the Company declared a dividend distribution of one purchase right (a “Right”) for each outstanding share of the Company’s common stock to shareholders of record as of the close of business on July 23, 2015 and issuable as of that date. On July 13, 2015, the Company entered into a Shareholder Rights Plan (the “Rights Plan”) with Wells Fargo Bank, N.A., a national banking association, with respect to the Rights. Except in certain circumstances set forth in the Rights Plan, each Right entitles the holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Cumulative Preferred Stock, $0.01 par value, of the Company (“Preferred Stock” and each one one-thousandth of a share of Preferred Stock, a “Unit”) at a price of $9.00 per Unit.
The Rights initially trade together with the common stock and are not exercisable. Subject to certain exceptions specified in the Rights Plan, the Rights will separate from the common stock and become exercisable following (i) the tenth calendar day after a public announcement or filing that a person or group has become an “Acquiring Person,” which is defined as a person who has acquired, or obtained the right to acquire, beneficial ownership of 4.99% or more of the common stock then outstanding, subject to certain exceptions, or (ii) the tenth calendar day (or such later date as may be determined by the board of directors) after any person or group commences a tender or exchange offer, the consummation of which would result in a person or group becoming an Acquiring Person. If a person or group becomes an Acquiring Person, each Right will entitle its holders (other than such Acquiring Person) to purchase one Unit at a price of $9.00 per Unit. A Unit is intended to give the shareholder approximately the same dividend, voting and liquidation rights as would one share of Common Stock, and should approximate the value of one share of Common Stock. At any time after a person becomes an Acquiring Person, the board of directors may exchange all or part of the outstanding Rights (other than those held by an Acquiring Person) for shares of common stock at an exchange rate of one share of common stock (and, in certain circumstances, a Unit) for each Right. The Company will promptly give public notice of any exchange (although failure to give notice will not affect the validity of the exchange).
The Rights will expire upon certain events described in the Rights Plan, including the close of business on the date of the third annual meeting of shareholders following the last annual meeting of shareholders of the Company at which the Rights Plan was most recently approved by shareholders, unless the Rights Plan is re-approved by shareholders at that third annual meeting of shareholders.  However, in no event will the Rights Plan expire later than the close of business on July 13, 2025. The Rights Plan was approved by the Company’s shareholders at the 2016 annual meeting of shareholders.
Until the close of business on the tenth calendar day after the day a public announcement or a filing is made indicating that a person or group has become an Acquiring Person, the Company may in its sole and absolute discretion amend the Rights or the Rights Plan agreement without the approval of any holders of the Rights or shares of common stock in any manner, including without limitation, amendments that increase or decrease the purchase price or redemption price or accelerate or extend the final expiration date or the period in which the Rights may be redeemed. The Company may also amend the Rights Plan after the close of business on the tenth calendar day after the day such public announcement or filing is made to cure ambiguities, to correct defective or inconsistent provisions, to shorten or lengthen time periods under the Rights Plan or in any other manner that does not adversely affect the interests of holders of the Rights. No amendment of the Rights Plan may extend its expiration date.
Litigation
Litigation
Litigation
The Company is involved from time to time in various claims and lawsuits in the ordinary course of business, including claims related to products, product warranties, intellectual property and consumer protection matters.
On June 26, 2017, a purported class action case was filed by an individual, William Horan, against both the Company and Invicta Watch Co. of America, Inc. (“Invicta”) in the United States District Court for the Eastern District of New York, asserting claims under the federal Magnuson-Moss Warranty Act and New York General Business Law Section 349.  The claims relate to the warranty provided with the Invicta watch that the plaintiff allegedly purchased through the Company.  Plaintiff alleges that the defendants breached the warranty, failed to disclose material information and\or made false representations concerning the warranty.  This case is pled as a putative class action, which means that the plaintiff seeks to represent a class of all other similarly situated individuals who purchased an Invicta watch through the Company.  The complaint seeks, among other relief, class certification of the lawsuit, unspecified damages, injunctive relief, costs and expenses, including attorneys’ fees, and such other relief as the court might find just and proper. Given the uncertainty of litigation, the preliminary stage of this case and the legal standards that must be met for, among other things, class certification, the Company cannot reasonably estimate the possible loss or range of loss that may result from this action.
 
On June 29, 2017, a purported class action case was filed by an individual, Betty Gregory, against the Company in the United States District Court for the Central District of California, asserting claims under the federal Telephone Consumer Protection Act (“TCPA”).  The plaintiff alleges that the Company unlawfully contacted her on her cellular telephone without her prior express consent.  This case is pled as a putative class action, and the plaintiff seeks to represent a class of all other individuals who received telephone calls similar to the ones she allegedly received from the Company and the Company's third-party collection vendors.  The TCPA provides for recovery of actual damages or $500 for each violation, whichever is greater. If it is determined that a defendant acted willfully or knowingly in violating the TCPA, the amount of the award may be increased by up to three times the amount provided above. The complaint seeks, among other relief, class certification of the lawsuit, unspecified damages, injunctive relief, costs and expenses, including attorneys’ fees, and such other relief as the court might find just and proper. Given the uncertainty of litigation, the preliminary stage of this case and the legal standards that must be met for, among other things, class certification, the Company cannot reasonably estimate the possible loss or range of loss that may result from this action.
Related Party Transactions
Related Party Transactions
Related Party Transactions
Relationship with GE Equity, Comcast and NBCU
Until April 29, 2016, the Company was a party to an amended and restated shareholder agreement, dated February 25, 2009 (the “GE/NBCU Shareholder Agreement”), with GE Equity and NBCU, which provided for certain corporate governance and standstill matters (as described further below). NBCU is an indirect subsidiary of Comcast Corporation (“Comcast”). The Company has a significant cable distribution agreement with Comcast and believes that the terms of the agreement are comparable to those with other cable system operators.
In an SEC filing made on August 18, 2015, GE Equity disclosed that on August 14, 2015, it and ASF Radio, L.P. (“ASF Radio”), an independent third party to Evine, entered into a Stock Purchase Agreement pursuant to which GE Equity agreed to sell 3,545,049 shares of the Company’s common stock, which is all of the shares GE Equity then owned, to ASF Radio for $2.15 per share. According to the SEC filing, ASF Radio is an affiliate of Ardian, an independent private equity investment company. The closing of this sale (the “GE/ASF Radio Sale”) occurred on April 29, 2016. In connection with the GE/ASF Radio Sale, the GE/NBCU Shareholder Agreement was terminated and the Company entered into a new Shareholder Agreement (the “NBCU Shareholder Agreement”) with NBCU described below.
GE/NBCU Shareholder Agreement
The GE/NBCU Shareholder Agreement that was terminated April 29, 2016 provided that GE Equity was entitled to designate nominees for three members of the Company's Board of Directors so long as the aggregate beneficial ownership of GE Equity and NBCU (and their affiliates) was at least equal to 50% of their beneficial ownership as of February 25, 2009 (i.e., beneficial ownership of approximately 8.7 million common shares) (the “50% Ownership Condition”), and two members of the Company's Board of Directors so long as their aggregate beneficial ownership was at least 10% of the shares of “adjusted outstanding common stock,” as defined in the GE/NBCU Shareholder Agreement (the “10% Ownership Condition”). In addition, the GE/NBCU Shareholder Agreement provided that GE Equity may designate any of its director-designees to be an observer of the audit, human resources and compensation, and corporate governance and nominating committees of the Company's Board of Directors. Neither GE Equity nor NBCU currently has, or during fiscal 2017 had, any designees serving on the Company's Board of Directors or committees.
The GE/NBCU Shareholder Agreement required that the Company obtain the consent of GE Equity before the Company (i) exceed certain thresholds relating to the issuance of securities, the payment of dividends, the repurchase or redemption of common stock, acquisitions (including investments and joint ventures) or dispositions, and the incurrence of debt; (ii) enter into any business different than the business in which the Company and its subsidiaries are currently engaged; and (iii) amend the Company's articles of incorporation to adversely affect GE Equity and NBCU (or their affiliates); provided, however, that these restrictions would no longer apply when both (1) GE Equity is no longer entitled to designate three director nominees, and (2) GE Equity and NBCU no longer hold any Series B preferred stock. The Company was also prohibited from taking any action that would cause any ownership interest by us in television broadcast stations from being attributable to GE Equity, NBCU or their affiliates.
Stock Purchase from NBCU
On January 31, 2017, the Company purchased from NBCU 4,400,000 shares of the Company's common stock, representing approximately 6.7% of shares then outstanding, for approximately $5 million or $1.12 per share, pursuant to the Repurchase Letter Agreement. Following the Company's share purchase, the direct equity ownership of NBCU in the Company consisted of 2,741,849 shares of common stock, or 4.5% of the Company's outstanding common stock. The NBCU Shareholder Agreement was terminated pursuant to the Repurchase Letter Agreement.
NBCU Shareholder Agreement
The Company was a party to the NBCU Shareholder Agreement until it was terminated pursuant to the Repurchase Letter Agreement on January 31, 2017. The NBCU Shareholder Agreement replaced the GE/NBCU Shareholder Agreement. The NBCU Shareholder Agreement provided that as long as NBCU or its affiliates beneficially own at least 5% of the Company's outstanding common stock, NBCU is entitled to designate one individual to be nominated to the Company’s Board of Directors. In addition, the NBCU Shareholder Agreement provided that NBCU may designate its director designee to be an observer of the audit, human resources and compensation, and corporate governance and nominating committees of the Company's Board of Directors. In addition, the NBCU Shareholder Agreement required the Company to obtain the consent of NBCU prior to the Company's adoption or amendment of any shareholder’s rights plan or certain other actions that would impede or restrict the ability of NBCU to acquire the Company's voting stock or our taking any action that would result in NBCU being deemed to be in violation of the Federal Communications Commission multiple ownership regulations.
The NBCU Shareholder Agreement also provided that unless NBCU beneficially owned less than 5% or more than 90% of the adjusted outstanding shares of common stock, NBCU could not sell, transfer or otherwise dispose of any securities of the Company subject to limited exceptions for (i) transfers to affiliates, (ii) third party tender offers, (iii) mergers, consolidations and reorganizations and (iv) transfers pursuant to underwritten public offerings or transfers exempt from registration under the Securities Act (provided, in the case of (iv), such transfers would not result in the transferee acquiring beneficial ownership in excess of 20%).
Registration Rights Agreement
On February 25, 2009, the Company entered into an amended and restated registration rights agreement that, as further amended, provided GE Equity, NBCU and their affiliates and any transferees and assigns, an aggregate of five demand registrations and unlimited piggy-back registration rights. In connection with the GE/ASF Radio Sale, an amendment to the Amended and Restated Registration Rights Agreement was entered into removing GE Equity as a party and adding ASF Radio, L.P. as a party.
2015 Letter Agreement with GE Equity
On July 9, 2015, the Company entered into a letter agreement with GE Equity pursuant to which GE Equity consented to the Company's adoption of a Shareholder Rights Plan in consideration for the Company's agreement to provide GE Equity, NBCU and certain of their respective affiliates with exemptions from the Shareholder Rights Plan. GE Equity’s consent was required pursuant to the terms of the GE/NBCU Shareholder Agreement. This discussion is a summary of the terms of the letter agreement. In the letter agreement, the Company agreed that if any of GE Equity, NBCU or any of their respective affiliates that holds shares of the Company's common stock from time to time (each a “Grandfathered Investor”) sells or otherwise transfers shares of the Company's common stock currently owned by such Grandfathered Investor to any third party identified to the Company in writing (any such third party, an “Exempt Purchaser”), the Company will take all actions necessary under the Shareholder Rights Plan so that such third party will not be deemed an Acquiring Person (as defined in the Shareholder Rights Plan) by virtue of the acquisition of such shares. The Company further agreed that, subject to certain limitations, upon request of any Grandfathered Investor or Exempt Purchaser, and in connection with a transfer by such Grandfathered Investor or Exempt Purchaser of shares of the Company's common stock to an Exempt Purchaser, the Company will enter into an agreement with the acquiring Exempt Purchaser granting such acquiring Exempt Purchaser substantially the same rights as set forth above with respect to any sale of the Company's outstanding shares of common stock to any other third party. Additionally, the Company agreed that without the consent of any Grandfathered Investor that is an affiliate of GE Equity and any Grandfathered Investor that is an affiliate of NBCU, the Company will not (i) amend the Shareholder Rights Plan in any material respect, other than to accelerate the Expiration Date or the Final Expiration Date, (ii) adopt another shareholders’ rights plan or (iii) amend the letter agreement.
Director Relationships
The Company entered into a service agreement with Newgistics, Inc. ("Newgistics") in fiscal 2004. Newgistics provides offsite customer returns consolidation and delivery services to the Company. The Company's Chief Executive Officer, Robert Rosenblatt, was a member of Newgistics' Board of Directors until October 2017, when Newgistics was acquired by a third party. The Company made payments to Newgistics totaling approximately $1,010,000 and $3,296,000 during the three and nine-month periods ended October 28, 2017 and payments totaling approximately $1,255,000 and $3,789,000 during the three and nine-month periods ended October 29, 2016.
One of the Company's directors, Thomas Beers, has a minority interest in one of the Company's on air food suppliers. The Company made inventory payments to this supplier totaling approximately $199,000 and $1,025,000 during the three and nine-month periods ended October 28, 2017 and payments totaling approximately $412,000 and $1,635,000 during the three and nine-month periods ended October 29, 2016.
Distribution Facility Expansion, Consolidation & Technology Upgrade
Distribution Facility Expansion, Consolidation & Technology Upgrade
Distribution Facility Expansion, Consolidation & Technology Upgrade
During fiscal 2014, the Company began a significant operational expansion initiative with respect to overall warehousing capacity and new equipment and system technology upgrades at the Company's Bowling Green, Kentucky distribution facility. During fiscal 2015, the Company expanded our 262,000 square foot facility to an approximately 600,000 square foot facility and moved out of the Company's leased satellite warehouse space. The updated facilities and technology upgrade includes a new high-speed parcel shipping and item sortation system coupled with a new warehouse management system to support the Company's increased level of shipments and a new call center facility to better serve our customers. The new sortation and warehouse management system were phased into production through fiscal 2016. Total cost of the physical building expansion, new sortation equipment and call center facility was approximately $25 million and was financed with the Company's expanded PNC revolving line of credit and a $15 million PNC term loan.
As a result of the Company's distribution facility expansion, consolidation and technology upgrade initiative, the Company incurred $0 in incremental expenses during the three and nine month periods ended October 28, 2017 and approximately $150,000 and $530,000 in incremental expenses during the three and nine month periods ended October 29, 2016 related primarily to increased labor and training costs associated with the Company’s warehouse management system migration.
Executive and Management Transition Costs
Executive and Management Transition Costs [Text Block]
Executive and Management Transition Costs
On March 23, 2017, the Company announced the elimination of the position of Senior Vice President of Sales & Product Planning. In conjunction with this executive change as well as other executive and management terminations made during the first nine months of fiscal 2017, the Company recorded charges to income totaling $893,000 and $1,971,000 for the three and nine-months ended October 28, 2017, which relate primarily to severance payments to be made as a result of the executive officer and other management terminations and other direct costs associated with the Company's 2017 executive and management transition.
On February 8, 2016, the Company announced the resignation of two executive officers, namely its Chief Executive Officer, and its Executive Vice President - Chief Strategy Officer & Interim General Counsel. In conjunction with these executive changes as well as other executive and management terminations made during the first nine months of fiscal 2016, the Company recorded charges to income totaling $568,000 and $4,411,000 for the three and nine-months ended October 29, 2016, which relate primarily to severance payments to be made as a result of the executive officer terminations and other direct costs associated with the Company's 2016 executive and management transition. On August 18, 2016, the Company announced that Robert Rosenblatt was appointed permanent Chief Executive Officer and entered into an executive employment agreement with Mr. Rosenblatt.
Basis of Financial Statement Presentation (Policies)
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America have been condensed or omitted in accordance with these rules and regulations. The accompanying condensed consolidated balance sheet as of January 28, 2017 has been derived from the Company's audited financial statements for the fiscal year ended January 28, 2017. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of these financial statements. Although management believes the disclosures and information presented are adequate, these interim condensed consolidated financial statements should be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its annual report on Form 10-K for the fiscal year ended January 28, 2017. Operating results for the nine-month period ended October 28, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending February 3, 2018.
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to January 31 and results in either a 52-week or 53-week fiscal year. References to years in this report relate to fiscal years, rather than to calendar years. The Company’s most recently completed fiscal year, fiscal 2016, ended on January 28, 2017, and consisted of 52 weeks. Fiscal 2017 will end on February 3, 2018, and will contain 53 weeks. The quarters ended October 28, 2017 and October 29, 2016 each consisted of 13 weeks.
Recently Adopted Accounting Standards
In July 2015, the Financial Accounting Standards Board issued Simplifying the Measurement of Inventory, Topic 330 (ASU No 2015-11). ASU 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost or net realizable value. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. The Company adopted this standard in the first quarter of fiscal 2017, applying it prospectively. The adoption of ASU 2015-11 did not have a material impact on the Company's consolidated financial statements.
In March 2016, the Financial Accounting Standards Board issued Compensation-Stock Compensation, Topic 718 (ASU No. 2016-09). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. In addition, the ASU also clarifies the statement of cash flows presentation for certain components of share-based awards. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2016-09 in the first quarter of fiscal 2017 and has elected to continue estimating forfeitures each period. Prospectively, beginning January 29, 2017, excess tax benefits/deficiencies, along with the full valuation allowance, have been reflected as income tax benefit/expense in the statement of operations resulting in no impact on the tax provision in fiscal 2017. Additionally, the statement of cash flows classification of prior periods has not changed as a result of adoption.
In August 2016, the Financial Accounting Standards Board issued Statement of Cash Flows, Topic 230 (ASU No. 2016-15). This amendment provides guidance on the presentation and classification of specific cash flow items to improve consistency in practice. The standard provides guidance in a number of situations including, among others, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and debt prepayment or extinguishment costs. The new standard is effective retrospectively for the Company for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. The Company elected to early adopt this standard in the first quarter of fiscal 2017, applying it retrospectively. The adoption of ASU 2016-15 had no impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Revenue from Contracts with Customers, Topic 606 (ASU No. 2014-09), which provides a framework for the recognition of revenue, with the objective that recognized revenues properly reflect amounts an entity is entitled to receive in exchange for goods and services. The guidance also includes additional disclosure requirements regarding revenue, cash flows and obligations related to contracts with customers. In July 2015, the Financial Accounting Standards Board approved a one year deferral of the effective date of ASU 2014-09. The standard will now become effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.
The Company is continuing to evaluate the impact of ASU 2014-09, related amendments and interpretive guidance will have on the Company's consolidated financial statements, financial systems and controls. In addition, the Company is in the process of finalizing its conclusions and determining the application of several aspects of ASU 2014-09, including: principal versus agent and the determination of when control of goods transfers to our customers. The Company expects certain changes to be made to its accounting policies, including the presentation of estimated merchandise returns as both an asset (equal to the inventory value expected to be returned) and a corresponding return liability, compared to the current practice of recording an estimated net return liability. In addition, the Company intends to elect the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when its payment terms are less than one year. The Company will apply the modified retrospective method of transition, which may result in a cumulative adjustment to retained earnings. Based on our analysis thus far, we believe the impact of adopting the new guidance will be immaterial to our annual and interim financial statements. We continue to assess the impact on all areas of our revenue recognition and related disclosure requirements.
In February 2016, the Financial Accounting Standards Board issued Leases, Topic 842 (ASU No 2016-02). ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2016-02 on the Company's consolidated financial statements.
Intangible Assets (Tables)
Schedule of Finite-lived and Infinite-lived Intangible Asset [Table Text Block]
Intangible assets in the accompanying consolidated balance sheets consisted of the following:
 
 
Estimated Useful Life
(In Years)
 
October 28, 2017
 
January 28, 2017
 
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets
 
5-15
 
$
1,786,000

 
$
(295,000
)
 
$
1,786,000

 
$
(171,000
)
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
  FCC broadcast license
 
 
 
$
9,500,000

 
 
 
$
12,000,000

 
 
Credit Agreements Credit Facility (Tables)
The Company's long-term credit facilities consist of:
 
 
October 28, 2017
 
January 28, 2017
PNC Credit Facility
 
 
 
 
PNC revolving loan due March 21, 2022, principal amount
 
$
59,900,000

 
$
59,900,000

 
 
 
 
 
PNC term loan due March 21, 2022, principal amount
 
14,924,000

 
10,637,000

Less unamortized debt issuance costs
 
(163,000
)
 
(181,000
)
PNC term loan due March 21, 2022, carrying amount
 
14,761,000

 
10,456,000

 
 
 
 
 
GACP Credit Agreement
 
 
 
 
GACP term loan due March 9, 2021, principal amount
 
3,654,000

 
16,292,000

Less unamortized debt issuance costs
 
(245,000
)
 
(1,260,000
)
GACP term loan due March 9, 2021, carrying amount
 
3,409,000

 
15,032,000

 
 
 
 
 
Total long-term credit facilities
 
78,070,000

 
85,388,000

Less current portion of long-term credit facilities
 
(3,440,000
)
 
(3,242,000
)
Long-term credit facilities, excluding current portion
 
$
74,630,000

 
$
82,146,000

The aggregate maturities of the Company's long-term credit facilities as of October 28, 2017 are as follows:
 
 
PNC Credit Facility
 
 
 
 
Fiscal year
 
Term loan
 
Revolving loan
 
GACP Term Loan
 
Total
2017
 
$
776,000

 
$

 
$
283,000

 
$
1,059,000

2018
 
2,326,000

 

 
850,000

 
3,176,000

2019
 
2,132,000

 

 
779,000

 
2,911,000

2020
 
2,326,000

 

 
850,000

 
3,176,000

2021
 
2,326,000

 

 
892,000

 
3,218,000

2022
 
5,038,000

 
59,900,000

 

 
64,938,000

 
 
$
14,924,000

 
$
59,900,000

 
$
3,654,000

 
$
78,478,000

Shareholders' Equity (Tables)
Grant date fair values were determined using a Monte Carlo valuation model based on assumptions as follows:
 
Fiscal 2017
 
Fiscal 2016
Total grant date fair value
$860,000
 
$224,000
Total grant date fair value per share
$1.53
 
$0.98
-
$1.72
Expected volatility
75%
 
71
%
-
73%
Weighted average expected life (in years)
3 years
 
3 years
Risk-free interest rate
1.5%
 
0.9
%
-
1.0%
The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company's stock. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company uses the simplified method in estimating its expected option term because it believes that historical exercise data cannot be accurately relied upon at this time to provide a reasonable basis for estimating an expected term due to the extreme volatility of its stock price and the resulting unpredictability of its stock option exercises. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its common stock and currently intends to retain earnings for use in operations.
 
Fiscal 2017
 
Fiscal 2016
Expected volatility:
81%
 
82
%
-
84%
Expected term (in years):
6 years
 
5

-
6 years
Risk-free interest rate:
2.0
%
-
2.2%
 
1.4
%
-
1.7%
A summary of the status of the Company’s stock option activity as of October 28, 2017 and changes during the nine months then ended is as follows:
 
2011
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2004
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2001
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
Balance outstanding, January 28, 2017
2,543,000

 
$
2.19

 
301,000

 
$
5.41

 
77,000

 
$
10.73

Granted
1,627,000

 
$
1.31

 

 
$

 

 
$

Exercised
(52,000
)
 
$
0.99

 

 
$

 

 
$

Forfeited or canceled
(636,000
)
 
$
3.05

 
(14,000
)
 
$
4.88

 
(77,000
)
 
$
10.73

Balance outstanding, October 28, 2017
3,482,000

 
$
1.64

 
287,000

 
$
5.44

 

 
$

Options exercisable at October 28, 2017
879,000

 
$
2.26

 
287,000

 
$
5.44

 

 
$

The following table summarizes information regarding stock options outstanding at October 28, 2017:
 
Options Outstanding
 
Options Vested or Expected to Vest
Option Type
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(Years)
 
Aggregate
Intrinsic
Value
2011 Incentive:
3,482,000

 
$
1.64

 
8.7
 
$
31,000

 
3,119,000

 
$
1.68

 
8.3
 
$
29,000

2004 Incentive:
287,000

 
$
5.44

 
2.5
 
$

 
287,000

 
$
5.44

 
2.5
 
$

2001 Incentive:

 
$

 
0.0
 
$

 

 
$

 
0.0
 
$

The percent of the target market-based performance vested restricted stock unit award that will be earned based on the Company's TSR relative to the peer group is as follows:
Percentile Rank
 
Percentage of
Units Vested
< 33%
 
0%
33%
 
50%
50%
 
100%
100%
 
150%
A summary of the status of the Company’s non-vested restricted stock activity as of October 28, 2017 and changes during the nine-month period then ended is as follows:
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, January 28, 2017
1,620,000

 
$2.00
Granted
2,008,000

 
$1.32
Vested
(339,000
)
 
$1.94
Forfeited
(367,000
)
 
$2.41
Non-vested outstanding, October 28, 2017
2,922,000

 
$1.49
Net Loss Per Common Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
A reconciliation of net loss per share calculations and the number of shares used in the calculation of basic loss per share and diluted loss per share is as follows:    
 
 
Three-Month Periods Ended
 
Nine-Month Periods Ended
 
 
October 28,
2017
 
October 29,
2016
 
October 28,
2017
 
October 29,
2016
Net loss (a)
 
$
(1,103,000
)
 
$
(3,867,000
)
 
$
(6,290,000
)
 
$
(10,792,000
)
Weighted average number of shares of common stock outstanding — Basic
 
65,191,367

 
60,513,215

 
63,400,368

 
58,317,681

Dilutive effect of stock options, non-vested shares and warrants (b)
 

 

 

 

Weighted average number of shares of common stock outstanding — Diluted
 
65,191,367

 
60,513,215

 
63,400,368

 
58,317,681

Net loss per common share
 
$
(0.02
)
 
$
(0.06
)
 
$
(0.10
)
 
$
(0.19
)
Net loss per common share — assuming dilution
 
$
(0.02
)
 
$
(0.06
)
 
$
(0.10
)
 
$
(0.19
)
(a) The net loss for the three and nine-month periods ended October 28, 2017 includes costs related to executive and management transition of $893,000 and $1,971,000 and loss on debt extinguishment of $221,000 and $1,134,000. The net loss for the three and nine-month periods ended October 29, 2016 includes costs related to executive and management transition of $568,000 and $4,411,000 and distribution facility consolidation and technology upgrade costs totaling $150,000 and $530,000.
(b) For the three and nine-month periods ended October 28, 2017, there were -0- incremental in-the-money potentially dilutive common shares outstanding, and approximately 796,000 and 58,000 for the three and nine-month periods ended October 29, 2016. Incremental in-the-money potentially dilutive common shares are excluded from the computation of diluted earnings per share, as the effect of their inclusion would be antidilutive.
Business Segments and Sales by Product Group (Tables)
Information on net sales by significant product groups [Table Text Block]
Information on net sales by significant product groups are as follows (in thousands):
 
 
Three-Month Periods Ended
 
Nine-Month Periods Ended
 
 
October 28,
2017
 
October 29,
2016
 
October 28,
2017
 
October 29,
2016
Jewelry & Watches
 
$
53,586

 
$
57,138

 
$
165,359

 
$
179,284

Home & Consumer Electronics
 
36,240

 
34,083

 
97,564

 
98,647

Beauty
 
20,566

 
18,718

 
63,445

 
65,082

Fashion & Accessories
 
26,468

 
26,335

 
84,231

 
84,854

All other (primarily shipping & handling revenue)
 
13,352

 
15,362

 
44,905

 
47,828

Total
 
$
150,212

 
$
151,636

 
$
455,504

 
$
475,695

General (Details)
9 Months Ended
Oct. 28, 2017
Households
General [Abstract]
 
Household Broadcast Penetration, Number of Households
87,000,000 
Basis of Financial Statement Presentation (Details)
3 Months Ended 9 Months Ended 12 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Jan. 28, 2017
Accounting Policies [Abstract]
 
 
 
 
Number of weeks in fiscal year
 
 
371 days 
364 days 
Number of weeks in fiscal quarter
P13W 
P13W 
 
 
Fair Value Measurements (Details) (USD $)
Oct. 28, 2017
Jan. 28, 2017
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Bank certificates of deposit
$ 450,000 
$ 450,000 
Long-term variable rate Credit Facilities
78,070,000 
85,388,000 
Long-term credit facilities, current maturities
3,440,000 
3,242,000 
Level 2 [Member]
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Bank certificates of deposit
450,000 
450,000 
Long-term variable rate Credit Facilities
78,070,000 
85,388,000 
Level 3 [Member]
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Level 3 investments
$ 0 
$ 0 
Intangible Assets (Details) (USD $)
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Jan. 28, 2017
Finite-lived intangible assets [Line Items]
 
 
 
 
 
Finite-lived intangible assets, Gross
$ 1,786,000 
 
$ 1,786,000 
 
$ 1,786,000 
Finite-lived intangible assets, Accumulated Amortization
(295,000)
 
(295,000)
 
(171,000)
Amortization expense of intangible assets
41,000 
18,000 
124,000 
61,000 
 
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
 
 
 
 
 
Estimated amortization expense, fiscal 2017 and each fiscal year through fiscal 2020
165,000 
 
165,000 
 
 
Estimated amortization expense, fiscal 2021
157,000 
 
157,000 
 
 
Indefinite-lived intangible assets [Abstract]
 
 
 
 
 
FCC broadcasting license, carrying value
9,500,000 
 
9,500,000 
 
12,000,000 
Aggregate consideration under two agreements to sell Boston television station, WWDP, including the Company's FCC broadcast license
13,500,000 
 
 
 
 
Broadcast Spectrum Allowed for Use Under Channel Sharing Agreement
33.30% 
 
33.30% 
 
 
Total consideration payable under the Channel Sharing Agreement
3,500,000 
 
 
 
 
Proceeds from Channel Sharing Agreement, amount paid upon grant of a required construction permit by the FCC
2,500,000 
 
 
 
 
Purchase price under asset purchase agreement
10,000,000 
 
 
 
 
Escrow holdback amount
1,000,000 
 
 
 
 
Commencement of Escrow Holdback Monthly Installments, Period after Closing Date
14 months 
 
 
 
 
FCC broadcast license [Member]
 
 
 
 
 
Indefinite-lived intangible assets [Abstract]
 
 
 
 
 
FCC broadcasting license, carrying value
9,500,000 
 
9,500,000 
 
12,000,000 
FCC broadcasting license, estimated fair value
 
 
 
 
$ 13,400,000 
Minimum [Member]
 
 
 
 
 
Finite-lived intangible assets [Line Items]
 
 
 
 
 
Finite-lived intangible assets, Estimated Useful Life
 
 
5 years 
 
 
Maximum [Member]
 
 
 
 
 
Finite-lived intangible assets [Line Items]
 
 
 
 
 
Finite-lived intangible assets, Estimated Useful Life
 
 
15 years 
 
 
Credit Agreements (Details) (USD $)
3 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 1 Months Ended 9 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Jan. 28, 2017
Mar. 21, 2017
PNC Bank, N.A. [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Oct. 29, 2016
PNC Bank, N.A. [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Oct. 29, 2016
PNC Bank, N.A. [Member]
Jan. 28, 2017
PNC Bank, N.A. [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Original 2012 Line Of Credit Agreement [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Line of Credit [Member]
Jan. 28, 2017
PNC Bank, N.A. [Member]
Line of Credit [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Term Loan [Member]
Jan. 28, 2017
PNC Bank, N.A. [Member]
Term Loan [Member]
Oct. 8, 2015
PNC Bank, N.A. [Member]
Term Loan [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Year One [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Year Two [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
Year Three [Member]
Oct. 28, 2017
PNC Bank, N.A. [Member]
After Year Three [Member]
Oct. 28, 2017
GACP [Member]
Oct. 29, 2016
GACP [Member]
Oct. 28, 2017
GACP [Member]
Oct. 29, 2016
GACP [Member]
Oct. 18, 2017
GACP [Member]
Term Loan [Member]
Mar. 21, 2017
GACP [Member]
Term Loan [Member]
Apr. 30, 2016
GACP [Member]
Term Loan [Member]
Oct. 28, 2017
GACP [Member]
Term Loan [Member]
Jan. 28, 2017
GACP [Member]
Term Loan [Member]
Mar. 10, 2016
GACP [Member]
Term Loan [Member]
Oct. 28, 2017
GACP [Member]
Alternate Base Rate [Domain]
Oct. 28, 2017
GACP [Member]
LIBOR [Member]
Oct. 28, 2017
GACP [Member]
Interest Rate Floor [Member]
Oct. 28, 2017
GACP [Member]
Base Rate [Member]
Oct. 28, 2017
GACP [Member]
Year Two [Member]
Oct. 28, 2017
GACP [Member]
Year Three [Member]
Oct. 28, 2017
GACP [Member]
After Year Three [Member]
Oct. 28, 2017
Minimum [Member]
PNC Bank, N.A. [Member]
LIBOR [Member]
Line of Credit [Member]
Oct. 28, 2017
Minimum [Member]
PNC Bank, N.A. [Member]
LIBOR [Member]
Term Loan [Member]
Oct. 28, 2017
Minimum [Member]
PNC Bank, N.A. [Member]
Base Rate [Member]
Term Loan [Member]
Oct. 28, 2017
Maximum [Member]
PNC Bank, N.A. [Member]
LIBOR [Member]
Line of Credit [Member]
Oct. 28, 2017
Maximum [Member]
PNC Bank, N.A. [Member]
LIBOR [Member]
Term Loan [Member]
Oct. 28, 2017
Maximum [Member]
PNC Bank, N.A. [Member]
Base Rate [Member]
Term Loan [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving loan
 
 
 
 
 
 
 
 
 
 
 
 
$ 59,900,000 
$ 59,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, gross of unamortized issuance costs
78,478,000 
 
78,478,000 
 
 
 
 
 
 
 
 
 
 
 
14,924,000 
10,637,000 
 
 
 
 
 
 
 
 
 
 
 
 
3,654,000 
16,292,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less unamortized debt issuance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(163,000)
(181,000)
 
 
 
 
 
 
 
 
 
 
 
 
(245,000)
(1,260,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
78,070,000 
 
78,070,000 
 
85,388,000 
 
 
 
 
 
 
 
 
 
14,761,000 
10,456,000 
15,000,000 
 
 
 
 
 
 
 
 
 
 
 
3,409,000 
15,032,000 
17,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term credit facilities, current maturities
(3,440,000)
 
(3,440,000)
 
(3,242,000)
 
 
 
 
 
 
 
 
 
(2,500,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
(921,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term credit facilities, excluding current portion
74,630,000 
 
74,630,000 
 
82,146,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit facility, maximum borrowing capacity
 
 
 
 
 
 
90,000,000 
 
90,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit, accordion feature
 
 
 
 
 
 
25,000,000 
 
25,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from PNC Credit Facility
 
 
 
 
 
6,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Maturity Date
 
 
 
 
 
Mar. 21, 2022 
 
 
 
 
May 01, 2020 
 
 
 
 
 
 
 
 
 
 
 
 
Mar. 09, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal prepayments of GACP Term Loan
 
 
14,352,000 
2,102,000