IMEDIA BRANDS, INC., 10-Q filed on 9/10/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
Aug. 03, 2019
Sep. 05, 2019
Document Information [Line Items]    
Entity Registrant Name iMedia Brands, Inc.  
Entity Central Index Key 0000870826  
Current Fiscal Year End Date --02-01  
Entity Filer Category Accelerated Filer  
Document Type 10-Q  
Document Period End Date Aug. 03, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Entity Small Business true  
Entity Emerging Growth Company false  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   76,770,354
Entity Current Reporting Status Yes  
Entity Shell Company false  
v3.19.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Aug. 03, 2019
Feb. 02, 2019
Current assets:    
Cash $ 21,619 $ 20,485
Restricted cash equivalents 450 450
Accounts receivable, net 70,269 81,763
Inventories 62,409 65,272
Prepaid expenses and other 9,154 9,053
Total current assets 163,901 177,023
Property and equipment, net 49,294 51,118
Other assets 2,087 1,846
TOTAL ASSETS 215,282 229,987
Current liabilities:    
Accounts payable 62,457 56,157
Accrued liabilities 40,499 37,374
Current portion of long term credit facility 2,488 2,488
Current portion of operating lease liabilities 907 0
Deferred revenue 35 35
Total current liabilities 106,386 96,054
Other long term liabilities 264 50
Long term credit facility 67,594 68,932
Total liabilities 174,244 165,036
Commitments and Contingencies
Shareholders' equity:    
Preferred stock, $.01 per share par value, 400,000 shares authorized; zero shares issued and outstanding 0 0
Common stock, $.01 per share par value, 99,600,000 shares authorized; 76,769,354 and 67,919,349 shares issued and outstanding 768 679
Additional paid-in capital 449,362 442,197
Accumulated deficit (409,092) (377,925)
Total shareholders’ equity 41,038 64,951
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 215,282 $ 229,987
v3.19.2
Consolidated Balance Sheets (Parentheticals) - $ / shares
Aug. 03, 2019
Feb. 02, 2019
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 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 99,600,000 99,600,000
Common stock, shares issued 76,769,354 67,919,349
Common stock, shares outstanding 76,769,354 67,919,349
v3.19.2
Consolidated Statements of Operations - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2019
Aug. 04, 2018
Aug. 03, 2019
Aug. 04, 2018
Income Statement [Abstract]        
Net sales $ 131,503 $ 150,799 $ 263,024 $ 307,304
Cost of sales 83,777 93,929 178,005 194,179
Gross profit 47,726 56,870 85,019 113,125
Operating expense:        
Distribution and selling 43,521 47,958 90,385 96,845
General and administrative 5,532 6,521 12,401 13,240
Depreciation and amortization 2,502 1,522 4,181 3,094
Restructuring costs 5,165 0 5,165 0
Executive and management transition costs 310 0 2,341 1,024
Total operating expense 57,030 56,001 114,473 114,203
Operating income (loss) (9,304) 869 (29,454) (1,078)
Other income (expense):        
Interest income 6 9 11 16
Interest expense (864) (898) (1,694) (1,924)
Total other expense, net (858) (889) (1,683) (1,908)
Loss before income taxes (10,162) (20) (31,137) (2,986)
Income tax provision (15) (20) (30) (40)
Net loss $ (10,177) $ (40) $ (31,167) $ (3,026)
Net loss per common share $ (0.13) $ 0.00 $ (0.44) $ (0.05)
Net loss per common share — assuming dilution $ (0.13) $ 0.00 $ (0.44) $ (0.05)
Weighted average number of common shares outstanding:        
Basic 75,502,646 66,009,117 71,410,554 65,685,034
Diluted 75,502,646 66,009,117 71,410,554 65,685,034
v3.19.2
Consolidated Statement of Shareholders' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit
Common Stock, Shares, Outstanding period beginning at Feb. 03, 2018   65,290,458    
Total Shareholders' Equity period beginning at Feb. 03, 2018 $ 83,996 $ 653 $ 439,111 $ (355,768)
Net loss (2,986) $ 0 0 (2,986)
Common stock issuances pursuant to equity compensation awards, Shares   297,879    
Common stock issuances pursuant to equity compensation awards, Value (100) $ 3 (103) 0
Share-based payment compensation 820 $ 0 820 0
Common Stock, Shares, Outstanding period end at May. 05, 2018   65,588,337    
Total Shareholders' Equity period end at May. 05, 2018 81,730 $ 656 439,828 (358,754)
Common Stock, Shares, Outstanding period beginning at Feb. 03, 2018   65,290,458    
Total Shareholders' Equity period beginning at Feb. 03, 2018 83,996 $ 653 439,111 (355,768)
Net loss (3,026)      
Common Stock, Shares, Outstanding period end at Aug. 04, 2018   66,287,786    
Total Shareholders' Equity period end at Aug. 04, 2018 82,338 $ 663 440,469 (358,794)
Common Stock, Shares, Outstanding period beginning at May. 05, 2018   65,588,337    
Total Shareholders' Equity period beginning at May. 05, 2018 81,730 $ 656 439,828 (358,754)
Net loss (40) $ 0 0 (40)
Common stock issuances pursuant to equity compensation awards, Shares   699,449    
Common stock issuances pursuant to equity compensation awards, Value 84 $ 7 77 0
Share-based payment compensation 564 $ 0 564 0
Common Stock, Shares, Outstanding period end at Aug. 04, 2018   66,287,786    
Total Shareholders' Equity period end at Aug. 04, 2018 $ 82,338 $ 663 440,469 (358,794)
Common Stock, Shares, Outstanding period beginning at Feb. 02, 2019 67,919,349 67,919,349.000    
Total Shareholders' Equity period beginning at Feb. 02, 2019 $ 64,951 $ 679 442,197 (377,925)
Net loss (20,990) $ 0 0 (20,990)
Common stock issuances pursuant to equity compensation awards, Shares   311,636    
Common stock issuances pursuant to equity compensation awards, Value (8) $ 3 (11) 0
Share-based payment compensation 966 $ 0 966 0
Common stock and warrant issuance, Shares   8,000,000    
Common stock and warrant issuance, Value 6,018 $ 80 5,938 0
Common Stock, Shares, Outstanding period end at May. 04, 2019   76,230,985.000    
Total Shareholders' Equity period end at May. 04, 2019 $ 50,937 $ 762 449,090 (398,915)
Common Stock, Shares, Outstanding period beginning at Feb. 02, 2019 67,919,349 67,919,349.000    
Total Shareholders' Equity period beginning at Feb. 02, 2019 $ 64,951 $ 679 442,197 (377,925)
Net loss $ (31,167)      
Common Stock, Shares, Outstanding period end at Aug. 03, 2019 76,769,354 76,769,354.000    
Total Shareholders' Equity period end at Aug. 03, 2019 $ 41,038 $ 768 449,362 (409,092)
Common Stock, Shares, Outstanding period beginning at May. 04, 2019   76,230,985.000    
Total Shareholders' Equity period beginning at May. 04, 2019 50,937 $ 762 449,090 (398,915)
Net loss (10,177) $ 0 0 (10,177)
Common stock issuances pursuant to equity compensation awards, Shares   538,369    
Common stock issuances pursuant to equity compensation awards, Value (13) $ 6 (19) 0
Share-based payment compensation $ 291 $ 0 291 0
Common Stock, Shares, Outstanding period end at Aug. 03, 2019 76,769,354 76,769,354.000    
Total Shareholders' Equity period end at Aug. 03, 2019 $ 41,038 $ 768 $ 449,362 $ (409,092)
v3.19.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Aug. 03, 2019
Aug. 04, 2018
OPERATING ACTIVITIES:    
Net loss $ (31,167) $ (3,026)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 6,140 5,135
Share-based payment compensation 1,257 1,358
Inventory impairment write-down 6,050 0
Amortization of deferred revenue 17 17
Amortization of deferred financing costs 104 104
Changes in operating assets and liabilities:    
Accounts receivable, net 11,494 13,948
Inventories (3,187) 3,419
Prepaid expenses and other (163) (5,676)
Accounts payable and accrued liabilities 9,581 (1,750)
Net cash provided by operating activities 92 13,495
INVESTING ACTIVITIES:    
Property and equipment additions (3,491) (4,071)
Net cash used for investing activities (3,491) (4,071)
FINANCING ACTIVITIES:    
Proceeds from issuance of revolving loan 109,700 111,400
Proceeds from issuance of common stock and warrants 6,000 0
Proceeds of term loans 0 5,821
Proceeds from exercise of stock options 0 111
Payments on revolving loan (109,700) (121,400)
Payments on term loan (1,357) (969)
Payments for common stock issuance costs (66) 0
Payments on finance leases (23) 0
Payments for restricted stock issuance (21) (127)
Payments for deferred financing costs 0 (58)
Net cash provided by (used for) financing activities 4,533 (5,222)
Net increase in cash and restricted cash equivalents 1,134 4,202
BEGINNING CASH AND RESTRICTED CASH EQUIVALENTS 20,935 24,390
ENDING CASH AND RESTRICTED CASH EQUIVALENTS 22,069 28,592
SUPPLEMENTAL CASH FLOW INFORMATION:    
Interest paid 1,451 1,726
Income taxes paid 28 14
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Property and equipment purchases included in accounts payable 124 216
Deferred financing costs included in accrued liabilities 0 29
Common stock issuance costs included in accrued liabilities 110 0
Equipment acquired through finance lease obligations 188 0
Issuance of warrants $ 193 $ 0
v3.19.2
General
6 Months Ended
Aug. 03, 2019
General [Abstract]  
General
General
iMedia Brands, Inc. (formerly EVINE Live Inc.) and its subsidiaries ("we," "our," "us," or the "Company") are collectively an interactive media company that manages ShopHQ, our nationally distributed shopping entertainment network, and iMedia Web Services. ShopHQ offers a mix of proprietary, exclusive and name-brand merchandise in the categories of jewelry & watches, home & consumer electronics, beauty & wellness, and fashion & accessories directly to consumers 24 hours a day in an engaging and informative shopping experience via television, online and mobile devices. ShopHQ programming is distributed in more than 87 million homes through cable and satellite distribution agreements, agreements with telecommunications companies and arrangements with over-the-air broadcast television stations. ShopHQ programming is also streamed live online at shophq.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, and is available on mobile channels and over-the-top platforms. Our programming and products are also marketed via mobile devices, including smartphones and tablets, and through the leading social media channels. The Company's nascent, but growing iMedia Web Services offers creative & interactive advertising and third-party logistics.
On July 16, 2019, the Company changed its corporate name to iMedia Brands, Inc. from EVINE Live Inc. Effective July 17, 2019, the Company's Nasdaq trading symbol also changed from EVLV to IMBI. On August 21, 2019, the Company changed the name of its primary network, Evine, back to ShopHQ, which was the name of the network in 2014.
v3.19.2
Basis of Financial Statement Presentation
6 Months Ended
Aug. 03, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
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 February 2, 2019 has been derived from the Company's audited financial statements for the fiscal year ended February 2, 2019. 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 February 2, 2019. Operating results for the six-month period ended August 3, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2020.
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 2018, ended on February 2, 2019, and consisted of 52 weeks. Fiscal 2019 will end February 1, 2020 and will contain 52 weeks. The three and six-month periods ended August 3, 2019 and August 4, 2018 each consisted of 13 and 26 weeks.
Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued Leases, Topic 842 (ASU 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 are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company adopted this standard in the first quarter of fiscal 2019 using the "Comparatives Under 840 Option" transition approach. Under this transition approach, comparative prior periods, including disclosures, were not restated. See Note 3 - "Leases" for information on the impact of adopting ASU 2016-02 on the Company's condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued Intangibles—Goodwill and Other—Internal-Use Software, Subtopic 350-40 (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted. The new standard can be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact that adopting the new accounting standard will have on its consolidated financial statements.
v3.19.2
Leases
6 Months Ended
Aug. 03, 2019
Leases [Abstract]  
Leases
Leases
Adoption of Leases, Topic 842
On February 3, 2019, the Company adopted ASU No. 2016-02, "Leases", and all related amendments using the "Comparatives Under 840 Option" transition approach. Under this transition approach, comparative prior periods, including disclosures, were not restated. The Company elected the transition package of practical expedients which, among other things, allowed the Company to carry forward historical lease classification. The Company chose not to elect the hindsight practical expedient. The adoption of the standard did not have an impact on the Company's condensed consolidated statements of operations and there was no adjustment to its retained earnings opening balance sheet. The Company does not expect the adoption of the new standard to have a material impact on the Company's operating results on an ongoing basis.
The most significant impact of the new leases standard was the recognition of right-of-use assets and lease liabilities for operating leases, while the Company's accounting for finance leases remained substantially unchanged. On February 3, 2019, the adoption of the new standard resulted in the recognition of a right-of-use asset of $1,474,000 and a lease liability of $1,407,000, and a reduction to prepaid expenses and other of $67,000.
The Company leases certain property and equipment, such as transmission and production equipment, satellite transponder and office equipment. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Some of the Company's leases include options to extend the term, which is only included in the lease liability and right-of-use assets calculation when it is reasonably certain the Company will exercise that option. As of August 3, 2019, the lease liability and right-of-use assets did not include any lease extension options.
The Company has lease agreements with lease and non-lease components, and has elected to account for these as a single lease component. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The components of lease expense were as follows:
 
 
For the Three-Month
Period Ended
August 3, 2019
 
For the Six-Month
Period Ended
August 3, 2019
Operating lease cost
 
$
258,000

 
$
523,000

Short-term lease cost
 
48,000

 
110,000

Variable lease cost (a)
 
30,000

 
50,000

(a) Includes variable costs of finance leases.
For the three and six-month periods ended August 3, 2019, finance lease costs included amortization of right-of-use assets of $21,000 and $24,000 and interest on lease liabilities of $2,000 and $3,000.
The Company obtained $188,000 and $142,000 right-of-use assets in exchange for finance and operating leases during the six-month period ended August 3, 2019. Supplemental cash flow information related to leases were as follows:
 
 
For the Six-Month
Period Ended
August 3, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows used for operating leases
 
$
524,000

Operating cash flows used for finance leases
 
3,000

Financing cash flows used for finance leases
 
23,000


The weighted average remaining lease term and weighted average discount rates related to leases were as follows:
 
 
August 3, 2019
Weighted average remaining lease term:
 
 
Operating leases
 
1.2 years
Finance leases
 
2.3 years
Weighted average discount rate:
 
 
Operating leases
 
5.4%
Finance leases
 
5.3%

Supplemental balance sheet information related to leases is as follows:
Leases
 
Classification
 
August 3, 2019
Assets
 
 
 
 
Operating lease right-of-use assets
 
Other assets
 
$
1,120,000

Finance lease right-of-use assets
 
Property and equipment, net
 
192,000

Total lease right-of-use assets
 
 
 
$
1,312,000

Operating lease liabilities
 
 
 
 
Current portion of operating lease liabilities
 
Current portion of operating lease liabilities
 
$
907,000

Operating lease liabilities, excluding current portion
 
Other long term liabilities
 
151,000

Total operating lease liabilities
 
 
 
1,058,000

Finance lease liabilities
 
 
 
 
Current portion of finance lease liabilities
 
Current liabilities: Accrued liabilities
 
95,000

Finance lease liabilities, excluding current portion
 
Other long term liabilities
 
99,000

Total finance lease liabilities
 
 
 
194,000

Total lease liabilities
 
 
 
$
1,252,000


Future maturities of lease liabilities as of August 3, 2019 are as follows:
Fiscal year
 
Operating Leases
 
Finance Leases
 
Total
2019
 
$
475,000

 
$
53,000

 
$
528,000

2020
 
618,000

 
85,000

 
703,000

2021
 

 
60,000

 
60,000

2022
 

 
8,000

 
8,000

2023
 

 

 

Thereafter
 

 

 

Total lease payments
 
1,093,000

 
206,000

 
1,299,000

Less imputed interest
 
(35,000
)
 
(12,000
)
 
(47,000
)
Total lease liabilities
 
$
1,058,000

 
$
194,000

 
$
1,252,000


As of August 3, 2019, the Company had no operating and finance leases that had not yet commenced.
Disclosures Related to Periods Prior to Adoption of Leases, Topic 842
Future minimum lease payments for assets under capital and operating leases at February 2, 2019 are as follows:
Future Minimum Lease Payments:
Capital Leases
 
Operating Leases
 
 
 
 
2019
$
13,000

 
$
1,005,000

2020
8,000

 
604,000

2021
8,000

 

2022
2,000

 

2023 and thereafter

 

Total minimum lease payments
31,000

 
$
1,609,000

Less: Amounts representing interest
(2,000
)
 
 
 
29,000

 
 
Less: Current portion
(12,000
)
 
 
Long-term capital lease obligation
$
17,000

 
 
v3.19.2
Revenue
6 Months Ended
Aug. 03, 2019
Revenue from Contract with Customer [Abstract]  
Revenue
Revenue
Revenue Recognition
Revenue is recognized when control of the promised merchandise is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for the merchandise, which is upon shipment. Revenue is reported net of estimated sales returns, credits and incentives, and excludes sales taxes. Sales returns are estimated and provided for at the time of sale based on historical experience. As of August 3, 2019 and February 2, 2019, the Company recorded a merchandise return liability of $6,860,000 and $8,097,000, included in accrued liabilities, and a right of return asset of $3,747,000 and $4,410,000, included in other current assets.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification ("ASC") 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Substantially all of the Company's sales are single performance obligation arrangements for transferring control of merchandise to customers.
In accordance with ASC 606, the Company disaggregates revenue from contracts with customers by significant product groups and timing of when the performance obligations are satisfied. A reconciliation of disaggregated revenue by significant product group is provided in Note 10 - "Business Segments and Sales by Product Group."
As of August 3, 2019, approximately $50,000 is expected to be recognized from remaining performance obligations within the next two years. The Company has applied the practical expedient to exclude the value of remaining performance obligations for contracts with an original expected term of one year or less. Revenue recognized over time was $9,000 for the three-month periods ended August 3, 2019 and August 4, 2018 and $17,000 for the six-month periods ended August 3, 2019 and August 4, 2018.
Accounts Receivable
The Company utilizes an installment payment program called ValuePay that entitles customers to purchase merchandise and generally pay for the merchandise in two or more equal monthly credit card installments. The Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when the payment terms are less than one year. Accounts receivable consist primarily of amounts due from customers for merchandise sales and from credit card companies and are reflected net of reserves for estimated uncollectible amounts. As of August 3, 2019 and February 2, 2019, the Company had approximately $63,373,000 and $74,787,000 of net receivables due from customers under the ValuePay installment program and total reserves for estimated uncollectible amounts of $7,752,000 and $8,533,000.
v3.19.2
Fair Value Measurements
6 Months Ended
Aug. 03, 2019
Fair Value Disclosures [Abstract]  
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 August 3, 2019 and February 2, 2019, the Company had $450,000 in Level 2 investments in the form of bank certificates of deposit, which are included in restricted cash equivalents in the condensed consolidated balance sheets. 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 August 3, 2019 and February 2, 2019, the Company also had a long-term variable rate PNC Credit Facility (as defined below), classified as Level 2, with carrying values of $70,082,000 and $71,420,000. As of August 3, 2019 and February 2, 2019, $2,488,000 of the long-term variable rate PNC Credit Facility was classified as current. The fair value of the PNC Credit Facility approximates, and is based on, its carrying value due to the variable rate nature of the financial instrument. The Company has no Level 3 investments that use significant unobservable inputs.
v3.19.2
Intangible Assets
6 Months Ended
Aug. 03, 2019
Intangible Assets [Abstract]  
Intangible Assets
Intangible Assets
Intangible assets in the accompanying condensed consolidated balance sheets consisted of the following:
 
 
August 3, 2019
 
February 2, 2019
 
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Gross Carrying
Amount
 
Accumulated
Amortization
Finite-lived intangible assets
 
$
1,979,000

 
$
(1,487,000
)
 
$
1,786,000

 
$
(502,000
)
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, a vendor exclusivity agreement (as further described below), and the Princeton Watches trade name and customer list. Amortization expense related to the finite-lived intangible assets was $945,000 and $42,000 for the three-month periods ended August 3, 2019 and August 4, 2018 and $986,000 and $83,000 and for the six-month periods ended August 3, 2019 and August 4, 2018. Estimated amortization expense is $1,313,000 for fiscal 2019, and $39,000 for fiscal 2020 and each fiscal year through fiscal 2023.
On May 29, 2019, the Company announced the decision to change the name of the Evine network back to ShopHQ, which was the name of the network in 2014. The remaining carrying amount of the Evine trademark is being amortized prospectively over the revised remaining useful life through August 21, 2019, the date of the network name change.
On May 2, 2019, we entered into a five-year vendor exclusivity agreement with Sterling Time, LLC ("Sterling Time") and Invicta Watch Company of America, Inc. ("IWCA") in connection with the closing under the private placement securities purchase agreement described in Note 8 below. The vendor exclusivity agreement grants the Company the exclusive right in television shopping to market, promote and sell the products from IWCA. The Company issued five-year warrants to purchase 3,500,000 shares of our common stock in connection with and as consideration for primarily entering into a vendor exclusivity agreement with the Company, which represented an aggregate value of $193,000. The vendor exclusivity agreement is being amortized as cost of sales over the five-year agreement term. See Note 8 - "Shareholders' Equity" for additional information.
v3.19.2
Credit Agreements
6 Months Ended
Aug. 03, 2019
Debt Disclosure [Abstract]  
Credit Agreements
Credit Agreements
The Company's long-term credit facility consists of:
 
 
August 3, 2019
 
February 2, 2019
PNC revolving loan due July 27, 2023, principal amount
 
$
53,900,000

 
$
53,900,000

PNC term loan due July 27, 2023, principal amount
 
16,286,000

 
17,643,000

Less unamortized debt issuance costs
 
(104,000
)
 
(123,000
)
PNC term loan due July 27, 2023, carrying amount
 
16,182,000

 
17,520,000

Total long-term credit facility
 
70,082,000

 
71,420,000

Less current portion of long-term credit facility
 
(2,488,000
)
 
(2,488,000
)
Long-term credit facility, excluding current portion
 
$
67,594,000

 
$
68,932,000


PNC Credit Facility
On February 9, 2012, the Company entered into a credit and security agreement (as amended through July 27, 2018, 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 previously outstanding term loan with GACP Finance Co., LLC. 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.
All borrowings under the PNC Credit Facility mature and are payable on July 27, 2023. 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. 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 either a Base Rate or LIBOR plus a margin consisting of between 1% and 2% on Base Rate advances and 2% and 3% on LIBOR advances based on the Company's trailing twelve-month reported leverage ratio (as defined in the PNC Credit Facility) measured semi-annually as demonstrated in its financial statements. The term loan bears interest at either a Base Rate or LIBOR plus a margin consisting of between 2% and 3% on Base Rate term loans and 3% to 4% on LIBOR Rate term loans based on the Company’s leverage ratio measured annually as demonstrated in its audited financial statements.
As of August 3, 2019, the Company had borrowings of $53.9 million under its revolving credit facility. Remaining available capacity under the revolving credit facility as of August 3, 2019 was approximately $5.7 million, which provided liquidity for working capital and general corporate purposes. The PNC Credit Facility also provides for a term loan on which the Company had originally drawn to fund an expansion and improvements at the Company's distribution facility in Bowling Green, Kentucky and subsequently to partially pay down the Company's previously outstanding term loan with GACP Finance Co., LLC and reduce its revolving credit facility borrowings. As of August 3, 2019, there was approximately $16.3 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 September 1, 2018 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 1.0% if terminated on or before July 27, 2020, 0.5% if terminated on or before July 27, 2021, and no fee if terminated after July 27, 2021. As of August 3, 2019, the imputed effective interest rate on the PNC term loan was 6.5%.
Interest expense recorded under the PNC Credit Facility was $860,000 and $1,689,000 for the three and six-month periods ended August 3, 2019 and $898,000 and $1,922,000 for the three and six-month periods ended August 4, 2018.
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. 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 August 3, 2019, the Company's unrestricted cash plus unused line availability was $27.3 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.
Deferred financing costs, net of amortization, relating to the revolving line of credit were $476,000 and $561,000 as of August 3, 2019 and February 2, 2019 and are included within other assets within the accompanying balance sheet. These costs are being expensed as additional interest over the five-year term of the PNC Credit Facility.
The aggregate maturities of the Company's long-term credit facility as of August 3, 2019 are as follows:
 
 
PNC Credit Facility
 
 
Fiscal year
 
Term loan
 
Revolving loan
 
Total
2019
 
$
1,131,000

 
$

 
$
1,131,000

2020
 
2,714,000

 

 
2,714,000

2021
 
2,714,000

 

 
2,714,000

2022
 
2,714,000

 

 
2,714,000

2023
 
7,013,000

 
53,900,000

 
60,913,000

 
 
$
16,286,000

 
$
53,900,000

 
$
70,186,000

v3.19.2
Shareholders' Equity
6 Months Ended
Aug. 03, 2019
Share-based Compensation [Abstract]  
Shareholders' Equity
Shareholders' Equity
Private Placement Securities Purchase Agreement
On May 2, 2019, the Company entered into a private placement securities purchase agreement ("Purchase Agreement") with certain accredited investors pursuant to which the Company: (a) sold, in the aggregate, 8,000,000 shares of the Company's common stock at a price of $0.75 per share and (b) issued five-year warrants ("5-year Warrants") to purchase 3,500,000 shares of the Company's common stock at an exercise price of $1.50 per share. The 5-year Warrants are exercisable in whole or in part from time to time through the expiration date of May 2, 2024. The purchasers included Invicta Media Investments, LLC, Michael and Leah Friedman, Timothy Peterman and certain other private investors. Invicta Media Investments, LLC is owned by IWCA, which is the designer and manufacturer of Invicta-branded watches and watch accessories, one of the Company’s largest and longest tenured brands. Michael and Leah Friedman are owners and officers of Sterling Time, which is the exclusive distributor of IWCA’s watches and watch accessories for television home shopping and our long-time vendor. A description of the relationship between the Company, IWCA and Sterling Time is contained in Note 15 - “Related Party Transactions”. Under the Purchase Agreement, the purchasers agreed to customary standstill provisions related to the Company for a period of two years, as well as to vote their shares in favor of matters recommended by the Company’s board of directors for approval by our shareholders. In addition, the Company agreed in the Purchase Agreement to appoint Eyal Lalo, an owner of IWCA, as vice chair of the Company’s board of directors, Michael Friedman to the Company’s board of directors and Timothy Peterman as the Company’s chief executive officer.
In connection with the closing under the Purchase Agreement, the Company entered into certain other agreements with IWCA, Sterling Time and the purchasers, including a five-year vendor exclusivity agreement with Sterling Time and IWCA. The vendor exclusivity agreement grants the Company the exclusive right in television shopping to market, promote and sell the products from IWCA.
The Company received gross proceeds of $6.0 million and incurred approximately $175,000 of issuance costs. The Company allocated the proceeds of the stock offering to the shares of common stock issued. The par value of the shares issued was recorded within common stock, with the remainder of the proceeds, less issuance costs, recorded as additional paid in capital in the Company's balance sheet. The Company has used the proceeds for general working capital purposes. The 5-year Warrants were issued primarily as consideration for a five-year vendor exclusivity agreement with IWCA and Sterling Time. The aggregate market value of the 5-year Warrants on the grant date was $193,000, which was recorded as an intangible asset and is being amortized as cost of sales over the agreement term. The 5-year Warrants are indexed to the Company's publicly traded stock and were classified as equity. As a result, the fair value of the 5-year Warrants was recorded as an increase to additional paid-in capital.
Warrants
As of August 3, 2019, the Company had outstanding warrants to purchase 7,349,365 shares of the Company’s common stock, of which 7,349,365 are fully exercisable. The warrants expire five years from the date of grant. The following table summarizes information regarding warrants outstanding at August 3, 2019:
Grant Date
 
Warrants Outstanding
 
Warrants Exercisable
 
Exercise Price
(Per Share)
 
Expiration Date
September 19, 2016
 
2,976,190

 
2,976,190

 
$2.90
 
September 19, 2021
November 10, 2016
 
333,873

 
333,873

 
$3.00
 
November 10, 2021
January 23, 2017
 
489,302

 
489,302

 
$1.76
 
January 23, 2022
March 16, 2017
 
50,000

 
50,000

 
$1.92
 
March 16, 2022
May 2, 2019
 
3,500,000

 
3,500,000

 
$1.50
 
May 2, 2024
On November 27, 2018, the Company issued warrants to Fonda, Inc. for 1,500,000 shares of our common stock in connection with and as consideration for entering into a services and trademark licensing agreement between the companies. The aggregate market value on the date of the award was $441,000 and was being amortized as cost of sales over the three-year services and trademark licensing agreement term. On July 29, 2019, the Company and Fonda, Inc. agreed to terminate the services and trademark licensing agreement and the warrant for 1,500,000 shares were forfeited.
Restricted Stock Award
On November 23, 2018, the Company entered into a restricted stock award agreement with Flageoli Classic Limited, LLC (“FCL”) granting FCL 1,500,000 restricted shares of the Company's common stock in connection with and as consideration for entering into a vendor exclusivity agreement with the Company. The vendor exclusivity agreement grants us the exclusive right in television shopping to market, promote and sell products under the trademark of Serious Skincare, a skin-care brand that launched on the Company's television network on January 3, 2019. Additionally, the agreement identifies Jennifer Flavin-Stallone as the primary spokesperson for the brand on the Company's television network. The restricted shares will vest in three tranches. Of the restricted shares granted, 500,000 vested on January 4, 2019, which was the first business day following the initial appearance of the Serious Skincare brand on the Company's television network. The remaining restricted shares will vest in equal amounts on January 4, 2020 and January 4, 2021. The aggregate market value on the date of the award was $1,408,000 and is being amortized as cost of sales over the three-year vendor exclusivity agreement term. The estimated fair value of the restricted stock is based on the grant date closing price of the Company's stock for time-based vesting awards.
Compensation expense relating to the restricted stock award was $117,000 and $235,000 for the second quarter and first six months of fiscal 2019. As of August 3, 2019, there was $1,085,000 of total unrecognized compensation cost related to non-vested restricted stock unit grants. That cost is expected to be recognized over a weighted average period of 2.3 years.
A summary of the status of the Company’s non-vested restricted stock award activity as of August 3, 2019 and changes during the six months then ended is as follows:
 
 
Restricted Stock
 
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, February 2, 2019
 
1,000,000

 
$
0.94

Granted
 

 
$

Vested
 

 
$

Non-vested outstanding, August 3, 2019
 
1,000,000

 
$
0.94


Stock-Based Compensation - Stock Options
Compensation is recognized for all stock-based compensation arrangements by the Company. Stock-based compensation expense related to stock option awards was $140,000 and $237,000 for the second quarters of fiscal 2019 and fiscal 2018 and $514,000 and $542,000 for the first six months of fiscal 2019 and fiscal 2018. 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 August 3, 2019, 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 13,000,000 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 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. Except for 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 2019
 
Fiscal 2018
Expected volatility:
75%
-
82%
 
72%
Expected term (in years):
6 years
 
6 years
Risk-free interest rate:
1.9%
-
2.6%
 
2.8%
-
3.0%

A summary of the status of the Company’s stock option activity as of August 3, 2019 and changes during the six months then ended is as follows:
 
2011
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
 
2004
Incentive
Stock
Option
Plan
 
Weighted
Average
Exercise
Price
Balance outstanding, February 2, 2019
4,759,000

 
$
1.36

 
107,000

 
$
4.87

Granted
259,000

 
$
0.46

 

 
$

Exercised

 
$

 

 
$

Forfeited or canceled
(895,000
)
 
$
1.20

 
(40,000
)
 
$
4.47

Balance outstanding, August 3, 2019
4,123,000

 
$
1.34

 
67,000

 
$
5.11

Options exercisable at August 3, 2019
2,994,000

 
$
1.47

 
67,000

 
$
5.11


The following table summarizes information regarding stock options outstanding at August 3, 2019:
 
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:
4,123,000

 
$
1.34

 
5.4
 
$

 
4,003,000

 
$
1.35

 
5.3
 
$

2004 Incentive:
67,000

 
$
5.11

 
4.8
 
$

 
67,000

 
$
5.11

 
4.8
 
$


The weighted average grant-date fair value of options granted in the first six months of fiscal 2019 and fiscal 2018 was $0.32 and $0.74. The total intrinsic value of options exercised during the first six months of fiscal 2019 and fiscal 2018 was $0 and $23,000. As of August 3, 2019, total unrecognized compensation cost related to stock options was $502,000 and is expected to be recognized over a weighted average period of approximately 1.5 years.
Stock-Based Compensation - Restricted Stock Units
Compensation expense relating to restricted stock unit grants was $48,000 and $302,000 for the second quarters of fiscal 2019 and fiscal 2018 and $486,000 and $817,000 for the first six months of fiscal 2019 and fiscal 2018. As of August 3, 2019, there was $1,422,000 of total unrecognized compensation cost related to non-vested restricted stock unit grants. That cost is expected to be recognized over a weighted average expected life of 1.9 years. The total fair value of restricted stock units vested during the first six months of fiscal 2019 and fiscal 2018 was $382,000 and $1,139,000. The estimated fair value of restricted stock units is based on the grant date closing price of the Company's stock for time-based vesting awards and a Monte Carlo valuation model for market-based vesting awards.
The Company has granted time-based restricted stock units to certain key employees as part of the Company's long-term incentive program. The restricted stock units generally vest in three equal annual installments beginning one year from the grant date and are being amortized as compensation expense over the three-year vesting period. The Company has also granted restricted stock units to non-employee directors as part of the Company's annual director compensation program. Each restricted stock unit grant vests or vested on the day immediately preceding the next annual meeting of shareholders following the date of grant. The grants are amortized as director compensation expense over the twelve-month vesting period.
The Company granted 176,000 and 259,000 market-based restricted stock performance units to executives and key employees as part of the Company's long-term incentive program during the second quarters of fiscal 2019 and fiscal 2018 and 941,000 and 747,000 market-based restricted stock performance units during the first six months of fiscal 2019 and fiscal 2018. 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 2019
 
Fiscal 2018
Total grant date fair value
$482,000
 
$859,000
Total grant date fair value per share
$0.51
 
$1.07
-
$1.30
Expected volatility
74%
-
82%
 
73%
-
76%
Weighted average expected life (in years)
3 years
 
3 years
Risk-free interest rate
1.7%
-
2.3%
 
2.4%
-
2.7%

The percent of the target market-based performance 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 May 2, 2019, Timothy A. Peterman was appointed as Chief Executive Officer and entered into an executive employment agreement. In conjunction with the employment agreement, the Company granted 680,000 restricted stock units to Mr. Peterman. The restricted stock units vest in three tranches, each tranche consisting of one-third of the units subject to the award. Tranche 1 will vest upon the one-year anniversary of the grant date. Tranche 2 will vest on the date the Company's average closing stock price for 20 consecutive trading days equals or exceeds $2.00 per share and the executive has been continuously employed at least one year. Tranche 3 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 two years. The vesting of the second and third tranches can occur any time on or before May 1, 2029. The total grant date fair value was estimated to be $220,000 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 2.5%, a weighted average expected life of 2.9 years and an implied volatility of 80% and were as follows for each tranche:
 
 
Fair Value (Per Share)
 
Derived Service Period
Tranche 1 (one year)
 
$0.37
 
1.00 Year
Tranche 2 ($2.00/share)
 
$0.32
 
3.27 Years
Tranche 3 ($4.00/share)
 
$0.29
 
4.53 Years

A summary of the status of the Company’s non-vested restricted stock unit activity as of August 3, 2019 and changes during the six-month period then ended is as follows:
 
Restricted Stock Units
 
Market-Based Units
 
Time-Based Units
 
Total
 
Shares
 
Weighted Average Grant Date Fair Value
 
Shares
 
Weighted Average Grant Date Fair Value
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Non-vested outstanding, February 2, 2019
1,629,000

 
$
1.35

 
1,807,000

 
$
1.04

 
3,436,000

 
$
1.18

Granted
1,395,000

 
$
0.44

 
2,313,000

 
$
0.44

 
3,708,000

 
$
0.44

Vested

 
$

 
(899,000
)
 
$
1.07

 
(899,000
)
 
$
1.07

Forfeited
(1,233,000
)
 
$
1.09

 
(1,163,000
)
 
$
0.72

 
(2,396,000
)
 
$
0.91

Non-vested outstanding, August 3, 2019
1,791,000

 
$
0.82

 
2,058,000

 
$
0.53

 
3,849,000

 
$
0.66

v3.19.2
Net Loss Per Common Share
6 Months Ended
Aug. 03, 2019
Earnings Per Share [Abstract]  
Net Loss Per Common Share
Net Loss Per Common Share
During the fourth quarter of fiscal 2018, the Company issued a restricted stock award that meets the criteria of a participating security. Accordingly, basic income (loss) per share is computed using the two-class method under which earnings are allocated to both common shares and participating securities. Undistributed net losses are allocated entirely to common shareholders since the participating security has no contractual obligation to share in the losses. All shares of restricted stock are deducted from weighted-average number of common shares outstanding – basic. 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 and is calculated using the treasury method.
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
 
Six-Month Periods Ended
 
 
August 3,
2019
 
August 4,
2018
 
August 3,
2019
 
August 4,
2018
Numerator:
 
 
 
 
 
 
 
 
Net loss (a)
 
$
(10,177,000
)
 
$
(40,000
)
 
$
(31,167,000
)
 
$
(3,026,000
)
Earnings allocated to participating share awards (b)
 

 

 

 

Net loss attributable to common shares — Basic and diluted
 
$
(10,177,000
)
 
$
(40,000
)
 
$
(31,167,000
)
 
$
(3,026,000
)
Denominator:
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding — Basic
 
75,502,646

 
66,009,117

 
71,410,554

 
65,685,034

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

 

 

 

Weighted average number of common shares outstanding — Diluted
 
75,502,646

 
66,009,117

 
71,410,554

 
65,685,034

Net loss per common share
 
$
(0.13
)
 
$
(0.00
)
 
$
(0.44
)
 
$
(0.05
)
Net loss per common share — assuming dilution
 
$
(0.13
)
 
$
(0.00
)
 
$
(0.44
)
 
$
(0.05
)
(a) The net loss for the three and six-month periods ended August 3, 2019 includes costs related to executive and management transition of $310,000 and $2,341,000, respectively, restructuring costs of $5,165,000 and rebranding costs of $238,000. In addition, the six-month period ended August 3, 2019 includes an inventory impairment write-down of $6,050,000. The net loss for the three and six-month periods ended August 4, 2018 includes costs related to executive and management transition of $0 and $1,024,000 and contract termination costs of $0 and $753,000.
(b) During the fourth quarter of fiscal 2018, the Company issued a restricted stock award that is a participating security. For the three and six-month periods ended August 3, 2019, the entire undistributed loss is allocated to common shareholders.
(c) For the three and six-month periods ended August 3, 2019, there were 284,000 and 229,000 incremental in-the-money potentially dilutive common shares outstanding, and 543,000 and 272,000 for the three and six-month periods ended August 4, 2018. The incremental in-the-money potentially dilutive common stock shares are excluded from the computation of diluted earnings per share, as the effect of their inclusion would be anti-dilutive.
v3.19.2
Business Segments and Sales by Product Group
6 Months Ended
Aug. 03, 2019
Segment Reporting [Abstract]  
Business Segments and Sales by Product Group
Business Segments and Sales by Product Group
The Company has one reporting segment, which encompasses its interactive video and digital commerce retailing. The Company markets, sells and distributes its products to consumers primarily through its video commerce television, online website 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 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
 
Six-Month Periods Ended
 
 
August 3,
2019
 
August 4,
2018
 
August 3,
2019
 
August 4,
2018
Jewelry & Watches
 
$
57,927

 
$
53,842

 
$
110,070

 
$
110,635

Home & Consumer Electronics
 
22,540

 
28,666

 
46,567

 
59,708

Beauty & Wellness
 
22,981

 
28,615

 
44,962

 
55,637

Fashion & Accessories
 
16,100

 
24,562

 
38,454

 
51,134

All other (primarily shipping & handling revenue)
 
11,955

 
15,114

 
22,971

 
30,190

Total
 
$
131,503

 
$
150,799

 
$
263,024

 
$
307,304

v3.19.2
Income Taxes
6 Months Ended
Aug. 03, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
At February 2, 2019, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $338 million which may be available to offset future taxable income. The Company's federal NOLs generated prior to 2018 expire in varying amounts each year from 2023 through 2037 in accordance with applicable federal tax regulations and the timing of when the NOLs were incurred. The Company's federal NOLs generated in 2018 and after can be carried forward indefinitely.
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.
Shareholder Rights Plan
The Company has 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. On July 12, 2019, the Company's shareholders re-approved the Rights Plan at the 2019 annual meeting of shareholders. The Rights Plan will expire on the close of business on the date of the 2022 annual meeting of shareholders, unless the Rights Plan is re-approved by shareholders prior to expiration.
v3.19.2
Cash and Restricted Cash Equivalents
6 Months Ended
Aug. 03, 2019
Restricted Cash Equivalents [Abstract]  
Cash and Restricted Cash Equivalents
Cash and Restricted Cash Equivalents
The following table provides a reconciliation of cash and restricted cash equivalents reported with the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows:
 
August 3, 2019
 
February 2, 2019
Cash
$
21,619,000

 
$
20,485,000

Restricted cash equivalents
450,000

 
450,000

Total cash and restricted cash equivalents
$
22,069,000

 
$
20,935,000


The Company's restricted cash equivalents consist of certificates of deposit with original maturities of three months or less and are generally restricted for a period ranging from 30 to 60 days.
v3.19.2
Inventory Impairment Write-down
6 Months Ended
Aug. 03, 2019
Inventory Disclosure [Abstract]  
Inventory Impairment Write-down
Inventory Impairment Write-down
On May 2, 2019, Timothy A. Peterman was appointed Chief Executive Officer of the Company (See Note 17 - “Executive and Management Transition Costs”) and implemented a new merchandise strategy to shift airtime and merchandise by increasing higher contribution margin categories, such as jewelry & watches and beauty & wellness, and decreasing home and fashion & accessories. This change of strategy resulted in the need to liquidate excess inventory in the fashion & accessories and home product categories as a result of the reduced airtime being allocated to those categories. As a result, the Company recorded a non-cash inventory write-down of $6,050,000 within cost of sales during the first quarter of fiscal 2019.
v3.19.2
Litigation
6 Months Ended
Aug. 03, 2019
Litigation [Abstract]  
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, contracts, employment, intellectual property, consumer protection and regulatory matters. In the opinion of management, none of the claims and suits, either individually or in the aggregate, will have a material adverse effect on the Company's operations or consolidated financial statements.
v3.19.2
Related Party Transactions
6 Months Ended
Aug. 03, 2019
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions
Director Relationships
On May 2, 2019, in accordance with the Purchase Agreement described in Note 8 - "Shareholders' Equity", the Company's Board of directors elected Michael Friedman and Eyal Lalo to the board for a term expiring at the Company's 2019 annual meeting of shareholders, and appointed Mr. Lalo as the vice chair of the board. Mr. Lalo reestablished Invicta, the flagship brand of the Invicta Watch Group and one of the Company's largest brands, in 1994, and has served as its chief executive officer since its inception. Mr. Friedman has served as chief executive officer of Sterling Time, which is the exclusive distributor of IWCA’s watches and watch accessories for television home shopping and our long-time vendor, since 2005. Sterling Time has served as a vendor to the Company for over 20 years. Under the Purchase Agreement, the Company agreed to recommend that the Company's shareholders vote to re-elect each of Eyal Lalo and Michael Friedman as a director of the Company at the 2019 annual meeting of shareholders for a term of office expiring at the 2020 annual meeting of shareholders, and to reflect such recommendation in the proxy statement for the 2019 annual meeting and solicit proxies in favor thereof. Messrs. Lalo and Friedman were re-elected by the Company's shareholders at the 2019 annual meeting. For their service as non-employee members of the board of directors, Messrs. Friedman and Lalo receive compensation under the Company's non-employee director compensation policy. Each director receives $65,000 in a cash retainer annually for service on our board. In addition, the Company's non-employee directors receive a restricted stock unit award that vests on the day immediately prior to the next annual meeting of shareholders. On May 2, 2019, Messrs. Friedman and Lalo each received a prorated grant for the partial year, which resulted in an award of 20,436 restricted stock units, valued at $7,500, that vested on July 11, 2019. On July 12, 2019, Messrs. Friedman and Lalo were each granted an award of 75,581 restricted stock units, valued at $32,500, that will vest on the day immediately prior to the Company's next annual meeting of shareholders.
Mr. Lalo is the owner of IWCA, which is the sole owner of Invicta Media Investments, LLC. Mr. Friedman is an owner of Sterling Time. Pursuant to the Purchase Agreement, Invicta Media Investments, LLC purchased 4,000,000 shares of the Company's common stock and a warrant to purchase 2,526,562 shares of the Company's common stock for an aggregate purchase price of $3,000,000. Pursuant to the Purchase Agreement, Michael and Leah Friedman purchased 1,800,000 shares of the Company's common stock and a warrant to purchase 842,188 shares of the Company's common stock for an aggregate purchase price of $1,350,000.
The Company purchased products from Sterling Time, an affiliate of Mr. Friedman, in the aggregate amount of $18.5 million and $33.9 million during the second quarter and first six months of fiscal 2019 and $13.2 million and $25.4 million during the second quarter and first six months of fiscal 2018. The Company purchased goods from Sterling Time on standard commercial terms. In the first quarter of fiscal 2019, the Company subsidized the cost of a promotional cruise for Invicta branded and other vendors’ products. As of August 3, 2019 and February 2, 2019, the Company had a net trade payable balance owed to Sterling Time of $7.1 million and $3.2 million.
v3.19.2
Restructuring Costs (Notes)
6 Months Ended
Aug. 03, 2019
Restructuring Costs [Abstract]  
Restructuring and Related Activities Disclosure [Text Block]
Restructuring Costs
During the second quarter of 2019, the Company implemented and completed a cost optimization initiative, which reduced the Company's organizational structure, closed the New York and Los Angeles offices and cut overhead costs. The initiative included the elimination of 11 senior executive roles and a 20% reduction to the Company's non-variable workforce. As a result, the Company recorded restructuring charges of $5,165,000 for the three and six-month periods ended August 3, 2019, which relate primarily to severance and other incremental costs associated with the consolidation and elimination of positions across the Company.
The following table summarizes the significant components and activity under the restructuring program for the six-month period ended August 3, 2019:
 
 
Balance at
February 2,
2019
 
Charges
 
Cash Payments
 
Balance at
August 3,
2019
Severance
 
$

 
$
4,454,000

 
$
(1,079,000
)
 
$
3,375,000

Other incremental costs
 

 
711,000

 
(380,000
)
 
331,000

 
 
$

 
$
5,165,000

 
$
(1,459,000
)
 
$
3,706,000


The liability for restructuring accruals is included in current accrued liabilities within the accompanying condensed consolidated balance sheet.
v3.19.2
Executive and Management Transition Costs
6 Months Ended
Aug. 03, 2019
Executive Transition Costs [Abstract]  
Executive and Management Transition Costs [Text Block]
Executive and Management Transition Costs
On May 2, 2019, Robert J. Rosenblatt, the Company's Chief Executive Officer, was terminated from his position as an officer and employee of the Company and was entitled to receive the payments set forth in his employment agreement. The Company recorded charges to income totaling $1,922,000 as a result. Mr. Rosenblatt remains a member of the Company's board of directors. On May 2, 2019, in accordance with the Purchase Agreement, the Company's board of directors appointed Timothy A. Peterman to serve as Chief Executive Officer, effective immediately, and entered into an employment agreement with Mr. Peterman.
In conjunction with these executive changes as well as other executive and management terminations made during the first six months of fiscal 2019, the Company recorded charges to income totaling $310,000 and $2,341,000 for the three and six-months ended August 3, 2019, 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 2019 executive and management transition.
On April 11, 2018, the Company entered into a transition and separation agreement with its Executive Vice President, Chief Operating Officer/Chief Financial Officer, under which his position terminated on April 16, 2018 and he served as a non-officer employee until June 1, 2018. On April 11, 2018, the Company announced the appointment of a new Chief Financial Officer, effective as of April 16, 2018. In conjunction with this executive change as well as other executive and management terminations made during the first six months of fiscal 2018, the Company recorded charges to income totaling $0 and $1,024,000 for the three and six-months ended August 4, 2018, 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 2018 executive and management transition.
v3.19.2
Basis of Financial Statement Presentation (Policies)
6 Months Ended
Aug. 03, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Principles of Consolidation
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 February 2, 2019 has been derived from the Company's audited financial statements for the fiscal year ended February 2, 2019. 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 February 2, 2019. Operating results for the six-month period ended August 3, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2020.
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
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 2018, ended on February 2, 2019, and consisted of 52 weeks. Fiscal 2019 will end February 1, 2020 and will contain 52 weeks. The three and six-month periods ended August 3, 2019 and August 4, 2018 each consisted of 13 and 26 weeks.
Recently Issued Accounting Pronouncements
Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued Leases, Topic 842 (ASU 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 are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company adopted this standard in the first quarter of fiscal 2019 using the "Comparatives Under 840 Option" transition approach. Under this transition approach, comparative prior periods, including disclosures, were not restated. See Note 3 - "Leases" for information on the impact of adopting ASU 2016-02 on the Company's condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued Intangibles—Goodwill and Other—Internal-Use Software, Subtopic 350-40 (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted. The new standard can be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact that adopting the new accounting standard will have on its consolidated financial statements.
v3.19.2
Revenue (Policies)
6 Months Ended
Aug. 03, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Revenue Recognition
Revenue is recognized when control of the promised merchandise is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for the merchandise, which is upon shipment. Revenue is reported net of estimated sales returns, credits and incentives, and excludes sales taxes. Sales returns are estimated and provided for at the time of sale based on historical experience. As of August 3, 2019 and February 2, 2019, the Company recorded a merchandise return liability of $6,860,000 and $8,097,000, included in accrued liabilities, and a right of return asset of $3,747,000 and $4,410,000, included in other current assets.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification ("ASC") 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Substantially all of the Company's sales are single performance obligation arrangements for transferring control of merchandise to customers.
In accordance with ASC 606, the Company disaggregates revenue from contracts with customers by significant product groups and timing of when the performance obligations are satisfied. A reconciliation of disaggregated revenue by significant product group is provided in Note 10 - "Business Segments and Sales by Product Group."
As of August 3, 2019, approximately $50,000 is expected to be recognized from remaining performance obligations within the next two years. The Company has applied the practical expedient to exclude the value of remaining performance obligations for contracts with an original expected term of one year or less. Revenue recognized over time was $9,000 for the three-month periods ended August 3, 2019 and August 4, 2018 and $17,000 for the six-month periods ended August 3, 2019 and August 4, 2018.
Accounts Receivable
The Company utilizes an installment payment program called ValuePay that entitles customers to purchase merchandise and generally pay for the merchandise in two or more equal monthly credit card installments. The Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when the payment terms are less than one year. Accounts receivable consist primarily of amounts due from customers for merchandise sales and from credit card companies and are reflected net of reserves for estimated uncollectible amounts. As of August 3, 2019 and February 2, 2019, the Company had approximately $63,373,000 and $74,787,000 of net receivables due from customers under the ValuePay installment program and total reserves for estimated uncollectible amounts of $7,752,000 and $8,533,000.
Accounts Receivable
Accounts Receivable
The Company utilizes an installment payment program called ValuePay that entitles customers to purchase merchandise and generally pay for the merchandise in two or more equal monthly credit card installments. The Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when the payment terms are less than one year. Accounts receivable consist primarily of amounts due from customers for merchandise sales and from credit card companies and are reflected net of reserves for estimated uncollectible amounts. As of August 3, 2019 and February 2, 2019, the Company had approximately $63,373,000 and $74,787,000 of net receivables due from customers under the ValuePay installment program and total reserves for estimated uncollectible amounts of $7,752,000 and $8,533,000.
v3.19.2
Net Income (Loss) Per Common Share (Policies)
6 Months Ended
Aug. 03, 2019
Net Income (Loss) Per Common Share [Abstract]  
Net Loss Per Common Share
Net Loss Per Common Share
During the fourth quarter of fiscal 2018, the Company issued a restricted stock award that meets the criteria of a participating security. Accordingly, basic income (loss) per share is computed using the two-class method under which earnings are allocated to both common shares and participating securities. Undistributed net losses are allocated entirely to common shareholders since the participating security has no contractual obligation to share in the losses. All shares of restricted stock are deducted from weighted-average number of common shares outstanding – basic. 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 and is calculated using the treasury method.
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
 
Six-Month Periods Ended
 
 
August 3,
2019
 
August 4,
2018
 
August 3,
2019
 
August 4,
2018
Numerator:
 
 
 
 
 
 
 
 
Net loss (a)
 
$
(10,177,000
)
 
$
(40,000
)
 
$
(31,167,000
)
 
$
(3,026,000
)
Earnings allocated to participating share awards (b)
 

 

 

 

Net loss attributable to common shares — Basic and diluted
 
$
(10,177,000
)
 
$
(40,000
)
 
$
(31,167,000
)
 
$
(3,026,000
)
Denominator:
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding — Basic
 
75,502,646

 
66,009,117

 
71,410,554

 
65,685,034

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

 

 

 

Weighted average number of common shares outstanding — Diluted
 
75,502,646

 
66,009,117

 
71,410,554

 
65,685,034

Net loss per common share
 
$
(0.13
)
 
$
(0.00
)
 
$
(0.44
)
 
$
(0.05
)
Net loss per common share — assuming dilution
 
$
(0.13
)
 
$
(0.00
)
 
$
(0.44
)
 
$
(0.05
)
(a) The net loss for the three and six-month periods ended August 3, 2019 includes costs related to executive and management transition of $310,000 and $2,341,000, respectively, restructuring costs of $5,165,000 and rebranding costs of $238,000. In addition, the six-month period ended August 3, 2019 includes an inventory impairment write-down of $6,050,000. The net loss for the three and six-month periods ended August 4, 2018 includes costs related to executive and management transition of $0 and $1,024,000 and contract termination costs of $0 and $753,000.
(b) During the fourth quarter of fiscal 2018, the Company issued a restricted stock award that is a participating security. For the three and six-month periods ended August 3, 2019, the entire undistributed loss is allocated to common shareholders.
(c) For the three and six-month periods ended August 3, 2019, there were 284,000 and 229,000 incremental in-the-money potentially dilutive common shares outstanding, and 543,000 and 272,000 for the three and six-month periods ended August 4, 2018. The incremental in-the-money potentially dilutive common stock shares are excluded from the computation of diluted earnings per share, as the effect of their inclusion would be anti-dilutive.
v3.19.2
Leases (Tables)
6 Months Ended
Aug. 03, 2019
Leases [Abstract]  
Components of lease expense [Table Text Block]
The components of lease expense were as follows:
 
 
For the Three-Month
Period Ended
August 3, 2019
 
For the Six-Month
Period Ended
August 3, 2019
Operating lease cost
 
$
258,000

 
$
523,000

Short-term lease cost
 
48,000

 
110,000

Variable lease cost (a)
 
30,000

 
50,000

(a) Includes variable costs of finance leases.
Supplemental cash flow information related to leases [Table Text Block]
The Company obtained $188,000 and $142,000 right-of-use assets in exchange for finance and operating leases during the six-month period ended August 3, 2019. Supplemental cash flow information related to leases were as follows:
 
 
For the Six-Month
Period Ended
August 3, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows used for operating leases
 
$
524,000

Operating cash flows used for finance leases
 
3,000

Financing cash flows used for finance leases
 
23,000

Weighted average remaining lease term and weighted average discount rates related to leases [Table Text Block]
The weighted average remaining lease term and weighted average discount rates related to leases were as follows:
 
 
August 3, 2019
Weighted average remaining lease term:
 
 
Operating leases
 
1.2 years
Finance leases
 
2.3 years
Weighted average discount rate:
 
 
Operating leases
 
5.4%
Finance leases
 
5.3%
Supplemental balance sheet information related to leases [Table Text Block]
Supplemental balance sheet information related to leases is as follows:
Leases
 
Classification
 
August 3, 2019
Assets
 
 
 
 
Operating lease right-of-use assets
 
Other assets
 
$
1,120,000

Finance lease right-of-use assets
 
Property and equipment, net
 
192,000

Total lease right-of-use assets
 
 
 
$
1,312,000

Operating lease liabilities
 
 
 
 
Current portion of operating lease liabilities
 
Current portion of operating lease liabilities
 
$
907,000

Operating lease liabilities, excluding current portion
 
Other long term liabilities
 
151,000

Total operating lease liabilities
 
 
 
1,058,000

Finance lease liabilities
 
 
 
 
Current portion of finance lease liabilities
 
Current liabilities: Accrued liabilities
 
95,000

Finance lease liabilities, excluding current portion
 
Other long term liabilities
 
99,000

Total finance lease liabilities
 
 
 
194,000

Total lease liabilities
 
 
 
$
1,252,000

Schedule of maturities of operating lease liabilities [Table Text Block]
Future maturities of lease liabilities as of August 3, 2019 are as follows:
Fiscal year
 
Operating Leases
 
Finance Leases
 
Total
2019
 
$
475,000

 
$
53,000

 
$
528,000

2020
 
618,000

 
85,000

 
703,000

2021
 

 
60,000

 
60,000

2022
 

 
8,000

 
8,000

2023
 

 

 

Thereafter
 

 

 

Total lease payments
 
1,093,000

 
206,000

 
1,299,000

Less imputed interest
 
(35,000
)
 
(12,000
)
 
(47,000
)
Total lease liabilities
 
$
1,058,000

 
$
194,000

 
$
1,252,000

Schedule of maturities of finance lease liabilities [Table Text Block]
Future maturities of lease liabilities as of August 3, 2019 are as follows:
Fiscal year
 
Operating Leases
 
Finance Leases
 
Total
2019
 
$
475,000

 
$
53,000

 
$
528,000

2020
 
618,000

 
85,000

 
703,000

2021
 

 
60,000

 
60,000

2022
 

 
8,000

 
8,000

2023