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Kaspien Holdings Inc. (KSPN) SEC Filing 10-Q Quarterly report for the period ending Saturday, October 31, 2020

Kaspien Holdings Inc.

HISTORY TOOLS
CIK: 795212 Ticker: KSPN
Exhibit 99.1

 

2818 N. Sullivan Rd. Ste 30
Spokane, WA 99216
www.Kaspien.com

Contact:
Contact:
Contact:
Kaspien Holdings Inc.
Kaspien, Inc
Financial Relations Board
Ed Sapienza
Kunal Chopra
Joseph Calabrese
Chief Financial Officer
Chief Executive Officer
jcalabrese@fbir.com
(509) 202-4261
(425) 281-3566
(212) 827-3772

NEWS RELEASE
 
KASPIEN HOLDINGS ANNOUNCES SECOND QUARTER RESULTS
 
Total Revenue increases 23.5% and Gross Merchandise Value increases 46%

Spokane Valley, WA, September 15, 2020—Kaspien Holdings Inc. (Nasdaq: KSPN) today reported financial results for its second quarter ended August 1, 2020.
 
“The second quarter was a strong quarter for Kaspien. As consumers buy more of their goods online, brands are looking to expand their online operations. Kaspien has spent years building the expertise, strategies, software and services needed to create a prosperous online business, evolving from a third-party retailer to a software and tech-enabled services company. The strength of our second quarter results is a testament to the quality and performance of our offerings.” said Kunal Chopra, Kaspien Holdings Inc.’s Principal Executive Officer.
 
“We ended the quarter with $62.7 million in platform Gross Merchandise Value (GMV), with nearly one-third of GMV from Kaspien’s subscription business. As we shift to be more multi-marketplace centric, a key milestone was becoming a first adopter of Walmart’s new Walmart Fulfillment Services (WFS). Additionally, our focus on tech enabled services has provided new offerings for brands seeking online growth, such as self-service and managed service solutions for Amazon ad management, US Tax compliance for online sellers, and an unauthorized seller removal service,” added Mr. Chopra.
 
Second Quarter Overview
 

 •
Total revenue increased 23.5% to $42.3 million compared to $34.3 million in the second quarter of fiscal 2019.  Increased retail sales were supported by strong growth in the Company’s subscriptions and dropship businesses.
 

 •
Gross profit for the quarter increased 43.3% to $4.4 million, or 10.5% of total revenue as compared to $3.1 million, or 9.0% of total revenue for the second quarter of 2019. The increase in Gross profit as a percentage of total revenue was due to improved gross margins on the Amazon US Platform, improved operational efficiencies and the addition of new higher gross margin services.
 

 •
SG&A expenses for the quarter were $4.9 million, a decline of $1.8 million or 26.3% as compared to the second quarter of 2019. The decline in SG&A was due to a decline of $2.0 million in corporate expenses. The decline in corporate expenses was related to the sale of the Company’s fye business in February 2020.
 

 •
Loss from continuing operations was $0.9 million compared to a loss from continuing operations of $3.8 million for the second quarter of fiscal 2019.
 

 •
Net loss was $0.9 million, or $0.49 per share, compared to a net loss of $8.1 million, or $4.48 per share, for the same period last year.
 

 •
Adjusted EBITDA (a non-GAAP measure) was $833,000 compared to a loss of $310,000 for the second quarter of fiscal 2019 (see note 1).
 
Twenty-six weeks ended August 1, 2020 Overview
 

 •
Total revenue for the twenty-six weeks ended August 1, 2020 increased 6.5% to $73.9 million, compared to $69.4 million for the same period last year driven by increased sales on the Amazon US Platform and growth in the subscriptions business.
 

 •
Gross profit for the twenty-six weeks ended August 1, 2020 increased 31.9% to $7.7 million, or 10.5% of total revenue as compared to $5.9 million, or 8.5% of total revenue for the comparable period of 2019. The increase in Gross profit as a percentage of total revenue was due to improved gross margins on the Amazon US Platform, improved operational efficiencies and the addition of new higher gross margin services.
 

 •
SG&A expenses for twenty-six weeks ended August 1, 2020 were $13.4 million a decline of $0.2 million as compared to the comparable period of 2019.
 

 •
Loss from continuing operations was $5.7 million compared to $7.8 million for the twenty-six weeks ended August 3, 2019.
 

 •
Net loss was $6.3 million, or $3.46 per share, for the twenty-six weeks ended August 1, 2020, compared to a net loss of $15.9 million, or $8.78 per share, for the same period last year.
 

 •
Adjusted EBITDA (a non-GAAP measure) was a $544,000 compared to a loss of $1.4 million for the same period last year (see note 1).
 

 •
Cash, cash equivalents and restricted cash as of August 1, 2020 was $8.6 million, compared to $9.9 million as of August 3, 2019.
 
2

 •
Borrowings under the credit facility at the end of the second quarter were $2.2 million compared to $12.1 million at the end of the second quarter last year.  As of August 1, 2020, $6.5 million was available for borrowing.
 

 •
Inventory was $20.6 million at the end of second quarter of 2020 as compared to $20.2 million at the end of the second quarter of 2019.
 
Kaspien Holdings Inc.
Condensed Consolidated Financial Results

STATEMENTS OF OPERATIONS:
(in thousands, except per share data)

   
Thirteen Weeks Ended
    
Twenty-six Weeks Ended
  
   
August 1,
2020
    
% to
Revenue
    
August 3,
2019
    
% to
Revenue
    
August 1,
2020
    
% to
Revenue
    
August 3,
2019
    
% to
Revenue
  
                                                 
Net revenue
  
$
42,296
          
$
34,260
          
$
73,885
          
$
69,392
        
                                                         
Cost of sales
    
37,873
      
89.5
%
    
31,173
      
91.0
%
    
66,151
      
89.5
%
    
63,528
      
91.5
%
Gross profit
    
4,423
      
10.5
%
    
3,087
      
9.0
%
    
7,734
      
10.5
%
    
5,864
      
8.5
%
                                                                 
Selling, general and administrative expenses
    
4,916
      
11.6
%
    
6,666
      
19.5
%
    
13,406
      
18.1
%
    
13,644
      
19.7
%
Loss from continuing operations
    
(493
)
    
-1.2
%
    
(3,579
)
    
-10.4
%
    
(5,672
)
    
-7.7
%
    
(7,780
)
    
-11.2
%
                                                                 
Interest expense
    
406
      
1.0
%
    
172
      
0.5
%
    
634
      
0.9
%
    
308
      
0.4
%
                                                                 
Loss from continuing operations before income tax benefit
    
(899
)
    
-2.1
%
    
(3,751
)
    
-10.9
%
    
(6,306
)
    
-8.5
%
    
(8,088
)
    
-11.7
%
                                                                 
Income tax expense
    
-
      
0.0
%
    
7
      
0.0
%
    
-
      
0.0
%
    
16
      
0.0
%
                                                                 
Loss from continuing operations
    
(899
)
    
-2.1
%
    
(3,758
)
    
-11.0
%
    
(6,306
)
    
-8.5
%
    
(8,104
)
    
-11.7
%
                                                                 
Loss from fye business, net of tax
    
-
      
0.0
%
    
(4,370
)
    
-12.8
%
    
-
      
0.0
%
    
(7,826
)
    
-11.3
%
                                                                 
Net loss
  
$
(899
)
    
-2.1
%
  
$
(8,128
)
    
-23.7
%
  
$
(6,306
)
    
-8.5
%
  
$
(15,930
)
    
-23.0
%
                                                                 
Basic and diluted loss per common share:
                                                                
                                                                 
Basic and diluted loss per share
  
$
(0.49
)
          
$
(4.48
)
          
$
(3.46
)
          
$
(8.78
)
        
                                                                 
Weighted average number of common shares outstanding - basic and diluted
    
1,825
              
1,816
              
1,823
              
1,815
          
                                                                 
Diluted Income per common share:
                                                                
SELECTED BALANCE SHEET CAPTIONS:
                                  

           

         
(in thousands, except store data)
                                  
August 1,
2020
            
August 3,
2019
          
                                                                 
Cash, cash equivalents, and restricted cash
                                  
$
8,649
            
$
9,930
          
Merchandise inventory
                                    
20,576
              
20,185
          
Fixed assets (net)
                                    
2,285
              
1,898
          
Accounts payable
                                    
9,857
              
9,285
          
Borrowings under line of credit
                                    
2,151
              
12,086
          
Long-term debt
                                    
4,401
              
-
          

3
Notes:
 

 1.
Reconciliation of net loss to adjusted EBITDA:
 
Adjusted EBITDA is defined as net loss, adjusted to exclude: (i) income tax expense; (ii) loss from fye business, net of tax, (iii) interest expense; (iv) Corporate SG&A expenses and (v) depreciation expense. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. We use adjusted EBITDA to evaluate our own operating performance and as an integral part of our planning process. We present adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance. We believe this measure is a financial metric used by many investors to compare companies. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings (losses), net earnings (loss) from continuing operations or cash flows from operating activities, as determined in accordance with GAAP.
 
   
Thirteen Weeks Ended
    
Twenty-six Weeks Ended
  
(amounts in thousands)
  
August 1,
2020
    
August 3,
2019
    
August 1,
2020
    
August 3,
2019
  
                         
Net loss
  
$
(899
)
  
$
(8,128
)
  
$
(6,306
)
  
$
(15,930
)
Income tax expense
    
-
      
7
      
-
      
16
  
Loss from fye business, net of tax
    
-
      
4,370
      
-
      
7,826
  
Interest expense
    
406
      
172
      
634
      
308
  
Loss from continuing operations
    
(493
)
    
(3,579
)
    
(5,672
)
    
(7,780
)
Corporate SG&A expenses
    
810
      
2,833
      
5,209
      
5,560
  
Depreciation expense
    
516
      
436
      
1,007
      
844
  
Adjusted EBITDA
  
$
833
    
$
(310
)
  
$
544
    
$
(1,376
)

Kaspien provides a platform of software and services to empower brands to grow their online distribution channels on digital marketplaces such as Amazon, Walmart, and eBay, among others. The Company helps brands achieve their online retail goals through its innovative and proprietary technology, tailored strategies, and mutually beneficial partnerships. Kaspien is positioning itself to be a brand’s ultimate online growth partner and is guided by seven core principles:
 
•          Partner Obsession
•          Insights Driven
•          Simplicity
•          Innovation
•          Results
•          Ownership
•          Diversity and Teamwork
 
 Kaspien, formerly Trans World Entertainment, established itself as a public company in 1986 and is traded on the Nasdaq Capital Market under the symbol “KSPN” formerly “TWMC”.
 
Certain statements in this release set forth management's intentions, plans, beliefs, expectations or predictions of the future based on current facts and analyses.  Actual results may differ materially from those indicated in such statements.  Additional information on factors that may affect the business and financial results of the Company can be found in filings of the Company with the Securities and Exchange Commission.
 

4
The following information was filed by Kaspien Holdings Inc. (KSPN) on Wednesday, September 16, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Document And Entity Information
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals)
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Comprehensive Income (Loss) (Unaudited)
Condensed Consolidated Statements Of Operations (Unaudited)
Condensed Consolidated Statements Of Shareholders' Equity (Unaudited)
Accumulated Other Comprehensive Loss
Basic And Diluted Loss Per Share
Basic And Diluted Loss Per Share (Details)
Basic And Diluted Loss Per Share (Tables)
Basis Of Presentation
Commitments And Contingencies
Commitments And Contingencies (Details)
Debt
Debt, Credit Facility (Details)
Debt, New Credit Facility (Details)
Debt, Paycheck Protection Program (Details)
Debt, Subordinated Loan Agreement (Details)
Defined Benefit Plan
Defined Benefit Plan (Details)
Defined Benefit Plan (Tables)
Depreciation And Amortization
Depreciation And Amortization (Details)
Discontinued Operations
Discontinued Operations (Details)
Discontinued Operations (Tables)
Income Taxes
Income Taxes (Details)
Intangible Assets
Intangible Assets (Details)
Intangible Assets (Tables)
Intangible Assets, Changes In Net Intangibles And Goodwill (Details)
Intangible Assets, Future Amortization Expense (Details)
Intangible Assets, Identifiable Intangible Assets (Details)
Nature Of Operations
Nature Of Operations (Details)
Nature Of Operations (Policies)
Nature Of Operations, Impact Of Covid-19 (Details)
Nature Of Operations, Liquidity And Cash Flows (Details)
Nature Of Operations, New Credit Facility And Subordinated Debt Agreement (Details)
Nature Of Operations, Paycheck Protection Program (Details)
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements (Policies)
Restricted Cash
Restricted Cash (Details)
Restricted Cash (Tables)
Sale Of Fye Business
Sale Of Fye Business (Details)
Sale Of Fye Business (Tables)
Stock Based Compensation
Stock Based Compensation (Details)
Stock Based Compensation (Tables)

Material Contracts, Statements, Certifications & more

Kaspien Holdings Inc. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification
Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification
Exhibit 32: Section 1350 Certification
Ticker: KSPN
CIK: 795212
Form Type: 10-Q Quarterly Report
Accession Number: 0001140361-20-028467
Submitted to the SEC: Tue Dec 15 2020 4:30:43 PM EST
Accepted by the SEC: Tue Dec 15 2020
Period: Saturday, October 31, 2020
Industry: Retail Record And Prerecorded Tape Stores

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