UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended October 4, 2020 | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from __________ to __________ | ||
Commission file number: 000-50081
UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC.
(Name of registrant as specified in its charter)
| Nevada | 65-1005398 | |
| (State or Other Jurisdiction of Organization) | (IRS Employer Identification Number) |
1800 2nd Street, Suite 970
Sarasota, FL 34236
(Address of principal executive offices)
(941) 906-8580
(Issuer’s telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer o | ||
| Non-accelerated filer þ | Smaller reporting company þ | ||
| Emerging growth company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Securities registered under Section 12(b) of the Act: None.
As of November 2, 2020, the issuer had 3,412,186 shares of ordinary Common Stock, $0.001 par value, and 323,820 shares of Class B Common Stock, $0.001 par value, outstanding.
UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC.
Form 10-Q
| Page | |||
| Cautionary Note Regarding Forward-Looking Statements | 3 | ||
| PART I. FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | 4 | |
| Consolidated Balance Sheets | 4 | ||
| Consolidated Statements of Operations | 5 | ||
| Consolidated Statements of Comprehensive Loss | 6 | ||
| Consolidated Statements of Changes in Stockholders’ Equity | 7 | ||
| Consolidated Statements of Cash Flows | 8 | ||
| Notes to Consolidated Financial Statements | 9 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 | |
| Item 4. | Controls and Procedures | 32 | |
| PART II. OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 33 | |
| Item 1A. | Risk Factors | 33 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 | |
| Item 3. | Defaults Upon Senior Securities | 33 | |
| Item 4. | Mine Safety Disclosures | 33 | |
| Item 5. | Other Information | 33 | |
| Item 6. | Exhibits | 33 | |
| Signatures | 34 | ||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements including, without limitation, statements containing the words “believes,” “anticipates,” “intends,” “expects,” and words of similar import, as well as all references to future results. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of Uniroyal Global Engineered Products, Inc. to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: risks involved in implementing our business strategy, our ability to obtain financing on acceptable terms, competition, our ability to manage growth, pricing and availability of equipment, materials and inventories, performance issues with suppliers, economic growth, the Company’s ability to successfully integrate acquired operations, currency fluctuations, risks of technological change, the effectiveness of cost-reduction plans, our dependence on key personnel, our ability to protect our intellectual property rights, risks of new technology and new products, and government regulation. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update any such forward-looking statements to reflect events, developments or circumstances after the date hereof.
| 3 |
PART 1 - FINANCIAL INFORMATION
Uniroyal Global Engineered Products, Inc.
| (Unaudited) | ||||||||
| ASSETS | October 4, 2020 (1) | December 29, 2019 | ||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 767,874 | $ | 513,588 | ||||
| Accounts receivable, net | 9,689,695 | 11,662,325 | ||||||
| Inventories, net | 17,967,896 | 19,116,542 | ||||||
| Other current assets | 1,020,555 | 930,015 | ||||||
| Related party receivable | 37,556 | - | ||||||
| Total Current Assets | 29,483,576 | 32,222,470 | ||||||
| PROPERTY AND EQUIPMENT, NET | 18,414,393 | 19,103,319 | ||||||
| OPERATING LEASE RIGHT-OF-USE ASSETS | 6,088,870 | 6,607,963 | ||||||
| OTHER ASSETS | ||||||||
| Intangible assets | 3,227,648 | 3,263,781 | ||||||
| Goodwill | 1,079,175 | 1,079,175 | ||||||
| Other long-term assets | 3,737,907 | 3,489,313 | ||||||
| Total Other Assets | 8,044,730 | 7,832,269 | ||||||
| TOTAL ASSETS | $ | 62,031,569 | $ | 65,766,021 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Checks issued in excess of bank balance | $ | 147,960 | $ | 332,141 | ||||
| Lines of credit | 18,452,489 | 20,530,773 | ||||||
| Current maturities of long-term debt | 1,092,420 | 1,238,541 | ||||||
| Current maturities of finance lease liabilities | 269,528 | 364,872 | ||||||
| Accounts payable | 8,338,193 | 9,232,119 | ||||||
| Accrued expenses and other liabilities | 7,035,285 | 3,890,367 | ||||||
| Related party obligation | 145,214 | 608,517 | ||||||
| Current portion of postretirement benefit liability - health and life | 155,803 | 155,803 | ||||||
| Total Current Liabilities | 35,636,892 | 36,353,133 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Long-term debt, less current portion | 3,651,836 | 2,892,242 | ||||||
| Finance lease liabilities, less current portion | 294,955 | 492,613 | ||||||
| Operating lease liabilities | 5,713,922 | 6,106,568 | ||||||
| Related party lease financing obligation | 2,541,472 | 2,646,970 | ||||||
| Long-term debt to related parties | 3,774,613 | 3,190,655 | ||||||
| Postretirement benefit liability - health and life, less current portion | 2,575,124 | 2,592,023 | ||||||
| Other long-term liabilities | 573,815 | 715,308 | ||||||
| Total Long-Term Liabilities | 19,125,737 | 18,636,379 | ||||||
| Total Liabilities | 54,762,629 | 54,989,512 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred units, Series A UEP Holdings, LLC, 200,000 units issued and outstanding ($100 issue price) | 617,571 | 617,571 | ||||||
| Preferred units, Series B UEP Holdings, LLC, 150,000 units issued and outstanding ($100 issue price) | 463,179 | 463,179 | ||||||
| Preferred stock, Uniroyal Global (Europe) Limited, 50 shares issued and outstanding ($1.51 stated value) | 75 | 75 | ||||||
| Common stock, 95,000,000 shares authorized ($.001 par value) 3,736,006 shares issued and outstanding as of October 4, 2020 and December 29, 2019 | 3,736 | 18,680 | ||||||
| Additional paid-in capital | 35,290,590 | 35,275,646 | ||||||
| Accumulated deficit | (27,696,592 | ) | (24,301,203 | ) | ||||
| Accumulated other comprehensive loss | (1,409,619 | ) | (1,297,439 | ) | ||||
| Total Stockholders' Equity | 7,268,940 | 10,776,509 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 62,031,569 | $ | 65,766,021 | ||||
| (1) | The amounts in common stock and additional paid-in capital were adjusted to reflect the one-for-five reverse stock split ("reverse stock split") as of February 24, 2020, the effective date of the reverse stock split. See Note 1 for additional information. |
See accompanying notes to the consolidated financial statements.
| 4 |
Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 (1) | October 4, 2020 | September 29, 2019 (1) | |||||||||||||
| NET SALES | $ | 15,171,898 | $ | 22,033,539 | $ | 43,528,393 | $ | 71,523,182 | ||||||||
| COST OF GOODS SOLD | 13,114,967 | 18,471,639 | 37,931,227 | 59,434,689 | ||||||||||||
| Gross Profit | 2,056,931 | 3,561,900 | 5,597,166 | 12,088,493 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling | 778,699 | 1,061,781 | 2,278,279 | 3,348,622 | ||||||||||||
| General and administrative | 1,957,486 | 1,373,118 | 4,834,011 | 4,332,978 | ||||||||||||
| Research and development | 198,182 | 377,989 | 704,239 | 1,302,707 | ||||||||||||
| Other operating expenses | - | - | - | 343,003 | ||||||||||||
| OPERATING EXPENSES | 2,934,367 | 2,812,888 | 7,816,529 | 9,327,310 | ||||||||||||
| Operating (Loss) Income | (877,436 | ) | 749,012 | (2,219,363 | ) | 2,761,183 | ||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||
| Interest and other debt related expense | (367,454 | ) | (509,829 | ) | (1,215,771 | ) | (1,547,343 | ) | ||||||||
| Funding from Paycheck Protection Program | 33,824 | - | 2,217,500 | - | ||||||||||||
| Other income (expense) | 85,753 | 50,213 | (185,417 | ) | 53,396 | |||||||||||
| Net Other Income (Expense) | (247,877 | ) | (459,616 | ) | 816,312 | (1,493,947 | ) | |||||||||
| (LOSS) INCOME BEFORE TAX PROVISION | (1,125,313 | ) | 289,396 | (1,403,051 | ) | 1,267,236 | ||||||||||
| TAX (BENEFIT) PROVISION | (111,318 | ) | 12,022 | (404,141 | ) | (6,287 | ) | |||||||||
| NET (LOSS) INCOME | (1,013,995 | ) | 277,374 | (998,910 | ) | 1,273,523 | ||||||||||
| Preferred stock dividend | (808,638 | ) | (777,372 | ) | (2,396,479 | ) | (2,339,862 | ) | ||||||||
| NET LOSS ALLOCABLE TO COMMON SHAREHOLDERS | $ | (1,822,633 | ) | $ | (499,998 | ) | $ | (3,395,389 | ) | $ | (1,066,339 | ) | ||||
| LOSS PER COMMON SHARE: | ||||||||||||||||
| Basic | $ | (0.49 | ) | $ | (0.13 | ) | $ | (0.91 | ) | $ | (0.29 | ) | ||||
| Diluted | $ | (0.49 | ) | $ | (0.13 | ) | $ | (0.91 | ) | $ | (0.29 | ) | ||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||||||||||
| Diluted | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||||||||||
| (1) | Share and per share amounts for the three and nine months ended September 29, 2019 have been restated to reflect the one-for-five reverse stock split that became effective on February 24, 2020. See Note 1 for additional information. |
See accompanying notes to the consolidated financial statements.
| 5 |
Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Comprehensive Loss
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 | October 4, 2020 | September 29, 2019 | |||||||||||||
| NET (LOSS) INCOME | $ | (1,013,995 | ) | $ | 277,374 | $ | (998,910 | ) | $ | 1,273,523 | ||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||
| Minimum benefit liability adjustment | - | (73,617 | ) | - | (220,851 | ) | ||||||||||
| Foreign currency translation adjustment | 235,736 | (240,059 | ) | (112,180 | ) | (221,612 | ) | |||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | 235,736 | (313,676 | ) | (112,180 | ) | (442,463 | ) | |||||||||
| COMPREHENSIVE (LOSS) INCOME | (778,259 | ) | (36,302 | ) | (1,111,090 | ) | 831,060 | |||||||||
| Preferred stock dividend | (808,638 | ) | (777,372 | ) | (2,396,479 | ) | (2,339,862 | ) | ||||||||
| COMPREHENSIVE LOSS TO COMMON SHAREHOLDERS | $ | (1,586,897 | ) | $ | (813,674 | ) | $ | (3,507,569 | ) | $ | (1,508,802 | ) | ||||
See accompanying notes to the consolidated financial statements.
| 6 |
Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
| UEPH Series A | UEPH Series B | UGEL Preferred | Common Stock | Additional Paid In | Accumulated | Accumulated
Other | Total | |||||||||||||||||||||||||||||||||||||||||
| Units | Amount | Units | Amount | Shares | Amount | Shares (1) | Amount (1) | Capital (1) | Deficit | Loss | Equity | |||||||||||||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| September 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2019 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 18,680 | $ | 35,275,646 | $ | (22,702,471 | ) | $ | (831,432 | ) | $ | 12,841,248 | ||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | 277,374 | - | 277,374 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | - | - | - | (313,676 | ) | (313,676 | ) | ||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | - | - | - | - | - | - | (777,372 | ) | - | (777,372 | ) | ||||||||||||||||||||||||||||||||||
| Balance September 29, 2019 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 18,680 | $ | 35,275,646 | $ | (23,202,469 | ) | $ | (1,145,108 | ) | $ | 12,027,574 | ||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| October 4, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance July 5, 2020 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 3,736 | $ | 35,290,590 | $ | (25,873,959 | ) | $ | (1,645,355 | ) | $ | 8,855,837 | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (1,013,995 | ) | - | (1,013,995 | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | - | - | - | - | 235,736 | 235,736 | ||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | - | - | - | - | - | - | (808,638 | ) | - | (808,638 | ) | ||||||||||||||||||||||||||||||||||
| Balance October 4, 2020 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 3,736 | $ | 35,290,590 | $ | (27,696,592 | ) | $ | (1,409,619 | ) | $ | 7,268,940 | ||||||||||||||||||||||||||
| For the Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| September 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 30, 2018 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,738,006 | $ | 18,690 | $ | 35,244,770 | $ | (22,136,130 | ) | $ | (702,645 | ) | $ | 13,505,510 | ||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | 1,273,523 | - | 1,273,523 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | - | - | - | (442,463 | ) | (442,463 | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | - | - | 44,166 | - | - | 44,166 | ||||||||||||||||||||||||||||||||||||
| Treasury shares purchased at cost and retired | - | - | - | - | - | - | (2,000 | ) | (10 | ) | (13,290 | ) | - | - | (13,300 | ) | ||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | - | - | - | - | - | - | (2,339,862 | ) | - | (2,339,862 | ) | ||||||||||||||||||||||||||||||||||
| Balance September 29, 2019 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 18,680 | $ | 35,275,646 | $ | (23,202,469 | ) | $ | (1,145,108 | ) | $ | 12,027,574 | ||||||||||||||||||||||||||
| For the Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 29, 2019 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 18,680 | $ | 35,275,646 | $ | (24,301,203 | ) | $ | (1,297,439 | ) | $ | 10,776,509 | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (998,910 | ) | - | (998,910 | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | - | - | - | (112,180 | ) | (112,180 | ) | ||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | - | - | - | - | - | - | - | (2,396,479 | ) | - | (2,396,479 | ) | ||||||||||||||||||||||||||||||||||
| Adjustment for a 1-for-5
reverse stock split | - | - | - | - | - | - | - | (14,944 | ) | 14,944 | - | - | - | |||||||||||||||||||||||||||||||||||
| Balance October 4, 2020 | 200,000 | $ | 617,571 | 150,000 | $ | 463,179 | 50 | $ | 75 | 3,736,006 | $ | 3,736 | $ | 35,290,590 | $ | (27,696,592 | ) | $ | (1,409,619 | ) | $ | 7,268,940 | ||||||||||||||||||||||||||
| (1) | The number of shares of common stock reflect the one-for-five reverse stock split that became effective on February 24, 2020. The amounts in common stock and additional paid-in capital were adjusted as of the effective date of the one-for five reverse stock split. See Note 1 for additional information. |
See accompanying notes to the consolidated financial statements.
| 7 |
Uniroyal Global Engineered Products, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | October 4, 2020 | September 29, 2019 | ||||||
| Net (loss) income | $ | (998,910 | ) | $ | 1,273,523 | |||
| Adjustments to reconcile net (loss) income to net cash flows from operating activities: | ||||||||
| Depreciation | 1,757,012 | 1,778,280 | ||||||
| Stock-based compensation expense | - | 44,166 | ||||||
| Amortization of intangible assets | 11,250 | 12,917 | ||||||
| Loss on disposal of property and equipment | 3,871 | 68,395 | ||||||
| Noncash postretirement benefit - health and life | - | (220,851 | ) | |||||
| Funding from Paycheck Protection Program recognized as income | (2,217,500 | ) | - | |||||
| Noncash lease adjustment | 66,591 | (26,258 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 1,862,403 | (1,187,917 | ) | |||||
| Inventories | 1,029,195 | (82,294 | ) | |||||
| Other current assets | (99,857 | ) | 324,711 | |||||
| Related party receivable | (37,556 | ) | (13,099 | ) | ||||
| Other long-term assets | (281,231 | ) | 74,135 | |||||
| Accounts payable | (784,890 | ) | 185,837 | |||||
| Accrued expenses and other liabilities | 803,544 | 249,784 | ||||||
| Postretirement benefit liability - health and life | (16,899 | ) | (18,208 | ) | ||||
| Other long-term liabilities | (130,374 | ) | (7,244 | ) | ||||
| Cash provided by operating activities | 966,649 | 2,455,877 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (1,200,045 | ) | (1,584,511 | ) | ||||
| Proceeds from policy loans, net of payments on life insurance policies | 28,787 | 127,440 | ||||||
| Cash used in investing activities | (1,171,258 | ) | (1,457,071 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net change in checks issued in excess of bank balance | (184,181 | ) | (102,725 | ) | ||||
| Net advances (payments) on lines of credit | (1,913,809 | ) | 1,893,069 | |||||
| Payments on long-term debt | (899,690 | ) | (772,381 | ) | ||||
Proceeds from issuance of long-term debt - Paycheck Protection Program | 2,217,500 | - | ||||||
Proceeds from issuance of long-term debt - automotive lenders | 1,519,861 | - | ||||||
| Proceeds from issuance of long-term debt - other | - | 454,088 | ||||||
| Payments on finance lease liabilities | (289,948 | ) | (484,834 | ) | ||||
| Proceeds from related party obligations | 983,958 | 800,000 | ||||||
| Payments on related party obligations | (968,801 | ) | (628,023 | ) | ||||
| Payment of preferred stock dividends | - | (2,332,503 | ) | |||||
| Purchase and retirement of treasury stock | - | (13,300 | ) | |||||
| Cash provided by (used in) financing activities | 464,890 | (1,186,609 | ) | |||||
| Net change in cash and cash equivalents | 260,281 | (187,803 | ) | |||||
| Cash and cash equivalents - beginning of period | 513,588 | 1,028,841 | ||||||
| Effects of currency translation on cash and cash equivalents | (5,995 | ) | (22,749 | ) | ||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 767,874 | $ | 818,289 | ||||
See Note 2 for noncash transactions and supplemental disclosure of cash flow information.
See accompanying notes to the consolidated financial statements.
| 8 |
UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC.
Notes to Consolidated Financial Statements
October 4, 2020
(Unaudited)
| 1. | Basis of Presentation |
The accompanying unaudited interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of Uniroyal Global Engineered Products, Inc.’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. Uniroyal Global Engineered Products, Inc. (the “Company,” “Uniroyal Global,” “we,” or “us”) filed audited consolidated financial statements as of and for the fiscal years ended December 29, 2019 and December 30, 2018 which included all information and notes necessary for such complete presentation in conjunction with its 2019 Annual Report on Form 10-K.
The results of operations for the interim period ended October 4, 2020 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 29, 2019, which are contained in the Company’s 2019 Annual Report on Form 10-K.
The Company owns all of the ownership interests in Uniroyal Engineered Products, LLC (“Uniroyal”) and its holding company UEP Holdings, LLC (“UEPH”), a U.S. manufacturer of textured coatings, and all of the ordinary common stock of Uniroyal Global (Europe) Limited (“UGEL”) formerly known as Engineered Products Acquisition Limited (“EPAL”), the holding company for Uniroyal Global Limited (“UGL”) formerly Wardle Storeys (Earby) Limited (“Wardle Storeys”), a European manufacturer of textured coatings and polymer films.
The Company and its subsidiaries use a 52/53-week fiscal year ending on the Sunday nearest to December 31. The current year ending January 3, 2021 is a 53-week year whereas the prior year ended December 29, 2019 was a 52-week year. The Company’s U.K. subsidiaries use the calendar year end of December 31. The activity of the U.K. subsidiaries that occurs on the days that do not coincide with the Company’s year-end is not material. The three months ended October 4, 2020 and September 29, 2019 were both 13-week periods while the nine months ended October 4, 2020 was a 40-week period and the nine months ended September 29, 2019 was a 39-week period.
The accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of October 4, 2020 and the results of operations, comprehensive loss and cash flows for the interim periods ended October 4, 2020 and September 29, 2019.
The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British Pound Sterling as the functional currency. See Note 4, Foreign Currency Translation.
For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation.
One-for-Five Reverse Stock Split
On January 27, 2020, the Company announced a one-for-five reverse stock split (“reverse stock split”) on its common stock that became effective on February 24, 2020. The amounts in common stock and additional paid-in capital were adjusted as of the effective date to reflect the reverse stock split. Share and per share amounts for the three and nine months ended September 29, 2019 have been restated to give effect to the reverse stock split.
| 9 |
Coronavirus (COVID-19)
Subsequent to year-end 2019, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a public health emergency. There have been mandates from international, federal, state and local authorities requiring forced closures of various schools, businesses and other facilities and organizations although there have been some recent easings of these closures. These forced closures have negatively impacted the Company’s business. Primarily due to the negative impact that COVID-19 is having on the global economy, the Company began to experience a decline in sales during the latter part of March 2020. In order to mitigate the effect of the decrease in revenue, the Company is managing its costs, which included initially reducing staff at its manufacturing facilities with production at one-third capacity at the U.S. facility and the entire production staff furloughed at the U.K. facility beginning in late March. During June 2020, the Company had some employees return to work as its U.K. facility started limited production of vinyl products based on orders it was receiving from its customers. The Company brought back additional production workers as incoming orders increased during the third quarter of 2020. Demand for our products continues to improve in the fourth quarter although it is well below normalized levels.
Additionally, the Company has applied for loans under programs offered by the governmental agencies in the United States and in the United Kingdom and is exploring options for other supplementary cash flow opportunities to provide further liquidity.
For the U.S. operations, during the second quarter of 2020 the Company received $2,217,500 in funds from One Community Bank (formerly Oregon Community Bank) through the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”). The loan matures on April 13, 2022 and bears an interest rate of 1.0%. The Company is required to make monthly payments of principal and interest beginning November 13, 2020 based on the amount that is outstanding on October 13, 2020 in order to fully amortize the loan by April 13, 2022. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.
All or a portion of the loan may be forgiven by the SBA for costs the Company incurs for payroll, rent, utilities and all other allowable expenses during the 24-week period beginning April 13, 2020. The Company used all proceeds from the loan to maintain payroll and make payments for lease, utility and other allowable expenses. Included in the accompanying consolidated statements of operations for the nine months ended October 4, 2020 was $2,217,500 of loan forgiveness that the Company expects to receive from the SBA. Although the Company has not been legally released from this amount of the loan, management concluded that there was reasonable assurance that the Company had substantially met the terms for forgiveness and therefore recognized this amount as income as a component of other income (expense). The Company submitted its application for loan forgiveness to One Community Bank in September 2020.
Also for the U.S. operations, during the third quarter of 2020 the Company applied for a $3.2 million loan from Wells Fargo Capital Finance, LLC through the Main Street Lending Program established by the Federal Reserve Board; however, there can be no guarantee that the Company will be successful in obtaining this funding.
For the U.K. operations, during the three and nine months ended October 4, 2020 the Company recorded reimbursed costs of approximately $474,000 and $1,560,000, respectively, under the Coronavirus Job Retention Scheme (“CJRS”) set up by the U.K. government to help employers pay the wages of those employees who would otherwise have been laid off during the coronavirus outbreak but under the CJRS were furloughed instead. This program reimbursed the Company for 80% of the compensation expense plus national insurance and certain benefits paid to the furloughed employees, resulting in lower salary expense for the Company. While the employees were on furlough, the compensation paid to them was limited to the amount reimbursed by the CJRS. The Company recorded the reimbursed amounts as reductions to the associated expenses.
Additionally for the U.K. operations, during the third quarter of 2020 the Company received a $783,958 loan from its principal shareholder and $1,545,538 in loans from automotive lenders. These funds provided additional working capital to meet various short-term cash needs.
| 10 |
While the closures and limitations on movement, domestically and internationally, are expected to be temporary due to the COVID-19 outbreak, the duration of the supply chain disruption and related financial impact cannot be estimated at this time. Should the closures continue for an extended period of time or should the effects of the coronavirus continue to spread, the impact could have a material adverse effect on the Company’s financial position, results of operations and cash flows which may require that the Company obtain additional financing.
The payment of dividends for the nine months ended October 4, 2020 and the three months ended December 29, 2019 was deferred to preserve cash and provide additional liquidity. As of October 4, 2020 and December 29, 2019, accrued dividends of $3,154,042 and $788,599, respectively, were included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.
Legal Proceedings
On October 1, 2020, the Health and Safety Executive (“HSE”), the government agency responsible for the enforcement of health and safety law in the U.K., charged our U.K. subsidiary, Uniroyal Global Limited, with an offense under the Health and Safety at Work etc. Act 1974 arising from an August 2019 incident in which an employee was injured in the course of his employment.
The Company fully cooperated with the HSE investigation and, at this time, intends to negotiate a plea based on the legal advice provided to it to date. Based on this legal advice, the Company believes that £150,000 ($195,000) is a reasonable estimate of the fine to be imposed. Accordingly, the Company has recorded a charge of $195,000 in general and administrative expenses in the accompanying Consolidated Statements of Operations for the three and nine months ended October 4, 2020.
| 2. | Noncash Transactions and Supplemental Disclosure of Cash Flow Information |
During the nine months ended October 4, 2020, the Company recorded funding from the Paycheck Protection Program of $2,217,500, which is the amount of debt forgiveness that it expects to receive for the loan it made through the Paycheck Protection Program. Although the Company has not been legally released from this amount of the loan, management concluded that there was reasonable assurance that the Company had substantially met the terms for forgiveness, including using all proceeds from the loan for eligible costs (as defined under the Paycheck Protection Program). The Company submitted its application for loan forgiveness in September 2020.
During the nine months ended September 29, 2019, the Company entered into several equipment financing obligations with fair values of $379,126, which are accounted for as capital assets. The fair values were added to property and equipment and a corresponding amount to long-term debt or related party lease financing obligation.
The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” on December 31, 2018. Under this new standard, the Company was required to record on its balance sheet previously unrecorded operating leases based on the present value of remaining lease payments. Per this new standard, the Company recorded operating lease right-of-use (“ROU”) assets and operating lease liabilities of $6,815,376 on its consolidated balance sheet as of December 31, 2018.
During the third quarter of 2020 and 2019, the Company obtained $130,000 and $249,051, respectively, in loans against the cash value of its company owned life insurance policies and are shown net of payments of $101,213 and $121,611, respectively, on the life insurance policies in the consolidated statements of cash flows. These loans have a weighted average interest rate of 3.65% and can be repaid at any time.
The following is supplemental disclosure of cash paid for the nine months ended:
| October 4, 2020 | September 29, 2019 | |||||||
| Interest | $ | 1,272,124 | $ | 1,452,735 | ||||
| 3. | Fair Value of Financial Instruments |
The Company’s short-term financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and lines of credit. The Company adjusts the carrying value of financial instruments denominated in other currencies such as cash, accounts receivable, accounts payable and lines of credit using the appropriate exchange rates at the balance sheet date. The Company believes that the carrying values of these short-term financial instruments approximate their estimated fair values.
The fair value of the Company’s long-term debt is estimated based on current rates for similar instruments with the same remaining maturities. In determining the current interest rates for similar instruments, the Company takes into account its risk of nonperformance. The Company believes that the carrying value of its long-term debt approximates its estimated fair value.
| 11 |
The Company uses foreign currency exchange contracts which are recorded at their estimated fair values in the accompanying consolidated balance sheets. The fair values of the currency exchange contracts are based upon observable market transactions of spot and forward rates.
For the nine months ended October 4, 2020, there have been no changes in the application of valuation methods applied to similar assets and liabilities.
| 4. | Foreign Currency Translation |
The financial position and results of operations of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of operations denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while the capital accounts are translated at the historical rate for the date they were recognized. Revenues and expenses are translated at the weighted average exchange rates during the reporting period. The resulting translation gains and losses on assets and liabilities are recorded in accumulated other comprehensive loss and are excluded from net income until realized through a sale or liquidation of the investment. Transaction gains and losses generated from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of the Company’s foreign operations are included in other income (expense) in the accompanying consolidated statements of operations.
| 5. | Inventories |
Inventories consist of the following:
| October 4, 2020 | December 29, 2019 | |||||||
| Raw materials | $ | 4,847,141 | $ | 5,430,125 | ||||
| Work-in-process | 4,155,246 | 4,677,987 | ||||||
| Finished goods | 11,086,340 | 10,922,947 | ||||||
| 20,088,727 | 21,031,059 | |||||||
| Less: Allowance for inventory obsolescence | (2,120,831 | ) | (1,914,517 | ) | ||||
| Total Inventories, net | $ | 17,967,896 | $ | 19,116,542 | ||||
| 6. | Other Long-term Assets |
Other long-term assets consist of the following:
| October 4, 2020 | December 29, 2019 | |||||||
| Deferred tax asset, net | $ | 2,970,289 | $ | 2,694,550 | ||||
| Other | 767,618 | 794,763 | ||||||
| Total Other Long-term Assets | $ | 3,737,907 | $ | 3,489,313 | ||||
| 7. | Other Long-term Liabilities |
Other long-term liabilities consist of the following:
| October 4, 2020 | December 29, 2019 | |||||||
| Deferred tax liability | $ | 568,452 | $ | 709,945 | ||||
| Other | 5,363 | 5,363 | ||||||
| Total Other Long-term Liabilities | $ | 573,815 | $ | 715,308 | ||||
| 12 |
| 8. | Lines of Credit |
The Company’s Uniroyal subsidiary has available a $30,000,000 revolving line of credit financing agreement with Wells Fargo Capital Finance, LLC (“Uniroyal Line of Credit”), which matures on June 15, 2023. Interest is payable monthly at the Eurodollar rate plus 2.25% or Wells Fargo Capital Finance, LLC's prime rate at the Company's election on outstanding balances up to $6,000,000 and prime rate on amounts in excess of $6,000,000. Borrowings on the line of credit are subject to the underlying borrowing base specified in the agreement. The underlying borrowing base is currently determined based upon eligible accounts receivable, inventories and equipment. The line of credit is secured by substantially all of Uniroyal's assets and includes certain financial and restrictive covenants. The Company was in compliance with these covenants as of October 4, 2020.
The outstanding balance on the Uniroyal Line of Credit was $10,566,665 and $10,328,913 as of October 4, 2020 and December 29, 2019, respectively. The Company has classified the outstanding balance on this line of credit within current liabilities in the accompanying consolidated balance sheets. Based upon eligible accounts receivable, inventories and equipment at October 4, 2020, the Uniroyal Line of Credit provided additional availability of approximately $368,000 and, combined with its total cash balance of $237,498, Uniroyal had liquidity of approximately $605,000 as of October 4, 2020.
The Company’s UGL subsidiary has available a £10,500,000 (approximately $13.6 million) revolving line of credit financing agreement with Lloyds Bank Commercial Finance Limited (“UGL Line of Credit”), which is subject to a six-month notice by either party. The line has several tranches based on currency or underlying security. Interest is payable monthly at the base rate (U.K. LIBOR or Lloyds Bank Base Rate as published) plus 1.95% to 2.45% depending on the tranche. Borrowings on the line of credit are subject to the underlying borrowing base specified in the agreement. The underlying borrowing base is currently determined based upon eligible accounts receivable and inventories. The line of credit is secured by substantially all of the subsidiary's assets and includes certain financial and restrictive covenants. The Company was in compliance with these covenants as of October 4, 2020.
The outstanding balance on the UGL Line of Credit was £6,095,747 and £7,787,002 ($7,885,824 and $10,201,860) as of October 4, 2020 and December 29, 2019, respectively. The Company has classified the outstanding balance on this line of credit within current liabilities in the accompanying consolidated balance sheets. Based upon eligible accounts receivable and inventories at October 4, 2020, the UGL Line of Credit provided additional availability of approximately $1.3 million and, combined with its total cash balance of $507,370, UGL had liquidity of approximately $1.8 million as of October 4, 2020.
| 9. | Long-term Debt |
Long-term debt consists of the following:
| Interest Rate | October 4, 2020 | December 29, 2019 | ||||||||
| Notes Payable | ||||||||||
| Wells Fargo Capital Finance, LLC | Prime | $ | 837,866 | $ | 1,099,700 | |||||
| Lloyds Bank Commercial Finance Limited | 4.23% | 48,671 | 60,971 | |||||||
| Lloyds Bank Commercial Finance Limited | LIBOR + 3.50% | 162,973 | 217,211 | |||||||
| Automotive lenders | 0.0% | 1,545,538 | - | |||||||
| 2,595,048 | 1,377,882 | |||||||||
| Equipment Financing Obligation | ||||||||||
| Kennet Equipment Leasing Limited | 10.90% | 52,462 | 238,514 | |||||||
| Regents Capital Corporation | 6.20%-7.24% | 759,458 | 994,830 | |||||||
| Lloyds Bank Commercial Finance Limited | 3.95% | 1,337,288 | 1,519,557 | |||||||
| 2,149,208 | 2,752,901 | |||||||||
| 4,744,256 | 4,130,783 | |||||||||
| Less: Current portion | (1,092,420 | ) | (1,238,541 | ) | ||||||
| Long-term Portion | $ | 3,651,836 | $ | 2,892,242 | ||||||
During the third quarter of 2020, the Company received $1,545,538 in loans from automotive lenders. The loans are to be repaid in increasing quarterly installments beginning in September 2021 with the final payment in March 2023. No interest is payable on the loans.
| 13 |
| 10. | Related Party Obligations |
Long-term debt to related parties consists of the following:
| Interest Rate | October 4, 2020 | December 29, 2019 | ||||||||
| Senior subordinated promissory note | 9.25% | $ | 2,000,000 | $ | 2,000,000 | |||||
| Senior secured promissory note | 10.00% | 765,655 | 765,655 | |||||||
| Subordinated secured promissory note | 8.00% | 225,000 | 225,000 | |||||||
| Subordinated secured promissory note | 8.00% | - | 200,000 | |||||||
| Subordinated secured promissory note | 0.00% | 783,958 | - | |||||||
| 3,774,613 | 3,190,655 | |||||||||
| Less: Current portion | - | - | ||||||||
| Long-term Portion | $ | 3,774,613 | $ | 3,190,655 | ||||||
The above notes that were outstanding at October 4, 2020 and December 29, 2019 were amended on March 20, 2020 to change the maturity dates to January 15, 2022. No other terms of the notes were changed. The $200,000 note, which was outstanding since January 2019, was repaid in March 2020.
During the third quarter of 2020, the Company issued a $783,958 subordinated secured promissory note to its majority shareholder that matures on April 5, 2023. No interest is payable on the note.
The Company has a lease financing obligation under which it leases its main U.S. manufacturing facility and certain other property from a related party lessor entity, owned by the Company’s majority shareholder. The lease financing obligation accrues interest at 14.95% and currently requires monthly principal and interest payments of $45,533, which are adjusted annually based on the consumer price index. The lease financing obligation matures on October 31, 2033. The Company has security deposits aggregating $267,500 held by the lessor entity.
The lease financing obligation consists of the following:
| October 4, 2020 | December 29, 2019 | |||||||
| Related party lease financing obligation | $ | 2,686,686 | $ | 2,780,487 | ||||
| Less: Current portion | (145,214 | ) | (133,517 | ) | ||||
| Long-term Portion | $ | 2,541,472 | $ | 2,646,970 | ||||
| 14 |
The long-term portion of the lease financing obligation is shown in the accompanying consolidated balance sheets as related party lease financing obligation. The current portion of the lease financing obligation and the remaining balance of related party short-term subordinated secured promissory notes are combined and are shown in current liabilities as related party obligation which consists of the following:
| October 4, 2020 | December 29, 2019 | |||||||
| Current portion of related party lease financing obligation | $ | 145,214 | $ | 133,517 | ||||
| Related party subordinated secured promissory note | - | 350,000 | ||||||
| Related party subordinated secured promissory note | - | 125,000 | ||||||
| Related Party Obligation | $ | 145,214 | $ | 608,517 | ||||
The related party subordinated secured promissory notes were at a rate of 10%. During the three months ended April 5, 2020, the Company’s majority shareholder advanced $200,000 to the Company, which the Company repaid within the same period.
| 11. | Leases |
The Company has operating leases for equipment and office facilities and finance leases for equipment. These leases expire at various dates from October 2020 through March 2039. Operating leases are included in operating lease right-of-use assets, accrued expenses and other liabilities, and operating lease liabilities in the accompanying consolidated balance sheets. Finance lease right-of-use assets are included in property and equipment, current maturities of finance lease liabilities, and finance lease liabilities, less current portion in the accompanying consolidated balance sheets.
The components of lease expense for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 | October 4, 2020 | September 29, 2019 | |||||||||||||
| Operating lease expense | $ | 249,069 | $ | 285,732 | $ | 746,045 | $ | 849,936 | ||||||||
| Finance lease expense: | ||||||||||||||||
| Amortization of right-of-use assets | $ | 49,803 | $ | 56,145 | $ | 158,658 | $ | 172,236 | ||||||||
| Interest on lease liabilities | 7,090 | 12,960 | 24,441 | 44,483 | ||||||||||||
| Total finance lease expense | $ | 56,893 | $ | 69,105 | $ | 183,099 | $ | 216,719 | ||||||||
Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 | October 4, 2020 | September 29, 2019 | |||||||||||||
| Operating cash flows from operating leases | $ | 249,920 | $ | 274,760 | $ | 670,267 | $ | 708,897 | ||||||||
| Operating cash flows from finance leases | $ | 7,090 | $ | 12,960 | $ | 24,441 | $ | 44,483 | ||||||||
| Financing cash flows from finance leases | $ | 71,720 | $ | 156,048 | $ | 289,948 | $ | 484,834 | ||||||||
| 15 |
Right-of-use assets obtained in exchange for lease obligations for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 | October 4, 2020 | September 29, 2019 | |||||||||||||
| Operating leases | $ | - | $ | - | $ | - | $ | 287,828 | ||||||||
| Finance leases | $ | - | $ | - | $ | - | $ | 13,197 | ||||||||
Supplemental balance sheet and other information related to operating leases are as follows:
| October 4, 2020 | December 29, 2019 | |||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets | $ | 6,088,870 | $ | 6,607,963 | ||||
| Accrued expenses and other liabilities | $ | 438,547 | $ | 497,225 | ||||
| Operating lease liabilities | 5,713,922 | 6,106,568 | ||||||
| Total operating lease liabilities | $ | 6,152,469 | $ | 6,603,793 | ||||
| Weighted average remaining lease term | 15.66 years | 15.75 years | ||||||
| Weighted average discount rate | 7.23% | 7.16% | ||||||
Supplemental balance sheet and other information related to finance leases are as follows:
| October 4, 2020 | December 29, 2019 | |||||||
| Finance leases: | ||||||||
| Property and equipment, net | $ | 2,281,411 | $ | 2,458,155 | ||||
| Current maturities of finance lease liabilities | $ | 269,528 | $ | 364,872 | ||||
| Finance lease liabilities, less current portion | 294,955 | 492,613 | ||||||
| Total finance lease liabilities | $ | 564,483 | $ | 857,485 | ||||
| Weighted average remaining lease term | 2.1 years | 2.5 years | ||||||
| Weighted average discount rate | 4.63% | 4.73% | ||||||
Maturities of operating and finance lease liabilities as of October 4, 2020 are as follows:
| Operating Leases | Finance Leases | |||||||
| Due in one year or less | $ | 864,803 | $ | 289,047 | ||||
| Due after one year through two years | 827,359 | 246,458 | ||||||
| Due after two years through three years | 716,012 | 56,096 | ||||||
| Due after three years through four years | 521,663 | 1,822 | ||||||
| Due after four years through five years | 504,331 | - | ||||||
| Thereafter | 7,533,702 | - | ||||||
| Total lease payments | 10,967,870 | 593,423 | ||||||
| Less: Interest | (4,815,401 | ) | (28,940 | ) | ||||
| Total | $ | 6,152,469 | $ | 564,483 | ||||
| 16 |
| 12. | Accumulated Other Comprehensive Loss |
The changes in accumulated other comprehensive loss were as follows:
| Minimum Benefit Liability Adjustments | Foreign Currency Translation Adjustment | Total | ||||||||||
| Balance at December 29, 2019 | $ | 5,694 | $ | (1,303,133 | ) | $ | (1,297,439 | ) | ||||
| Other comprehensive loss before reclassifications | - | (112,180 | ) | (112,180 | ) | |||||||
| Balance at October 4, 2020 | $ | 5,694 | $ | (1,415,313 | ) | $ | (1,409,619 | ) | ||||
| 13. | Stock Based Compensation |
On June 25, 2015, the Company’s stockholders approved the adoption of the 2015 Stock Option Plan. This plan provides for the granting of options to purchase the Company’s common stock to employees and directors. The options granted are subject to a vesting schedule as set forth in each individual option agreement. Each option expires on the tenth anniversary of its date of grant unless an earlier termination date is provided in the grant agreement. The maximum aggregate number of shares of common stock that may be optioned and sold under the plan shall be 6% of the shares outstanding on the date of grant. The shares that may be optioned under the plan may be authorized but unissued or may be treasury shares. Compensation expense is recognized on a straight-line basis over a three-year vesting period from date of grant.
Stock option activity for the nine months ended October 4, 2020 and September 29, 2019 is as follows:
| Stock Options | ||||||||||||||||||||||||
| Total | Weighted Average Exercise Price | Exercis- able | Weighted Average Exercise Price | Non- Vested | Weighted Average Exercise Price | |||||||||||||||||||
| Outstanding at December 30, 2018 (1) | 189,300 | $ | 13.98 | 166,867 | $ | 13.46 | 22,433 | $ | 17.85 | |||||||||||||||
| Granted | - | - | - | - | - | - | ||||||||||||||||||
| Vested (1) | - | - | 22,433 | 17.85 | (22,433 | ) | 17.85 | |||||||||||||||||
| Exercised | - | - | - | - | - | - | ||||||||||||||||||
| Forfeited or cancelled (1) | (7,500 | ) | 13.85 | (7,500 | ) | 13.85 | - | - | ||||||||||||||||
| Outstanding at September 29, 2019 (1) | 181,800 | $ | 13.99 | 181,800 | $ | 13.99 | - | $ | - | |||||||||||||||
| Outstanding at December 29, 2019 | 151,800 | $ | 14.02 | 151,800 | $ | 14.02 | - | $ | - | |||||||||||||||
| Granted | - | - | - | - | - | - | ||||||||||||||||||
| Vested | - | - | - | - | - | - | ||||||||||||||||||
| Exercised | - | - | - | - | - | - | ||||||||||||||||||
| Forfeited or cancelled | - | - | - | - | - | - | ||||||||||||||||||
| Outstanding at October 4, 2020 | 151,800 | $ | 14.02 | 151,800 | $ | 14.02 | - | $ | - | |||||||||||||||
| Aggregate Intrinsic Value September 29, 2019 | $ | - | $ | - | $ | - | ||||||||||||||||||
| Aggregate Intrinsic Value October 4, 2020 | $ | - | $ | - | $ | - | ||||||||||||||||||
| (1) | The number and weighted average exercise price of options have been restated to reflect a one-for-five reverse stock split that became effective on February 24, 2020. See Note 1 for additional information. |
| 17 |
As of October 4, 2020 and September 29, 2019, there was no aggregate intrinsic value of the options outstanding because the options’ weighted average exercise prices of $14.02 and $13.99 per share, respectively, were greater than the average market prices of the common shares.
There was no option expense recognized for the three months ended October 4, 2020 and September 29, 2019, and for the nine months ended October 4, 2020. Option expense recognized was $44,166 for the nine months ended September 29, 2019. As of October 4, 2020, there was no unrecognized compensation cost related to the options granted under the 2015 Stock Option Plan.
| 14. | Recent Accounting Standards |
On August 28, 2018, the Financial Accounting Standards Board issued a new standard, ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The new standard modifies the disclosure requirements on fair value measurements in Topic 820, “Fair Value Measurement.” Certain requirements were removed such as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, certain requirements were modified and certain disclosures were added such as the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. The Company adopted this standard on December 30, 2019. Since this standard only revises disclosure requirements, the adoption of this standard for the year ending January 3, 2021 will not have a significant effect on the Company’s consolidated financial position, results of operations and cash flows.
On December 18, 2019, the Financial Accounting Standards Board issued a new standard, ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This new guidance simplifies the accounting for income taxes by removing certain exceptions such as the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income/gain from other items; and the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The new guidance also simplifies the accounting for income taxes under certain circumstances such as requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of a business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; and requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This standard will be effective for the Company on January 4, 2021. The Company is currently evaluating the effects this standard will have, if any, on its consolidated financial position, results of operations and cash flows.
| 18 |
| 15. | Loss per Common Share |
The following table sets forth the computation of loss per common share - basic and loss per common share – diluted for the three and nine months ended October 4, 2020 and September 29, 2019:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 (1) | October 4, 2020 | September 29, 2019 (1) | |||||||||||||
| Numerator | ||||||||||||||||
| Net loss allocable to common shareholders | $ | (1,822,633 | ) | $ | (499,998 | ) | $ | (3,395,389 | ) | $ | (1,066,339 | ) | ||||
| Denominator | ||||||||||||||||
| Denominator for basic earnings per share - weighted average shares outstanding | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||||||||||
| Weighted average effect of dilutive securities | - | - | - | - | ||||||||||||
| Denominator for dilutive earnings per share - weighted average shares outstanding | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||||||||||
| Basic and Diluted Net Loss Per Share | ||||||||||||||||
| Net loss allocable to common shareholders | $ | (0.49 | ) | $ | (0.13 | ) | $ | (0.91 | ) | $ | (0.29 | ) | ||||
| Effect of dilutive securities | - | - | - | - | ||||||||||||
| Net loss allocable to common shareholders | $ | (0.49 | ) | $ | (0.13 | ) | $ | (0.91 | ) | $ | (0.29 | ) | ||||
| (1) | Share and per share amounts for the three and nine months ended September 29, 2019 have been restated to reflect a one-for-five reverse stock split that became effective on February 24, 2020. See Note 1 for additional information. |
Due to the net loss allocable to common shareholders for the three and nine months ended October 4, 2020 and the three and nine months ended September 29, 2019, the calculations of basic and diluted loss per share were the same since including options to purchase shares of the Company’s common stock in the calculations of diluted loss per share would have been anti-dilutive. However, if diluted earnings per share had been reported for the three and nine months ended October 4, 2020 and the three and nine months ended September 29, 2019, the calculations would have excluded options to purchase 151,800 and 181,800 shares of common stock, respectively, because the options’ weighted average exercise prices of $14.02 and $13.99 per share, respectively, were greater than the average market prices of the common shares.
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| 16. | Revenue |
The Company recognizes revenue and related accounts receivable when obligations under the terms of a contract with a customer are satisfied, which includes the control of products transferring to the customer. For Uniroyal, this generally occurs when products are shipped and, for UGL, this generally occurs when the customer accepts delivery either at the Company’s U.K. facility or at a mutually agreed upon location. Revenue is measured as the amount of consideration the Company expects to receive in exchange for products transferred to the customer.
The following table sets forth revenue disaggregated by the Company’s automotive and industrial sectors for the three and nine months ended October 4, 2020 and September 29, 2019:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 | October 4, 2020 | September 29, 2019 | |||||||||||||
| Revenue by product sector: | ||||||||||||||||
| Automotive | $ | 9,064,735 | $ | 14,133,223 | $ | 24,866,376 | $ | 46,433,893 | ||||||||
| Industrial | 6,107,163 | 7,900,316 | 18,662,017 | 25,089,289 | ||||||||||||
| Total Revenue | $ | 15,171,898 | $ | 22,033,539 | $ | 43,528,393 | $ | 71,523,182 | ||||||||
The following table sets forth revenue disaggregated by the geographic locations of the Company’s customers for the three and nine months ended October 4, 2020 and September 29, 2019:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 4, 2020 | September 29, 2019 | October 4, 2020 | September 29, 2019 | |||||||||||||
| Revenue by customer location: | ||||||||||||||||
| North America | $ | 7,562,196 | $ | 11,213,393 | $ | 23,714,242 | $ | 35,527,931 | ||||||||
| Europe | 6,529,779 | 9,362,032 | 17,139,460 | 31,968,702 | ||||||||||||
| Asia | 885,984 | 1,383,081 | 2,214,264 | 3,799,104 | ||||||||||||
| Other | 193,939 | 75,033 | 460,427 | 227,445 | ||||||||||||
| Total Revenue | $ | 15,171,898 | $ | 22,033,539 | $ | 43,528,393 | $ | 71,523,182 | ||||||||
| 17. | Restructuring Expenses |
In order to increase operating efficiencies and decrease costs, the Company developed a plan to restructure the operations and the management team of its foreign operations facility located in Earby, England. As part of the restructuring, during the quarter ended March 31, 2019, the Company entered into settlement agreements with certain members of that facility’s management team which terminated their continuing service. The Company recorded a charge of $343,003 for the cost of these agreements which is included in other operating expenses in the accompanying consolidated statements of operations for the nine months ended September 29, 2019.
| 18. | Subsequent Events |
The Company has evaluated subsequent events occurring through the date that the financial statements were available to be issued for events requiring recording or disclosure in the October 4, 2020 consolidated financial statements. Subsequent to October 4, 2020, the Company received approximately $384,000 in a loan from its majority shareholder and $1.6 million in loans from automotive lenders with additional availability of approximately $400,000, which will provide more working capital to meet various short-term cash needs.
| 20 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Business Description
We are a leading provider of manufactured vinyl coated fabrics. Our best-known brand, Naugahyde, is the product of many improvements on a rubber-coated fabric developed a century ago in Naugatuck, Connecticut. We design, manufacture and market a wide selection of vinyl coated fabric products under a portfolio of recognized brand names. We believe that our business has continued to be a leading supplier in its marketplace because of our ability to provide specialized materials with performance characteristics customized to the end-user specifications, complemented by technical and customer support for the use of our products in manufacturing.
Our vinyl coated fabric products have undergone considerable evolution and today are distinguished by superior performance in a wide variety of applications as alternatives to leather, cloth and other synthetic fabric coverings. Our standard product lines consist of more than 600 SKUs with combinations of colors, textures, patterns and other properties. Our products are differentiated by unique protective top finishes and transfer print capabilities. Additional process capabilities include embossing grains and patterns, and rotogravure printing, which imparts five color character prints and non-registered prints, lamination and panel cutting.
Our vinyl coated fabric products have various high-performance characteristics and capabilities. They are durable, stain resistant, easily processed, more cost-effective and better performing than traditional leather or fabric coverings. Our products are frequently used in applications that require rigorous performance characteristics such as automotive and non-automotive transportation, certain indoor/outdoor furniture, commercial and hospitality seating, healthcare facilities and athletic equipment. We manufacture materials in a wide range of colors and textures. They can be hand or machine sewn, laminated to an underlying structure, thermoformed to cover various substrates or made into a variety of shapes for diverse end-uses. We are a long-established supplier to the global automotive industry and manufacture products for interior soft trim components from floor to headliner, which are produced to meet specific component production requirements such as cut and sew, vacuum forming/covering, compression molding, and high frequency welding. Some products are supplied with micro perforations, which are necessary on most compression molding processes. Materials can also be combined with polyurethane or polypropylene foam laminated by either flame or hot melt adhesive for seating, fascia and door applications.
Products are developed and marketed based upon the performance characteristics required by end-users. For example, for recreational products used outdoors, such as boats, personal watercraft, golf carts and snowmobiles, a product designed primarily for water-based durability and weatherability is used. We also manufacture a line of products called BeautyGard®, with water-based topcoats that contain agents to protect against bacterial and fungal micro-organisms and can withstand repeated cleaning, a necessity in the restaurant and health care industries. These topcoats are environmentally friendlier than solvent-based topcoats. The line is widely used in hospitals and other healthcare facilities. Flame and smoke retardant vinyl coated fabrics are used for a variety of commercial and institutional furniture applications, including hospitals, restaurants and residential care centers and seats for school buses, trains and aircraft.
We currently conduct our operations in manufacturing facilities that are located in Stoughton, Wisconsin and Earby, England.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future circumstances. For further discussion of our significant accounting policies, refer to Note 1 – “Summary of Significant Accounting Policies” to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies, Judgments and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2019.
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Recent Accounting Pronouncements
See Note 14 – “Recent Accounting Standards” to the consolidated financial statements for a discussion of recent accounting guidance.
Overview:
The Company and its subsidiaries use a 52/53-week fiscal year ending on the Sunday nearest to December 31. The current year ending January 3, 2021 is a 53-week year whereas the prior year ended December 29, 2019 was a 52-week year. The Company’s U.K. subsidiaries use the calendar year end of December 31. The activity of the U.K. subsidiaries that occurs on the days that do not coincide with the Company’s year-end is not material. The three months ended October 4, 2020 and September 29, 2019 were both 13-week periods while the nine months ended October 4, 2020 was a 40-week period and the nine months ended September 29, 2019 was a 39-week period.
Our Earby, England operation’s functional currency is the British Pound Sterling (“Pound Sterling”) and has sales and purchases transactions that are denominated in currencies other than the Pound Sterling, principally the Euro. Approximately 26% of the Company’s global revenues and 29% of its global raw material purchases are derived from these Euro transactions.
The average year-to-date exchange rate for the Pound Sterling to the U.S. Dollar was approximately 0.5% lower and the average exchange rate for the Euro to the Pound Sterling was approximately 0.1% higher in 2020 compared to 2019. These small exchange rate changes had the effect of slightly increasing net sales by approximately $2,000 for the nine months ended October 4, 2020. The overall currency effect on the Company’s net loss was a positive amount of approximately $4,000 for the nine months ended October 4, 2020.
On January 27, 2020, the Company announced a one-for-five reverse stock split (“reverse stock split”) on its common stock that became effective on February 24, 2020. The amounts in common stock and additional paid-in capital were adjusted as of the effective date to reflect the reverse stock split. Share and per share amounts for the three and nine months ended September 29, 2019 have been restated to give effect to the reverse stock split.
The U.K. exit from the European Union on January 31, 2020, commonly referred to as Brexit, has caused, and may continue to cause, uncertainty in the global markets. Political and regulatory responses to the withdrawal are still developing, and we are in the process of assessing the impact that the withdrawal may have on our business as more information becomes available. Any impact from Brexit on our business and operations over the long term will depend, in part, on the outcome of tariff, tax treaties, trade, regulatory, and other negotiations the U.K. conducts.
Subsequent to year-end 2019, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a public health emergency. There have been mandates from international, federal, state and local authorities requiring forced closures of various schools, businesses and other facilities and organizations although there have been some recent easings of these closures. These forced closures have negatively impacted the Company’s business. Primarily due to the negative impact that COVID-19 is having on the global economy, the Company began to experience a decline in sales during the latter part of March 2020. In order to mitigate the effect of the decrease in revenue, the Company is managing its costs, which included initially reducing staff at its manufacturing facilities with production at one-third capacity at the U.S. facility and the entire production staff furloughed at the U.K. facility beginning in late March. During June 2020, the Company had some employees return to work as its U.K. facility started limited production of vinyl products based on orders it was receiving from its customers. The Company brought back additional production workers as incoming orders increased during the third quarter of 2020. Demand for our products continues to improve in the fourth quarter although it is well below normalized levels.
Additionally, the Company has applied for loans under programs offered by the governmental agencies in the United States and in the United Kingdom and is exploring options for other supplementary cash flow opportunities to provide further liquidity.
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For the U.S. operations, during the second quarter of 2020 the Company received $2,217,500 in funds from One Community Bank (formerly Oregon Community Bank) through the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”). The loan matures on April 13, 2022 and bears an interest rate of 1.0%. The Company is required to make monthly payments of principal and interest beginning November 13, 2020 based on the amount that is outstanding on October 13, 2020 in order to fully amortize the loan by April 13, 2022. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.
All or a portion of the loan may be forgiven by the SBA for costs the Company incurs for payroll, rent, utilities and all other allowable expenses during the 24-week period beginning April 13, 2020. The Company used all proceeds from the loan to maintain payroll and make payments for lease, utility and other allowable expenses. Included in the accompanying consolidated statements of operations for the nine months ended October 4, 2020 was $2,217,500 of loan forgiveness that the Company expects to receive from the SBA. Although the Company has not been legally released from this amount of the loan, management concluded that there was reasonable assurance that the Company had substantially met the terms for forgiveness and therefore recognized this amount as income as a component of other income (expense). The Company submitted its application for loan forgiveness to One Community Bank in September 2020.
Also for the U.S. operations, during the third quarter of 2020 the Company applied for a $3.2 million loan from Wells Fargo Capital Finance, LLC through the Main Street Lending Program established by the Federal Reserve Board; however, there can be no guarantee that the Company will be successful in obtaining this funding.
For the U.K. operations, during the three and nine months ended October 4, 2020 the Company recorded reimbursed costs of approximately $474,000 and $1,560,000, respectively, under the Coronavirus Job Retention Scheme (“CJRS”) set up by the U.K. government to help employers pay the wages of those employees who would otherwise have been laid off during the coronavirus outbreak but under the CJRS were furloughed instead. This program reimbursed the Company for 80% of the compensation expense plus national insurance and certain benefits paid to the furloughed employees, resulting in lower salary expense for the Company. While the employees were on furlough, the compensation paid to them was limited to the amount reimbursed by the CJRS. The Company recorded the reimbursed amounts as reductions to the associated expenses.
Additionally for the U.K. operations, during the third quarter of 2020 the Company received a $783,958 loan from its principal shareholder and $1,545,538 in loans from automotive lenders. These funds provided additional working capital to meet various short-term cash needs.
While the closures and limitations on movement, domestically and internationally, are expected to be temporary due to the COVID-19 outbreak, the duration of the supply chain disruption and related financial impact cannot be estimated at this time. Should the closures continue for an extended period of time or should the effects of the coronavirus continue to spread, the impact could have a material adverse effect on the Company’s financial position, results of operations and cash flows which may require that the Company obtain additional financing.
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Three Months Ended October 4, 2020 Compared to the Three Months Ended September 29, 2019
The following table sets forth, for the three months ended October 4, 2020 (“three months 2020”) and September 29, 2019 (“three months 2019”), certain operational data including their respective percentage of net sales:
| Three Months Ended | ||||||||||||||||||||||||
| October 4, 2020 | September 29, 2019 | Change | % Change | |||||||||||||||||||||
| Net Sales | $ | 15,171,898 | 100.0 | % | $ | 22,033,539 | 100.0 | % | $ | (6,861,641 | ) | -31.1% | ||||||||||||
| Cost of Goods Sold | 13,114,967 | 86.4 | % | 18,471,639 | 83.8 | % | (5,356,672 | ) | -29.0% | |||||||||||||||
| Gross Profit | 2,056,931 | 13.6 | % | 3,561,900 | 16.2 | % | (1,504,969 | ) | -42.3% | |||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||
| Selling | 778,699 | 5.1 | % | 1,061,781 | 4.8 | % | (283,082 | ) | -26.7% | |||||||||||||||
| General and administrative | 1,957,486 | 12.9 | % | 1,373,118 | 6.2 | % | 584,368 | 42.6% | ||||||||||||||||
| Research and development | 198,182 | 1.3 | % | 377,989 | 1.7 | % | (179,807 | ) | -47.6% | |||||||||||||||
| Total Operating Expenses | 2,934,367 | 19.3 | % | 2,812,888 | 12.8 | % | 121,479 | 4.3% | ||||||||||||||||
| Operating (Loss) Income | (877,436 | ) | -5.8 | % | 749,012 | 3.4 | % | (1,626,448 | ) | <-100% | ||||||||||||||
| Interest expense | (367,454 | ) | -2.4 | % | (509,829 | ) | -2.3 | % | 142,375 | -27.9% | ||||||||||||||
| Funding from Paycheck Protection Program | 33,824 | 0.2 | % | - | 0.0 | % | 33,824 | - | ||||||||||||||||
| Other income | 85,753 | 0.6 | % | 50,213 | 0.2 | % | 35,540 | 70.8% | ||||||||||||||||
| (Loss) Income before Tax Provision | (1,125,313 | ) | -7.4 | % | 289,396 | 1.3 | % | (1,414,709 | ) | <-100% | ||||||||||||||
| Tax (benefit) provision | (111,318 | ) | -0.7 | % | 12,022 | 0.1 | % | (123,340 | ) | <-100% | ||||||||||||||
| Net (Loss) Income | (1,013,995 | ) | -6.7 | % | 277,374 | 1.3 | % | (1,291,369 | ) | <-100% | ||||||||||||||
| Preferred stock dividend | (808,638 | ) | -5.3 | % | (777,372 | ) | -3.5 | % | (31,266 | ) | 4.0% | |||||||||||||
| Net Loss Allocable to Common Shareholders | $ | (1,822,633 | ) | -12.0 | % | $ | (499,998 | ) | -2.3 | % | $ | (1,322,635 | ) | >100% | ||||||||||
Revenue:
Total revenue for the three months 2020 decreased $6,861,641 or 31.1% to $15,171,898 from $22,033,539 for the three months 2019. There was a favorable currency effect of approximately $367,000 on total revenue.
For the three months 2020 compared to the three months 2019, U.S. automotive sales decreased 47.7% and European automotive sales decreased 33.8% (excluding the currency adjustment). This significant decrease was principally due to the COVID-19 pandemic, where most of the Company’s customers in this market and the OEMs of the automobiles that use the Company’s products, shut down production lines or their entire production facilities at the end of the first quarter 2020 and continued into the second quarter 2020 as the pandemic continued. The automotive market began to improve at the end of the second quarter as most of the customers and OEMs were restarting their production facilities. Due to the continuing improvement in the automotive market and the Company retaining all of its programs, the Company’s sales activity increased significantly in the third quarter 2020 as compared to the second quarter 2020. However, it had not yet reached the run-rate of the period prior to the onset of COVID-19.
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Additionally, sales for the industrial sector decreased 22.7% (23.2% before currency effect) primarily due to a decline in the U.S. contract market. The negative impact of COVID-19 on the global economy was a major factor in the overall decline in sales. However, as with automobile sales, industrial sales increased in the third quarter 2020 as compared to the second quarter 2020.
Also impacting 2020 revenue to a lesser degree, the Company in August 2019, decommissioned and shut down equipment in the U.K. that manufactured calender product for both the automotive and industrial market. The Company had built sufficient inventory of this product to service its customers for several months after the shutdown. Shortly before the shutdown, the Company entered into agreements with another company to provide some of the calender film it originally produced. Once the film was further processed by the Company, it was able to continue offering certain products to one of its customers. During the three months 2020, the Company sold $407,550 of calender product principally using the purchased film compared to $1,159,209 for the three months 2019. Of these amounts, all were in the automotive market for the three months 2020 and $957,578 were in the automotive market for the three months 2019.
Gross Profit:
Total gross profit for the three months 2020 decreased $1,504,969 or 42.3% to $2,056,931 from $3,561,900 for the three months 2019. The gross profit percentage was 13.6% of sales for the three months 2020 compared to 16.2% for the three months 2019. The lower amount and percentage for the three months 2020 were primarily due to the impact of COVID-19 including production inefficiencies caused by smaller runs associated with less demand. Gross profit amount and percentage were much higher as compared to the second quarter of 2020 primarily due to the continuing improvement in sales. During the third quarter of 2020, manufacturing costs were reduced approximately $370,000 due to reimbursements through the CJRS for the salaries of furloughed employees. There was a favorable currency effect of approximately $36,000 on gross profit.
Operating Expenses:
Selling expenses for the three months 2020 decreased $283,082 or 26.7% to $778,699 from $1,061,781 for the three months 2019. Due to the lower sales activity primarily as a result of COVID-19, selling expenses such as commission, travel and entertainment were reduced in 2020. In addition, the Company was reimbursed approximately $43,000 through the CJRS for the wages of furloughed employees resulting in lower salary expense. Also contributing to the lower selling expenses in 2020 was the 2019 closure of the calender product line and the elimination of its applicable employment and commission costs. There was a $16,000 unfavorable currency effect that partially offset the decrease in selling expenses.
General and administrative expenses for the three months 2020 increased $584,368 or 42.6% to $1,957,486 from $1,373,118 for the three months 2019. The increase was primarily due to costs for cash management consulting services provided to the Company and a charge relating to a legal proceeding in the U.K., as previously discussed. Partially offsetting the increase were approximately $15,000 in wages that were reimbursed through the CJRS. Included in the increase in general and administrative expenses was an unfavorable currency effect of $46,000.
Research and development expenses for the three months 2020 decreased $179,807 or 47.6% to $198,182 from $377,989 for the three months 2019. The decrease was principally a decline in activities attributable to the COVID-19 pandemic including lower development costs for new trials and wages of approximately $46,000 that were reimbursed through the CJRS. There was a $3,000 unfavorable currency effect that partially offset the decrease in research and development expenses.
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Operating Income (Loss):
Operating loss for the three months 2020 was $877,436 compared to operating income of $749,012 for the three months 2019, a decrease of $1,626,448. The decrease was primarily due to the decline in gross profit as a result of COVID-19. The operating loss percentage was -5.8% of sales for the three months 2020 compared to the operating income percentage of 3.4% for the three months 2019.
Interest Expense:
Interest expense for the three months 2020 decreased $142,375 or 27.9% to $367,454 from $509,829 for the three months 2019. The decrease was primarily due to lower interest rates on LIBOR and prime during the three months 2020 compared to the three months 2019.
Funding from Paycheck Protection Program:
For the three months 2020, the $33,824 funding from the PPP was the amount of proceeds from the PPP loan that the Company used during the third quarter for allowable expenses under the PPP. The Company expects to receive forgiveness on this debt from the SBA under the CARES Act for these eligible costs incurred by the Company, as previously discussed.
Other Income:
Other income for the three months 2020 was $85,753 compared to other income of $50,213 for the three months 2019. Included in other income are the currency gains and losses recognized on foreign currency transactions and the change in the fair value of financial assets and liabilities that are denominated in Euros as these currencies fluctuated during the period. Also included in other income are gains and losses from the change in fair values on the Company’s foreign currency exchange contracts.
Tax Provision (Benefit):
The Company files income tax returns in the United States as a C-Corporation, and in several state jurisdictions and in the United Kingdom. The Company’s U.S. operating subsidiary, Uniroyal, is a limited liability company (LLC) for federal and state income tax purposes and as such, its income, losses, and credits are allocated to its members. The Company made the acquisition of Uniroyal through UEPH, a limited liability company, which issued preferred ownership interests to the sellers that provide for quarterly dividends. Uniroyal’s taxable income is allocated entirely to UEPH as its sole member and since it is a pass-through entity, this income less the dividends paid to the sellers of Uniroyal is reported on the Company’s tax return. The taxable income applicable to the dividends for the preferred ownership interests is reported to the sellers who report it on their respective individual tax returns.
The Company does not have a history of repatriating a significant portion of its foreign cash. However, if it decided to repatriate these foreign amounts to fund U.S. operations, the Company would not be required to pay any additional U.S. tax related to these amounts since the Company previously recorded a one-time transition tax on deemed repatriation of deferred foreign income.
The tax benefit for the three months 2020 was $111,318 compared to a tax provision of $12,022 for the three months 2019. The tax benefit for the three months 2020 was principally attributable to the results of the U.K. operations and the tax provision for the three months 2019 was principally attributable to the results of the U.S. operations.
Preferred Stock Dividend:
The terms of the acquisitions in November 2014 resulted in the issuance of preferred ownership units/stock of UEP Holdings, LLC and UGEL (formerly EPAL) to the sellers. These preferred units have carried quarterly dividend requirements on a total value of $55,000,000 at rates ranging from 5.0% to 8.0%. The dividend rate on the Series B UEP Holdings preferred units which started at 5.5% increases by 0.5% on the anniversary of the issuance up to a maximum of 8.0%. The payment of dividends for the first three quarters of 2020 and the three months ended December 29, 2019 was deferred to preserve cash and provide additional liquidity. As of October 4, 2020 and December 29, 2019, accrued dividends of $3,154,042 and $788,599, respectively, were included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.
| 26 |
Nine Months Ended October 4, 2020 Compared to the Nine Months Ended September 29, 2019
The following table sets forth, for the nine months ended October 4, 2020 (“nine months 2020”) and September 29, 2019 (“nine months 2019”), certain operational data including their respective percentage of net sales:
| Nine Months Ended | ||||||||||||||||||||||||
| October 4, 2020 | September 29, 2019 | Change | % Change | |||||||||||||||||||||
| Net Sales | $ | 43,528,393 | 100.0 | % | $ | 71,523,182 | 100.0 | % | $ | (27,994,789 | ) | -39.1% | ||||||||||||
| Cost of Goods Sold | 37,931,227 | 87.1 | % | 59,434,689 | 83.1 | % | (21,503,462 | ) | -36.2% | |||||||||||||||
| Gross Profit | 5,597,166 | 12.9 | % | 12,088,493 | 16.9 | % | (6,491,327 | ) | -53.7% | |||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||
| Selling | 2,278,279 | 5.2 | % | 3,348,622 | 4.7 | % | (1,070,343 | ) | -32.0% | |||||||||||||||
| General and administrative | 4,834,011 | 11.1 | % | 4,332,978 | 6.1 | % | 501,033 | 11.6% | ||||||||||||||||
| Research and development | 704,239 | 1.6 | % | 1,302,707 | 1.8 | % | (598,468 | ) | -45.9% | |||||||||||||||
| Other operating expenses | - | 0.0 | % | 343,003 | 0.5 | % | (343,003 | ) | -100.0% | |||||||||||||||
| Total Operating Expenses | 7,816,529 | 18.0 | % | 9,327,310 | 13.0 | % | (1,510,781 | ) | -16.2% | |||||||||||||||
| Operating (Loss) Income | (2,219,363 | ) | -5.1 | % | 2,761,183 | 3.9 | % | (4,980,546 | ) | <-100% | ||||||||||||||
| Interest expense | (1,215,771 | ) | -2.8 | % | (1,547,343 | ) | -2.2 | % | 331,572 | -21.4% | ||||||||||||||
| Funding from Paycheck Protection Program | 2,217,500 | 5.1 | % | - | 0.0 | % | 2,217,500 | - | ||||||||||||||||
| Other (expense) income | (185,417 | ) | -0.4 | % | 53,396 | 0.1 | % | (238,813 | ) | <-100% | ||||||||||||||
| (Loss) Income before Tax Provision | (1,403,051 | ) | -3.2 | % | 1,267,236 | 1.8 | % | (2,670,287 | ) | <-100% | ||||||||||||||
| Tax benefit | (404,141 | ) | -0.9 | % | (6,287 | ) | 0.0 | % | (397,854 | ) | >100% | |||||||||||||
| Net (Loss) Income | (998,910 | ) | -2.3 | % | 1,273,523 | 1.8 | % | (2,272,433 | ) | <-100% | ||||||||||||||
| Preferred stock dividend | (2,396,479 | ) | -5.5 | % | (2,339,862 | ) | -3.3 | % | (56,617 | ) | 2.4% | |||||||||||||
| Net Loss Allocable to Common Shareholders | $ | (3,395,389 | ) | -7.8 | % | $ | (1,066,339 | ) | -1.5 | % | $ | (2,329,050 | ) | >100% | ||||||||||
Revenue:
Total revenue for the nine months 2020 decreased $27,994,789 or 39.1% to $43,528,393 from $71,523,182 for the nine months 2019. There was a favorable currency effect of approximately $2,000 on total revenue.
For the nine months 2020 compared to the nine months 2019, U.S. automotive sales decreased 49.2% and European automotive sales decreased 45.2% (excluding the currency adjustment). This significant decrease was principally due to the COVID-19 pandemic, where most of the Company’s customers in this market and the OEMs of the automobiles that use the Company’s products, shut down production lines or their entire production facilities at the end of the first quarter 2020 and continued into the second quarter 2020 as the pandemic continued. The automotive market began to improve at the end of the second quarter as most of the customers and OEMs were restarting their production facilities. Due to the continuing improvement in the automotive market and the Company retaining all of its programs, the Company’s sales activity increased significantly in the third quarter 2020 as compared to the second quarter 2020. However, it had not yet reached the run-rate of the period prior to the onset of COVID-19.
Additionally, sales for the industrial sector decreased 25.6% (the same as before the currency effect) primarily due to a decline in the U.S. contract market. The negative impact of COVID-19 on the global economy was a major factor in the overall decline in sales which principally began during the latter part of March 2020.
| 27 |
Also impacting 2020 revenue to a lesser degree, the Company in August 2019, decommissioned and shut down equipment in the U.K. that manufactured calender product for both the automotive and industrial market. The Company had built sufficient inventory of this product to service its customers for several months after the shutdown. Shortly before the shutdown, the Company entered into agreements with another company to provide some of the calender film it originally produced. Once the film was further processed by the Company, it was able to continue offering certain products to one of its customers. During the nine months 2020, the Company sold $1,153,432 of calender product principally using the purchased film compared to $3,980,459 for the nine months 2019. Of these amounts, $1,098,901 and $2,944,107 were in the automotive market for the nine months 2020 and 2019, respectively.
Gross Profit:
Total gross profit for the nine months 2020 decreased $6,491,327 or 53.7% to $5,597,166 from $12,088,493 for the nine months 2019. The gross profit percentage was 12.9% of sales for the nine months 2020 compared to 16.9% for the nine months 2019. Gross profit amount and percentage were negatively impacted by the effect of COVID-19 including production inefficiencies caused by smaller runs associated with less demand. During the nine months 2020, manufacturing costs were reduced approximately $1,304,000 due to reimbursements through the CJRS for the salaries of furloughed employees. There was a favorable currency effect of approximately $4,000 on gross profit.
Operating Expenses:
Selling expenses for the nine months 2020 decreased $1,070,343 or 32.0% to $2,278,279 from $3,348,622 for the nine months 2019. Due to lower sales activity primarily as a result of COVID-19, selling expenses such as commission, travel and entertainment were reduced in 2020. In addition, the Company was reimbursed approximately $99,000 through the CJRS for the wages of furloughed employees resulting in lower salary expense. Also contributing to the lower selling expenses in 2020 was the 2019 closure of the calender product line and the elimination of its applicable employment and commission costs. There was a favorable currency effect that slightly contributed to the decrease in selling expenses also.
General and administrative expenses for the nine months 2020 increased $501,033 or 11.6% to $4,834,011 from $4,332,978 for the nine months 2019. This increase was primarily due to costs for cash management consulting services provided to the Company and a charge relating to a legal proceeding in the U.K., as previously discussed. Partially offsetting the increase were wages of approximately $35,000 that were reimbursed through the CJRS. There was a favorable currency effect that slightly offset the increase in general and administrative expenses.
Research and development expenses for the nine months 2020 decreased $598,468 or 45.9% to $704,239 from $1,302,707 for the nine months 2019. The decrease was principally decreased activities attributable to the COVID-19 pandemic including lower development costs for new trials and wages of approximately $122,000 that were reimbursed through the CJRS. There was a favorable currency effect that slightly contributed to the decrease in selling expenses also.
There were no other operating expenses for the nine months 2020 and $343,003 for 2019. The amount for 2019 was cost incurred by the Company as part of a restructuring plan to reduce inefficiencies at its U.K. facility.
Operating Income (Loss):
Operating loss for the nine months 2020 was $2,219,363 compared to operating income of $2,761,183 for the nine months 2019, a decrease of $4,980,546. The decrease was due to the decline in gross profit partially offset by the decrease in operating expenses, which included the $343,003 non-recurring restructuring charge in 2019. The operating loss percentage was -5.1% of sales for the nine months 2020 compared to the operating income percentage of 3.9% for the nine months 2019.
Interest Expense:
Interest expense for the nine months 2020 decreased $331,572 or 21.4% to $1,215,771 from $1,547,343 for the nine months 2019. The decrease was primarily due to lower interest rates on LIBOR and prime during the nine months 2020 compared to the nine months 2019.
Funding from Paycheck Protection Program:
For the nine months 2020, the $2,217,500 funding from the PPP is the amount of debt forgiveness that the Company expects to receive from the SBA under the CARES Act for eligible costs incurred by the Company, as previously discussed.
| 28 |
Other Income (Expense):
Other expense for the nine months 2020 was $185,417 compared to other income of $53,396 for the nine months 2019. Included in other income (expense) are the currency gains and losses recognized on foreign currency transactions and the change in the fair value of financial assets and liabilities that are denominated in Euros as these currencies fluctuated during the period. Also included in other income (expense) are gains and losses from the change in fair values on the Company’s foreign currency exchange contracts.
Tax Benefit:
The Company files income tax returns in the United States as a C-Corporation, and in several state jurisdictions and in the United Kingdom. The Company’s U.S. operating subsidiary, Uniroyal, is a limited liability company (LLC) for federal and state income tax purposes and as such, its income, losses, and credits are allocated to its members. The Company made the acquisition of Uniroyal through UEPH, a limited liability company, which issued preferred ownership interests to the sellers that provide for quarterly dividends. Uniroyal’s taxable income is allocated entirely to UEPH as its sole member and since it is a pass-through entity, this income less the dividends paid to the sellers of Uniroyal is reported on the Company’s tax return. The taxable income applicable to the dividends for the preferred ownership interests is reported to the sellers who report it on their respective individual tax returns.
The Company does not have a history of repatriating a significant portion of its foreign cash. However, if it decided to repatriate these foreign amounts to fund U.S. operations, the Company would not be required to pay any additional U.S. tax related to these amounts since the Company previously recorded a one-time transition tax on deemed repatriation of deferred foreign income.
The tax benefit for the nine months 2020 was $404,141, principally attributable to the results of the U.S. operations, compared to $6,287 for the nine months 2019, principally attributable to the results of the U.K. operations partially offset by a tax provision for the U.S. operations.
Preferred Stock Dividend:
The terms of the acquisitions in November 2014 resulted in the issuance of preferred ownership units/stock of UEP Holdings, LLC and UGEL (formerly EPAL) to the sellers. These preferred units have carried quarterly dividend requirements on a total value of $55,000,000 at rates ranging from 5.0% to 8.0%. The dividend rate on the Series B UEP Holdings preferred units which started at 5.5% increases by 0.5% on the anniversary of the issuance up to a maximum of 8.0%. The payment of dividends for the nine months ended October 4, 2020 and the three months ended December 29, 2019 was deferred to preserve cash and provide additional liquidity. As of October 4, 2020 and December 29, 2019, accrued dividends of $3,154,042 and $788,599, respectively, were included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.
Liquidity and Sources of Capital
Cash, as it is needed, is provided by using the Company’s lines of credit. These lines provide for a total borrowing commitment in excess of $43,000,000 subject to the underlying borrowing base specified in the agreements. Of the total outstanding borrowings of $18,452,489 at October 4, 2020, $13.9 million of the lines bears interest at LIBOR or the Eurodollar rate plus a range of 1.95% to 2.45%, depending on the underlying borrowing base and $4.6 million bears interest at the bank’s prime or base lending rate which was 3.25% at October 4, 2020. The lines provided additional availability of approximately $1.7 million and, combined with UEP’s and UGL’s total cash balances, liquidity was approximately $2.4 million at October 4, 2020. We plan to use this availability and cash provided by operating activities to finance our cash needs for the remaining months of fiscal 2020 and future periods. The balances due under the lines of credit are recorded as current liabilities on the consolidated balance sheets.
As a result of the COVID-19 pandemic, sales of the Company’s products are lower than expected. This has had a negative impact on the Company’s working capital which could affect its ability to borrow using the Company’s lines of credit. To increase its liquidity, as previously discussed, the Company has applied for loans under programs offered by the governmental agencies in the United States and in the United Kingdom.
| 29 |
For the U.S. operations, early in the second quarter of 2020 the Company received $2,217,500 in funds through the Paycheck Protection Program administered by the United States Small Business Administration. The Company believes that all of this debt will be forgiven; it submitted its application for loan forgiveness in September 2020. Also for the U.S. operations, during the third quarter of 2020 the Company applied for a $3.2 million loan from Wells Fargo Capital Finance, LLC through the Main Street Lending Program established by the Federal Reserve Board; however, there can be no guarantee that the Company will be successful in obtaining this funding.
In the U.K., the Company has recorded £1,245,000 ($1,560,000) in funding available under the Coronavirus Job Retention Scheme which reimbursed the Company for the compensation expense paid to furloughed employees. Additionally for the U.K. operations, during the third quarter of 2020 the Company received a $783,958 loan from its principal shareholder and $1,545,538 in loans from automotive lenders. Subsequent to October 4, 2020, the Company received approximately $384,000 in a loan from its majority shareholder and $1.6 million in loans from automotive lenders with additional availability of approximately $400,000. These funds provided more working capital to meet various short-term cash needs.
The Company continues to attempt to manage its operating costs to match the reduced sales volume. We believe that the increasing sales activities combined with the funding from nontraditional sources (U.S. and U.K. governments and automotive lenders) will be sufficient to provide for short-term cash needs. However, there can be no assurance that additional financing will be available on favorable terms, if at all.
The ratio of current assets to current liabilities, including the amount due under our lines of credit, was 0.83 at October 4, 2020 and 0.89 at December 29, 2019.
Cash balances increased $260,281, before the effects of currency translation of $(5,995), to $767,874 at October 4, 2020 from $513,588 at December 29, 2019. Of the above noted amounts, $507,370 and $498,007 were held outside the U.S. by our foreign subsidiaries as of October 4, 2020 and December 29, 2019, respectively.
Cash provided by operations was $966,649 for the nine months 2020 compared to $2,455,877 for the nine months 2019. For the nine months 2020, cash provided by operations was primarily due to changes in working capital of $2,772,839 offset by the net loss of $998,910, changes in other assets and liabilities of $(428,504) and adjustments for non-cash items of $(378,776). For the nine months 2019, cash provided by operations was primarily due to adjustments for non-cash items of $1,656,649, net income of $1,273,523 and changes in other assets and liabilities of $48,683 offset by changes in working capital of $(522,978).
Cash used in investing activities was $1,171,258 for the nine months 2020 compared to $1,457,071 for the nine months 2019. During 2020 and 2019, cash used in investing activities was principally for purchases of machinery and equipment at our manufacturing locations and payments made for company-owned key man life insurance premiums. For the nine months 2020 and 2019, the payments made for the life insurance premiums were offset by proceeds from policy loans of $130,000 and $249,051, respectively.
For the nine months 2020, cash provided by financing activities was $464,890 compared to cash used in financing activities of $1,186,609 for the nine months 2019. Impacting cash flows from financing activities for the nine months 2020 and 2019 were net payments on lines of credit of $1,913,810 and net advances on lines of credit of $1,893,069, respectively. The changes in the lines of credit reflect the funding of working capital. There were no preferred dividend payments during the nine months 2020 compared to $2,332,503 during the nine months 2019, which also impacted cash flows from financing activities. As previously stated, the dividends for the nine months 2020 were deferred to preserve cash and provide additional liquidity. Also impacting cash flows from financing activities were proceeds from issuance of long-term debt of $3,737,361 ($2,217,500 through the Paycheck Protection Program and $1,545,538, net of translation adjustment of $25,677, from automotive lenders) for the nine months 2020 and $454,088 for the nine months 2019. Additionally during the nine months 2020 and 2019, our majority shareholder provided $938,958 and $800,000, respectively, in financing in the form of subordinated secured promissory notes. Payments of $875,000 and $550,000 were made on these notes during the nine months 2020 and 2019, respectively.
Our credit agreements contain customary affirmative and negative covenants. We were in compliance with our debt covenants as of October 4, 2020 and through the date of filing of this report.
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We currently have several on-going capital projects that are important to our long-term strategic goals. Machinery and equipment will also be added as needed to increase capacity or enhance operating efficiencies in our manufacturing plants. We will use a combination of financing arrangements to provide the necessary capital. We believe that our existing resources, including cash on hand and our credit facilities, together with cash generated from operations and additional bank borrowings, will be sufficient to fund our cash flow requirements through at least the next twelve months. However, there can be no assurance that additional financing will be available on favorable terms, if at all.
We have no material off balance sheet arrangements.
| 31 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable.
| Item 4. | Controls and Procedures |
The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, Chief Financial Officer, and Board of Directors, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of October 4, 2020 and concluded that our disclosure controls and procedures were effective as of October 4, 2020.
Changes in Internal Controls over Financial Reporting
During the nine months ended October 4, 2020, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 32 |
PART II. OTHER INFORMATION
| Item 1. | Legal Proceedings |
None.
| Item 1A. | Risk Factors |
Not applicable.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Issuer Purchases of Equity Securities
None.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
None.
| Item 6. | Exhibits |
| (a) | Exhibits. |
| Exhibit No. | Description | |
| 31.1 * | Chief Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14(a) | |
| 31.2 * | Chief Financial Officer Certification Pursuant to Securities Exchange Act Rules 13a-14(a) | |
| 32.1 * | Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 | |
| 32.2 * | Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350 | |
| 101.INS * + | XBRL Instance Document | |
| 101.CAL * + | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF * + | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB * + | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE * + | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.SCH * + | XBRL Taxonomy Extension Schema Document |
_______________
| * | Filed herewith. |
| + | In accordance with Rule 406T of Regulation S-T, this information is deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
| 33 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC. | ||
| Dated: November 18, 2020 | By: | /s/ Howard R. Curd |
|
Howard R. Curd Chief Executive Officer | ||
| Dated: November 18, 2020 | By: | /s/ Edmund C. King |
|
Edmund C. King Chief Financial Officer |
34
EXHIBIT 31.1
CERTIFICATION
I, Howard R. Curd, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Uniroyal Global Engineered Products, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of and for the periods presented in this report;
4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer ’s internal control over financial reporting. |
5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
| Date: November 18, 2020 | /s/ Howard R. Curd | |
| Howard R. Curd | ||
| Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Edmund C. King, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Uniroyal Global Engineered Products, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of and for the periods presented in this report;
4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the issuer ’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting. |
5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
| Date: November 18, 2020 | /s/ Edmund C. King | |
| Edmund C. King | ||
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniroyal Global Engineered Products, Inc. (the “Company” or “Uniroyal Global”) on Form 10-Q for the period ended October 4, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard R. Curd, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 18, 2020 | /s/ Howard R. Curd | |
| Howard R. Curd | ||
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniroyal Global Engineered Products, Inc. (the “Company” or “Uniroyal Global”) on Form 10-Q for the period ended October 4, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edmund C. King, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 18, 2020 | /s/ Edmund C. King | |
| Edmund C. King | ||
| Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Oct. 04, 2020 |
Nov. 02, 2020 |
|
| Entity Registrant Name | UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC. | |
| Document Type | 10-Q | |
| Document Period End Date | Oct. 04, 2020 | |
| Amendment Flag | false | |
| Entity Central Index Key | 0001172706 | |
| Current Fiscal Year End Date | --01-03 | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Shell Company | false | |
| Entity Emerging Growth Company | false | |
| Entity Current Reporting Status | Yes | |
| Document Fiscal Year Focus | 2020 | |
| Document Fiscal Period Focus | Q3 | |
| Entity Interactive Data Current | Yes | |
| Entity File Number | 000-50081 | |
| Document Quarterly Report | true | |
| Document Transition Report | false | |
| Entity Incorporation, State or Country Code | NV | |
| Ordinary Common Stock [Member] | ||
| Entity Common Stock, Shares Outstanding | 3,412,186 | |
| Common Class B [Member] | ||
| Entity Common Stock, Shares Outstanding | 323,820 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Oct. 04, 2020 |
Dec. 29, 2019 |
|---|---|---|
| Assets [Abstract] | ||
| Series A UEP Holdings LLC par value | $ 100 | $ 100 |
| Series A UEP Holdings LLC shares issued | 200,000 | 200,000 |
| Series A UEP Holdings LLC shares outstanding | 200,000 | 200,000 |
| Series B UEP Holdings LLC par value | $ 100 | $ 100 |
| Series B UEP Holdings LLC shares issued | 150,000 | 150,000 |
| Series B UEP Holdings LLC shares outstanding | 150,000 | 150,000 |
| Preferred stock, Uniroyal Global (Europe) Limited shares Par value | $ 1.51 | $ 1.51 |
| Preferred stock, Uniroyal Global (Europe) Limited shares issued | 50 | 50 |
| Preferred stock, Uniroyal Global (Europe) Limited shares outstanding | 50 | 50 |
| Common Stock, par value | $ 0.001 | $ 0.001 |
| Common Stock, shares authorized | 95,000,000 | 95,000,000 |
| Common Stock, shares issued | 3,736,006 | 3,736,006 |
| Common Stock, shares outstanding | 3,736,006 | 3,736,006 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
[1] | Oct. 04, 2020 |
Sep. 29, 2019 |
[1] | |||
| Revenues [Abstract] | ||||||||
| NET SALES | $ 15,171,898 | $ 22,033,539 | $ 43,528,393 | $ 71,523,182 | ||||
| COST OF GOODS SOLD | 13,114,967 | 18,471,639 | 37,931,227 | 59,434,689 | ||||
| Gross Profit | 2,056,931 | 3,561,900 | 5,597,166 | 12,088,493 | ||||
| OPERATING EXPENSES: | ||||||||
| Selling | 778,699 | 1,061,781 | 2,278,279 | 3,348,622 | ||||
| General and administrative | 1,957,486 | 1,373,118 | 4,834,011 | 4,332,978 | ||||
| Research and development | 198,182 | 377,989 | 704,239 | 1,302,707 | ||||
| Other operating expenses | 343,003 | |||||||
| OPERATING EXPENSES | 2,934,367 | 2,812,888 | 7,816,529 | 9,327,310 | ||||
| Operating (Loss) Income | (877,436) | 749,012 | (2,219,363) | 2,761,183 | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest and other debt related expense | (367,454) | (509,829) | (1,215,771) | (1,547,343) | ||||
| Funding from Paycheck Protection Program | 33,824 | 2,217,500 | ||||||
| Other income (expense) | 85,753 | 50,213 | (185,417) | 53,396 | ||||
| Net Other Income (Expense) | (247,877) | (459,616) | 816,312 | (1,493,947) | ||||
| (LOSS) INCOME BEFORE TAX PROVISION | (1,125,313) | 289,396 | (1,403,051) | 1,267,236 | ||||
| TAX (BENEFIT) PROVISION | (111,318) | 12,022 | (404,141) | (6,287) | ||||
| NET (LOSS) INCOME | (1,013,995) | 277,374 | (998,910) | 1,273,523 | ||||
| Preferred stock dividend | (808,638) | (777,372) | (2,396,479) | (2,339,862) | ||||
| NET LOSS ALLOCABLE TO COMMON SHAREHOLDERS | $ (1,822,633) | $ (499,998) | $ (3,395,389) | $ (1,066,339) | ||||
| LOSS PER COMMON SHARE: | ||||||||
| Basic | $ (0.49) | $ (0.13) | $ (0.91) | $ (0.29) | ||||
| Diluted | $ (0.49) | $ (0.13) | $ (0.91) | $ (0.29) | ||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||
| Basic | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||
| Diluted | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||
| ||||||||
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|||||
| COMPREHENSIVE LOSS | ||||||||
| NET (LOSS) INCOME | $ (1,013,995) | $ 277,374 | [1] | $ (998,910) | $ 1,273,523 | [1] | ||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
| Minimum benefit liability adjustment | (73,617) | (220,851) | ||||||
| Foreign currency translation adjustment | 235,736 | (240,059) | (112,180) | (221,612) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | 235,736 | (313,676) | (112,180) | (442,463) | ||||
| COMPREHENSIVE (LOSS) INCOME | (778,259) | (36,302) | (1,111,090) | 831,060 | ||||
| Preferred stock dividend | (808,638) | (777,372) | (2,396,479) | (2,339,862) | ||||
| COMPREHENSIVE LOSS TO COMMON SHAREHOLDERS | $ (1,586,897) | $ (813,674) | $ (3,507,569) | $ (1,508,802) | ||||
| ||||||||
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) |
UEPH Series A Units [Member] |
UEPH Series B Units [Member] |
UGEL Preferred Shares [Member] |
Common Stock [Member] |
[1] | Additional Paid-In Capital [Member] |
[1] | Accmulated Deficit [Member] |
Accumulated Other Comprehensive Loss [Member] |
Total |
|||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 30, 2018 | $ 617,571 | $ 463,179 | $ 75 | $ 18,690 | $ 35,244,770 | $ (22,136,130) | $ (702,645) | $ 13,505,510 | |||||||
| Balance, shares at Dec. 30, 2018 | 200,000 | 150,000 | 50 | 3,738,006 | |||||||||||
| Net income (loss) | 1,273,523 | 1,273,523 | [2] | ||||||||||||
| Other comprehensive income (loss) | (442,463) | (442,463) | |||||||||||||
| Stock-based compensation expense | 44,166 | 44,166 | |||||||||||||
| Treasury shares purchased at cost and retired | $ (10) | (13,290) | (13,300) | ||||||||||||
| Treasury shares purchased at cost and retired, shares | (2,000) | ||||||||||||||
| Preferred stock dividend | (2,339,862) | (2,339,862) | |||||||||||||
| Balance at Sep. 29, 2019 | $ 617,571 | $ 463,179 | $ 75 | $ 18,680 | 35,275,646 | (23,202,469) | (1,145,108) | 12,027,574 | |||||||
| Balance, shares at Sep. 29, 2019 | 200,000 | 150,000 | 50 | 3,738,006 | |||||||||||
| Balance at Jun. 30, 2019 | $ 617,571 | $ 463,179 | $ 75 | $ 18,680 | 35,275,646 | (22,702,471) | (831,432) | 12,841,248 | |||||||
| Balance, shares at Jun. 30, 2019 | 200,000 | 150,000 | 50 | 3,738,006 | |||||||||||
| Net income (loss) | 277,374 | 277,374 | [2] | ||||||||||||
| Other comprehensive income (loss) | (313,676) | (313,676) | |||||||||||||
| Preferred stock dividend | (777,372) | (777,372) | |||||||||||||
| Balance at Sep. 29, 2019 | $ 617,571 | $ 463,179 | $ 75 | $ 18,680 | 35,275,646 | (23,202,469) | (1,145,108) | 12,027,574 | |||||||
| Balance, shares at Sep. 29, 2019 | 200,000 | 150,000 | 50 | 3,738,006 | |||||||||||
| Balance at Dec. 29, 2019 | $ 617,571 | $ 463,179 | $ 75 | $ 18,680 | 35,275,646 | (24,301,203) | (1,297,439) | 10,776,509 | |||||||
| Balance, shares at Dec. 29, 2019 | 200,000 | 150,000 | 50 | 3,736,006 | |||||||||||
| Net income (loss) | (998,910) | (998,910) | |||||||||||||
| Other comprehensive income (loss) | (112,180) | (112,180) | |||||||||||||
| Preferred stock dividend | (2,396,479) | (2,396,479) | |||||||||||||
| Adjustment for reverse stock split | (14,944) | 14,944 | |||||||||||||
| Balance at Oct. 04, 2020 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (27,696,592) | (1,409,619) | 7,268,940 | |||||||
| Balance, shares at Oct. 04, 2020 | 200,000 | 150,000 | 50 | 3,736,006 | |||||||||||
| Balance at Jul. 05, 2020 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | 35,290,590 | (25,873,959) | (1,645,355) | 8,855,837 | |||||||
| Balance, shares at Jul. 05, 2020 | 200,000 | 150,000 | 50 | 3,736,006 | |||||||||||
| Net income (loss) | (1,013,995) | (1,013,995) | |||||||||||||
| Other comprehensive income (loss) | 235,736 | 235,736 | |||||||||||||
| Preferred stock dividend | (808,638) | (808,638) | |||||||||||||
| Balance at Oct. 04, 2020 | $ 617,571 | $ 463,179 | $ 75 | $ 3,736 | $ 35,290,590 | $ (27,696,592) | $ (1,409,619) | $ 7,268,940 | |||||||
| Balance, shares at Oct. 04, 2020 | 200,000 | 150,000 | 50 | 3,736,006 | |||||||||||
| |||||||||||||||
Consolidated Statements of Cash Flows (Unaudited) - USD ($) |
9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net (loss) income | $ (998,910) | $ 1,273,523 | [1] | |||||
| Adjustments to reconcile net (loss) income to net cash flows from operating activities: | ||||||||
| Depreciation | 1,757,012 | 1,778,280 | ||||||
| Stock-based compensation expense | 44,166 | |||||||
| Amortization of intangible assets | 11,250 | 12,917 | ||||||
| Loss on disposal of property and equipment | 3,871 | 68,395 | ||||||
| Noncash postretirement benefit - health and life | (220,851) | |||||||
| Funding from Paycheck Protection Program recognized as income | (2,217,500) | [1] | ||||||
| Noncash lease adjustment | 66,591 | (26,258) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 1,862,403 | (1,187,917) | ||||||
| Inventories | 1,029,195 | (82,294) | ||||||
| Other current assets | (99,857) | 324,711 | ||||||
| Related party receivable | (37,556) | (13,099) | ||||||
| Other long-term assets | (281,231) | 74,135 | ||||||
| Accounts payable | (784,890) | 185,837 | ||||||
| Accrued expenses and other liabilities | 803,544 | 249,784 | ||||||
| Postretirement benefit liability - health and life | (16,899) | (18,208) | ||||||
| Other long-term liabilities | (130,374) | (7,244) | ||||||
| Cash provided by operating activities | 966,649 | 2,455,877 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (1,200,045) | (1,584,511) | ||||||
| Proceeds from policy loans, net of payments on life insurance policies | 28,787 | 127,440 | ||||||
| Cash used in Investing Activities | (1,171,258) | (1,457,071) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net change in checks issued in excess of bank balance | (184,181) | (102,725) | ||||||
| Net advances (payments) on lines of credit | (1,913,809) | 1,893,069 | ||||||
| Payments on long-term debt | (899,690) | (772,381) | ||||||
| Proceeds from issuance of long-term debt - Paycheck Protection Program | 2,217,500 | |||||||
| Proceeds from issuance of long-term debt - automotive lenders | 1,519,861 | |||||||
| Proceeds from issuance of long-term debt - other | 454,088 | |||||||
| Payments on finance lease liabilities | (289,948) | (484,834) | ||||||
| Proceeds from related party obligations | 983,958 | 800,000 | ||||||
| Payments on related party obligations | (968,801) | (628,023) | ||||||
| Payment of preferred stock dividends | (2,332,503) | |||||||
| Purchase and retirement of treasury stock | (13,300) | |||||||
| Cash provided by (used in) financing activities | 464,890 | (1,186,609) | ||||||
| Net Change in Cash and Cash equivalents | 260,281 | (187,803) | ||||||
| Cash and Cash equivalents - beginning of Period | 513,588 | 1,028,841 | ||||||
| Effects of currency translation on cash and cash equivalents | (5,995) | (22,749) | ||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 767,874 | [2] | $ 818,289 | |||||
| ||||||||
Basis of Presentation |
9 Months Ended | ||
|---|---|---|---|
Oct. 04, 2020 | |||
| Accounting Policies [Abstract] | |||
| Basis of Presentation |
The accompanying unaudited interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of Uniroyal Global Engineered Products, Inc.’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. Uniroyal Global Engineered Products, Inc. (the “Company,” “Uniroyal Global,” “we,” or “us”) filed audited consolidated financial statements as of and for the fiscal years ended December 29, 2019 and December 30, 2018 which included all information and notes necessary for such complete presentation in conjunction with its 2019 Annual Report on Form 10-K.
The results of operations for the interim period ended October 4, 2020 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 29, 2019, which are contained in the Company’s 2019 Annual Report on Form 10-K.
The Company owns all of the ownership interests in Uniroyal Engineered Products, LLC (“Uniroyal”) and its holding company UEP Holdings, LLC (“UEPH”), a U.S. manufacturer of textured coatings, and all of the ordinary common stock of Uniroyal Global (Europe) Limited (“UGEL”) formerly known as Engineered Products Acquisition Limited (“EPAL”), the holding company for Uniroyal Global Limited (“UGL”) formerly Wardle Storeys (Earby) Limited (“Wardle Storeys”), a European manufacturer of textured coatings and polymer films.
The Company and its subsidiaries use a 52/53-week fiscal year ending on the Sunday nearest to December 31. The current year ending January 3, 2021 is a 53-week year whereas the prior year ended December 29, 2019 was a 52-week year. The Company’s U.K. subsidiaries use the calendar year end of December 31. The activity of the U.K. subsidiaries that occurs on the days that do not coincide with the Company’s year-end is not material. The three months ended October 4, 2020 and September 29, 2019 were both 13-week periods while the nine months ended October 4, 2020 was a 40-week period and the nine months ended September 29, 2019 was a 39-week period.
The accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of October 4, 2020 and the results of operations, comprehensive loss and cash flows for the interim periods ended October 4, 2020 and September 29, 2019.
The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British Pound Sterling as the functional currency. See Note 4, Foreign Currency Translation.
For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation.
One-for-Five Reverse Stock Split
On January 27, 2020, the Company announced a one-for-five reverse stock split (“reverse stock split”) on its common stock that became effective on February 24, 2020. The amounts in common stock and additional paid-in capital were adjusted as of the effective date to reflect the reverse stock split. Share and per share amounts for the three and nine months ended September 29, 2019 have been restated to give effect to the reverse stock split.
Coronavirus (COVID-19)
Subsequent to year-end 2019, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a public health emergency. There have been mandates from international, federal, state and local authorities requiring forced closures of various schools, businesses and other facilities and organizations although there have been some recent easings of these closures. These forced closures have negatively impacted the Company’s business. Primarily due to the negative impact that COVID-19 is having on the global economy, the Company began to experience a decline in sales during the latter part of March 2020. In order to mitigate the effect of the decrease in revenue, the Company is managing its costs, which included initially reducing staff at its manufacturing facilities with production at one-third capacity at the U.S. facility and the entire production staff furloughed at the U.K. facility beginning in late March. During June 2020, the Company had some employees return to work as its U.K. facility started limited production of vinyl products based on orders it was receiving from its customers. The Company brought back additional production workers as incoming orders increased during the third quarter of 2020. Demand for our products continues to improve in the fourth quarter although it is well below normalized levels.
Additionally, the Company has applied for loans under programs offered by the governmental agencies in the United States and in the United Kingdom and is exploring options for other supplementary cash flow opportunities to provide further liquidity.
For the U.S. operations, during the second quarter of 2020 the Company received $2,217,500 in funds from One Community Bank (formerly Oregon Community Bank) through the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”). The loan matures on April 13, 2022 and bears an interest rate of 1.0%. The Company is required to make monthly payments of principal and interest beginning November 13, 2020 based on the amount that is outstanding on October 13, 2020 in order to fully amortize the loan by April 13, 2022. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.
All or a portion of the loan may be forgiven by the SBA for costs the Company incurs for payroll, rent, utilities and all other allowable expenses during the 24-week period beginning April 13, 2020. The Company used all proceeds from the loan to maintain payroll and make payments for lease, utility and other allowable expenses. Included in the accompanying consolidated statements of operations for the nine months ended October 4, 2020 was $2,217,500 of loan forgiveness that the Company expects to receive from the SBA. Although the Company has not been legally released from this amount of the loan, management concluded that there was reasonable assurance that the Company had substantially met the terms for forgiveness and therefore recognized this amount as income as a component of other income (expense). The Company submitted its application for loan forgiveness to One Community Bank in September 2020.
Also for the U.S. operations, during the third quarter of 2020 the Company applied for a $3.2 million loan from Wells Fargo Capital Finance, LLC through the Main Street Lending Program established by the Federal Reserve Board; however, there can be no guarantee that the Company will be successful in obtaining this funding.
For the U.K. operations, during the three and nine months ended October 4, 2020 the Company recorded reimbursed costs of approximately $474,000 and $1,560,000, respectively, under the Coronavirus Job Retention Scheme (“CJRS”) set up by the U.K. government to help employers pay the wages of those employees who would otherwise have been laid off during the coronavirus outbreak but under the CJRS were furloughed instead. This program reimbursed the Company for 80% of the compensation expense plus national insurance and certain benefits paid to the furloughed employees, resulting in lower salary expense for the Company. While the employees were on furlough, the compensation paid to them was limited to the amount reimbursed by the CJRS. The Company recorded the reimbursed amounts as reductions to the associated expenses.
Additionally for the U.K. operations, during the third quarter of 2020 the Company received a $783,958 loan from its principal shareholder and $1,545,538 in loans from automotive lenders. These funds provided additional working capital to meet various short-term cash needs.
While the closures and limitations on movement, domestically and internationally, are expected to be temporary due to the COVID-19 outbreak, the duration of the supply chain disruption and related financial impact cannot be estimated at this time. Should the closures continue for an extended period of time or should the effects of the coronavirus continue to spread, the impact could have a material adverse effect on the Company’s financial position, results of operations and cash flows which may require that the Company obtain additional financing.
The payment of dividends for the nine months ended October 4, 2020 and the three months ended December 29, 2019 was deferred to preserve cash and provide additional liquidity. As of October 4, 2020 and December 29, 2019, accrued dividends of $3,154,042 and $788,599, respectively, were included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.
Legal Proceedings
On October 1, 2020, the Health and Safety Executive (“HSE”), the government agency responsible for the enforcement of health and safety law in the U.K., charged our U.K. subsidiary, Uniroyal Global Limited, with an offense under the Health and Safety at Work etc. Act 1974 arising from an August 2019 incident in which an employee was injured in the course of his employment.
The Company fully cooperated with the HSE investigation and, at this time, intends to negotiate a plea based on the legal advice provided to it to date. Based on this legal advice, the Company believes that £150,000 ($195,000) is a reasonable estimate of the fine to be imposed. Accordingly, the Company has recorded a charge of $195,000 in general and administrative expenses in the accompanying Consolidated Statements of Operations for the three and nine months ended October 4, 2020. |
Noncash Transactions and Supplemental Disclosure of Cash Flow Information |
9 Months Ended | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | |||||||||||||||||||||||||||||
| Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||
| Noncash Transactions and Supplemental Disclosure of Cash Flow Information |
During the nine months ended October 4, 2020, the Company recorded funding from the Paycheck Protection Program of $2,217,500, which is the amount of debt forgiveness that it expects to receive for the loan it made through the Paycheck Protection Program. Although the Company has not been legally released from this amount of the loan, management concluded that there was reasonable assurance that the Company had substantially met the terms for forgiveness, including using all proceeds from the loan for eligible costs (as defined under the Paycheck Protection Program). The Company submitted its application for loan forgiveness in September 2020.
During the nine months ended September 29, 2019, the Company entered into several equipment financing obligations with fair values of $379,126, which are accounted for as capital assets. The fair values were added to property and equipment and a corresponding amount to long-term debt or related party lease financing obligation.
The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” on December 31, 2018. Under this new standard, the Company was required to record on its balance sheet previously unrecorded operating leases based on the present value of remaining lease payments. Per this new standard, the Company recorded operating lease right-of-use (“ROU”) assets and operating lease liabilities of $6,815,376 on its consolidated balance sheet as of December 31, 2018.
During the third quarter of 2020 and 2019, the Company obtained $130,000 and $249,051, respectively, in loans against the cash value of its company owned life insurance policies and are shown net of payments of $101,213 and $121,611, respectively, on the life insurance policies in the consolidated statements of cash flows. These loans have a weighted average interest rate of 3.65% and can be repaid at any time.
The following is supplemental disclosure of cash paid for the nine months ended:
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Fair Value of Financial Instruments |
9 Months Ended | |||
|---|---|---|---|---|
Oct. 04, 2020 | ||||
| Fair Value Of Financial Instruments | ||||
| Fair Value of Financial Instruments |
The Company’s short-term financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and lines of credit. The Company adjusts the carrying value of financial instruments denominated in other currencies such as cash, accounts receivable, accounts payable and lines of credit using the appropriate exchange rates at the balance sheet date. The Company believes that the carrying values of these short-term financial instruments approximate their estimated fair values.
The fair value of the Company’s long-term debt is estimated based on current rates for similar instruments with the same remaining maturities. In determining the current interest rates for similar instruments, the Company takes into account its risk of nonperformance. The Company believes that the carrying value of its long-term debt approximates its estimated fair value.
The Company uses foreign currency exchange contracts which are recorded at their estimated fair values in the accompanying consolidated balance sheets. The fair values of the currency exchange contracts are based upon observable market transactions of spot and forward rates.
For the nine months ended October 4, 2020, there have been no changes in the application of valuation methods applied to similar assets and liabilities. |
Foreign Currency Translation |
9 Months Ended | |||
|---|---|---|---|---|
Oct. 04, 2020 | ||||
| Foreign Currency Translation [Abstract] | ||||
| Foreign Currency Translation |
The financial position and results of operations of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of operations denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while the capital accounts are translated at the historical rate for the date they were recognized. Revenues and expenses are translated at the weighted average exchange rates during the reporting period. The resulting translation gains and losses on assets and liabilities are recorded in accumulated other comprehensive loss and are excluded from net income until realized through a sale or liquidation of the investment. Transaction gains and losses generated from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of the Company’s foreign operations are included in other income (expense) in the accompanying consolidated statements of operations. |
Inventories |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 04, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories |
Inventories consist of the following:
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Other Long-term Assets |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Other Assets, Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Long-term Assets |
Other long-term assets consist of the following:
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Other Long-term Liabilities |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Liabilities, Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Long-term Liabilities |
Other long-term liabilities consist of the following:
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Lines of Credit |
9 Months Ended | |||
|---|---|---|---|---|
Oct. 04, 2020 | ||||
| Line of Credit Facility [Abstract] | ||||
| Lines of Credit |
The Company’s Uniroyal subsidiary has available a $30,000,000 revolving line of credit financing agreement with Wells Fargo Capital Finance, LLC (“Uniroyal Line of Credit”), which matures on June 15, 2023. Interest is payable monthly at the Eurodollar rate plus 2.25% or Wells Fargo Capital Finance, LLC's prime rate at the Company's election on outstanding balances up to $6,000,000 and prime rate on amounts in excess of $6,000,000. Borrowings on the line of credit are subject to the underlying borrowing base specified in the agreement. The underlying borrowing base is currently determined based upon eligible accounts receivable, inventories and equipment. The line of credit is secured by substantially all of Uniroyal's assets and includes certain financial and restrictive covenants. The Company was in compliance with these covenants as of October 4, 2020.
The outstanding balance on the Uniroyal Line of Credit was $10,566,665 and $10,328,913 as of October 4, 2020 and December 29, 2019, respectively. The Company has classified the outstanding balance on this line of credit within current liabilities in the accompanying consolidated balance sheets. Based upon eligible accounts receivable, inventories and equipment at October 4, 2020, the Uniroyal Line of Credit provided additional availability of approximately $368,000 and, combined with its total cash balance of $237,498, Uniroyal had liquidity of approximately $605,000 as of October 4, 2020.
The Company’s UGL subsidiary has available a £10,500,000 (approximately $13.6 million) revolving line of credit financing agreement with Lloyds Bank Commercial Finance Limited (“UGL Line of Credit”), which is subject to a six-month notice by either party. The line has several tranches based on currency or underlying security. Interest is payable monthly at the base rate (U.K. LIBOR or Lloyds Bank Base Rate as published) plus 1.95% to 2.45% depending on the tranche. Borrowings on the line of credit are subject to the underlying borrowing base specified in the agreement. The underlying borrowing base is currently determined based upon eligible accounts receivable and inventories. The line of credit is secured by substantially all of the subsidiary's assets and includes certain financial and restrictive covenants. The Company was in compliance with these covenants as of October 4, 2020.
The outstanding balance on the UGL Line of Credit was £6,095,747 and £7,787,002 ($7,885,824 and $10,201,860) as of October 4, 2020 and December 29, 2019, respectively. The Company has classified the outstanding balance on this line of credit within current liabilities in the accompanying consolidated balance sheets. Based upon eligible accounts receivable and inventories at October 4, 2020, the UGL Line of Credit provided additional availability of approximately $1.3 million and, combined with its total cash balance of $507,370, UGL had liquidity of approximately $1.8 million as of October 4, 2020. |
Long-Term Debt |
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| Long-term Debt, by Current and Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt |
Long-term debt consists of the following:
During the third quarter of 2020, the Company received $1,545,538 in loans from automotive lenders. The loans are to be repaid in increasing quarterly installments beginning in September 2021 with the final payment in March 2023. No interest is payable on the loans. |
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Related Party Obligations |
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| Related Party Obligations |
Long-term debt to related parties consists of the following:
The above notes that were outstanding at October 4, 2020 and December 29, 2019 were amended on March 20, 2020 to change the maturity dates to January 15, 2022. No other terms of the notes were changed. The $200,000 note, which was outstanding since January 2019, was repaid in March 2020.
During the third quarter of 2020, the Company issued a $783,958 subordinated secured promissory note to its majority shareholder that matures on April 5, 2023. No interest is payable on the note.
The Company has a lease financing obligation under which it leases its main U.S. manufacturing facility and certain other property from a related party lessor entity, owned by the Company’s majority shareholder. The lease financing obligation accrues interest at 14.95% and currently requires monthly principal and interest payments of $45,533, which are adjusted annually based on the consumer price index. The lease financing obligation matures on October 31, 2033. The Company has security deposits aggregating $267,500 held by the lessor entity.
The lease financing obligation consists of the following:
The long-term portion of the lease financing obligation is shown in the accompanying consolidated balance sheets as related party lease financing obligation. The current portion of the lease financing obligation and the remaining balance of related party short-term subordinated secured promissory notes are combined and are shown in current liabilities as related party obligation which consists of the following:
The related party subordinated secured promissory notes were at a rate of 10%. During the three months ended April 5, 2020, the Company’s majority shareholder advanced $200,000 to the Company, which the Company repaid within the same period. |
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Leases |
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| Capital Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases |
The Company has operating leases for equipment and office facilities and finance leases for equipment. These leases expire at various dates from October 2020 through March 2039. Operating leases are included in operating lease right-of-use assets, accrued expenses and other liabilities, and operating lease liabilities in the accompanying consolidated balance sheets. Finance lease right-of-use assets are included in property and equipment, current maturities of finance lease liabilities, and finance lease liabilities, less current portion in the accompanying consolidated balance sheets.
The components of lease expense for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
Right-of-use assets obtained in exchange for lease obligations for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
Supplemental balance sheet and other information related to operating leases are as follows:
Supplemental balance sheet and other information related to finance leases are as follows:
Maturities of operating and finance lease liabilities as of October 4, 2020 are as follows:
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Accumulated Other Comprehensive Loss |
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| AOCI Attributable to Parent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss |
The changes in accumulated other comprehensive loss were as follows:
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Stock Based Compensation |
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| Stock Options or Stock Based Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation |
On June 25, 2015, the Company’s stockholders approved the adoption of the 2015 Stock Option Plan. This plan provides for the granting of options to purchase the Company’s common stock to employees and directors. The options granted are subject to a vesting schedule as set forth in each individual option agreement. Each option expires on the tenth anniversary of its date of grant unless an earlier termination date is provided in the grant agreement. The maximum aggregate number of shares of common stock that may be optioned and sold under the plan shall be 6% of the shares outstanding on the date of grant. The shares that may be optioned under the plan may be authorized but unissued or may be treasury shares. Compensation expense is recognized on a straight-line basis over a three-year vesting period from date of grant.
Stock option activity for the nine months ended October 4, 2020 and September 29, 2019 is as follows:
As of October 4, 2020 and September 29, 2019, there was no aggregate intrinsic value of the options outstanding because the options’ weighted average exercise prices of $14.02 and $13.99 per share, respectively, were greater than the average market prices of the common shares.
There was no option expense recognized for the three months ended October 4, 2020 and September 29, 2019, and for the nine months ended October 4, 2020. Option expense recognized was $44,166 for the nine months ended September 29, 2019. As of October 4, 2020, there was no unrecognized compensation cost related to the options granted under the 2015 Stock Option Plan. |
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Recent Accounting Standards |
9 Months Ended | |||
|---|---|---|---|---|
Oct. 04, 2020 | ||||
| Related Party Obligations Schedule Of Current Portions Details | ||||
| Recent Accounting Standards |
On August 28, 2018, the Financial Accounting Standards Board issued a new standard, ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The new standard modifies the disclosure requirements on fair value measurements in Topic 820, “Fair Value Measurement.” Certain requirements were removed such as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, certain requirements were modified and certain disclosures were added such as the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. The Company adopted this standard on December 30, 2019. Since this standard only revises disclosure requirements, the adoption of this standard for the year ending January 3, 2021 will not have a significant effect on the Company’s consolidated financial position, results of operations and cash flows.
On December 18, 2019, the Financial Accounting Standards Board issued a new standard, ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This new guidance simplifies the accounting for income taxes by removing certain exceptions such as the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income/gain from other items; and the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The new guidance also simplifies the accounting for income taxes under certain circumstances such as requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of a business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; and requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This standard will be effective for the Company on January 4, 2021. The Company is currently evaluating the effects this standard will have, if any, on its consolidated financial position, results of operations and cash flows. |
Loss per Common Share |
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| LOSS PER COMMON SHARE: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss per Common Share |
The following table sets forth the computation of loss per common share - basic and loss per common share – diluted for the three and nine months ended October 4, 2020 and September 29, 2019:
Due to the net loss allocable to common shareholders for the three and nine months ended October 4, 2020 and the three and nine months ended September 29, 2019, the calculations of basic and diluted loss per share were the same since including options to purchase shares of the Company’s common stock in the calculations of diluted loss per share would have been anti-dilutive. However, if diluted earnings per share had been reported for the three and nine months ended October 4, 2020 and the three and nine months ended September 29, 2019, the calculations would have excluded options to purchase 151,800 and 181,800 shares of common stock, respectively, because the options’ weighted average exercise prices of $14.02 and $13.99 per share, respectively, were greater than the average market prices of the common shares. |
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Revenue |
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| Revenue Recognition and Deferred Revenue [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue |
The Company recognizes revenue and related accounts receivable when obligations under the terms of a contract with a customer are satisfied, which includes the control of products transferring to the customer. For Uniroyal, this generally occurs when products are shipped and, for UGL, this generally occurs when the customer accepts delivery either at the Company’s U.K. facility or at a mutually agreed upon location. Revenue is measured as the amount of consideration the Company expects to receive in exchange for products transferred to the customer.
The following table sets forth revenue disaggregated by the Company’s automotive and industrial sectors for the three and nine months ended October 4, 2020 and September 29, 2019:
The following table sets forth revenue disaggregated by the geographic locations of the Company’s customers for the three and nine months ended October 4, 2020 and September 29, 2019:
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Restructuring Expenses |
9 Months Ended | |||
|---|---|---|---|---|
Oct. 04, 2020 | ||||
| ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisesInPeriodExercisable | ||||
| Restructuring Expenses |
In order to increase operating efficiencies and decrease costs, the Company developed a plan to restructure the operations and the management team of its foreign operations facility located in Earby, England. As part of the restructuring, during the quarter ended March 31, 2019, the Company entered into settlement agreements with certain members of that facility’s management team which terminated their continuing service. The Company recorded a charge of $343,003 for the cost of these agreements which is included in other operating expenses in the accompanying consolidated statements of operations for the nine months ended September 29, 2019. |
Subsequent Events |
9 Months Ended | ||
|---|---|---|---|
Oct. 04, 2020 | |||
| Subsequent Events [Abstract] | |||
| Subsequent Events |
The Company has evaluated subsequent events occurring through the date that the financial statements were available to be issued for events requiring recording or disclosure in the October 4, 2020 consolidated financial statements. Subsequent to October 4, 2020, the Company received approximately $384,000 in a loan from its majority shareholder and $1.6 million in loans from automotive lenders with additional availability of approximately $400,000, which will provide more working capital to meet various short-term cash needs. |
Noncash Transactions and Supplemental Disclosure of Cash Flow Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||
| Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||
| Schedule of Noncash Transactions and Supplemental Disclosure of Cash Flow Information Text Block | The following is supplemental disclosure of cash paid for the nine months ended:
|
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Inventories (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventories | Inventories consist of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-term Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Assets, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Long-term Assets | Other long-term assets consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-term Liabilities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Liabilities, Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Long-term Liabilities | Other long-term liabilities consist of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term Debt, by Current and Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-Term Debt | Long-term debt consists of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Obligations Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt to Related Parties | Long-term debt to related parties consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Lease Obligation | The lease financing obligation consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Obligations, Current | The current portion of the lease financing obligation and the remaining balance of related party short-term subordinated secured promissory notes are combined and are shown in current liabilities as related party obligation which consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Lease Expense | The components of lease expense for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cash Paid for Lease Liabilities | Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Right-of-use assets Obtained in Exchange for Lease Obligations | Right-of-use assets obtained in exchange for lease obligations for the three and nine months ended October 4, 2020 and September 29, 2019 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Information Related to Operating Leases | Supplemental balance sheet and other information related to operating leases are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Information Related to Finance Leases | Supplemental balance sheet and other information related to finance leases are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturities of Lease Liabilities | Maturities of operating and finance lease liabilities as of October 4, 2020 are as follows:
|
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AOCI Attributable to Parent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive loss were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Option Plan: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Options Activity | Stock option activity for the nine months ended October 4, 2020 and September 29, 2019 is as follows:
|
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Loss per Common Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nonvested | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Loss per Common Share | The following table sets forth the computation of loss per common share - basic and loss per common share – diluted for the three and nine months ended October 4, 2020 and September 29, 2019:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Disaggregated Revenue | The following table sets forth revenue disaggregated by the Company’s automotive and industrial sectors for the three and nine months ended October 4, 2020 and September 29, 2019:
The following table sets forth revenue disaggregated by the geographic locations of the Company’s customers for the three and nine months ended October 4, 2020 and September 29, 2019:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 27, 2020 |
Oct. 04, 2020
USD ($)
|
Jul. 05, 2020
USD ($)
|
Sep. 29, 2019
USD ($)
|
[1] |
Oct. 04, 2020
USD ($)
|
Sep. 29, 2019
USD ($)
|
[1] |
Oct. 01, 2020
USD ($)
|
Oct. 01, 2020
GBP (£)
|
Dec. 29, 2019
USD ($)
|
|||
| Debt Instrument [Line Items] | |||||||||||||
| Reverse stock split | one-for-five | ||||||||||||
| Accrued dividends | $ 3,154,042 | $ 3,154,042 | $ 788,599 | ||||||||||
| Gain from debt forgiveness | 33,824 | 2,217,500 | |||||||||||
| Amount received under Coronavirus Job Retention Scheme as reimbursement for compensation expense | $ 474,000 | 1,560,000 | |||||||||||
| Percentage of normal wages received by employees under Coronavirus Job Retention Scheme | 80.00% | ||||||||||||
| Charge against fee imposed under general and administrative expenses | $ 195,000 | $ 195,000 | |||||||||||
| Health and Safety Executive [Member] | |||||||||||||
| Debt Instrument [Line Items] | |||||||||||||
| Estimated amount of fine to be imposed under legal advice | $ 195,000 | ||||||||||||
| Health and Safety Executive [Member] | British Pound Sterling [Member] | |||||||||||||
| Debt Instrument [Line Items] | |||||||||||||
| Estimated amount of fine to be imposed under legal advice | £ | £ 150,000 | ||||||||||||
| COVID-19 [Member] | Paycheck Protection Program Loan [Member] | |||||||||||||
| Debt Instrument [Line Items] | |||||||||||||
| Proceeds from loan | $ 2,217,500 | ||||||||||||
| Interest rate | 1.00% | ||||||||||||
| Date of first periodic payment | Apr. 13, 2022 | ||||||||||||
| Wells Fargo Capital Finance, LLC [Member] | |||||||||||||
| Debt Instrument [Line Items] | |||||||||||||
| Proceeds from issuance of debt | 3,200,000 | ||||||||||||
| Principal shareholder [Member] | |||||||||||||
| Debt Instrument [Line Items] | |||||||||||||
| Proceeds from issuance of debt | 783,958 | ||||||||||||
| Loans from Automotive Lenders [Member] | |||||||||||||
| Debt Instrument [Line Items] | |||||||||||||
| Proceeds from issuance of debt | $ 1,545,538 | ||||||||||||
| |||||||||||||
Noncash Transactions and Supplemental Disclosure of Cash Flow Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
Dec. 29, 2019 |
Jan. 02, 2019 |
|||||||||
| Line of Credit Facility [Line Items] | ||||||||||||||
| Gain from debt forgiveness through paycheck protection program funding | $ 33,824 | [1] | $ 2,217,500 | [1] | ||||||||||
| New equipment leases during the year | 379,126 | |||||||||||||
| Interest | 1,272,124 | $ 1,452,735 | ||||||||||||
| Right-of-use assets | 6,088,870 | [2] | 6,088,870 | [2] | $ 6,607,963 | $ 6,815,376 | ||||||||
| Operating lease liabilities | 6,152,469 | $ 6,152,469 | $ 6,603,793 | $ 6,815,376 | ||||||||||
| Owned life insurance policies [Member] | ||||||||||||||
| Line of Credit Facility [Line Items] | ||||||||||||||
| Proceeds from issuance of debt | 130,000 | 249,051 | ||||||||||||
| Shown net of payments | $ 101,213 | $ 121,611 | ||||||||||||
| Weighted average interest rate | 3.65% | 3.65% | ||||||||||||
| ||||||||||||||
Inventories (Schedule of Inventories) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Inventory Disclosure [Abstract] | |||||
| Raw materials | $ 4,847,141 | $ 5,430,125 | |||
| Work-in-process | 4,155,246 | 4,677,987 | |||
| Finished goods | 11,086,340 | 10,922,947 | |||
| Inventories gross | 20,088,727 | 21,031,059 | |||
| Less: Allowance for inventory obsolescence | (2,120,831) | (1,914,517) | |||
| Total Inventories, net | $ 17,967,896 | [1] | $ 19,116,542 | ||
| |||||
Other Long-term Assets (Schedule of Other Long-term Assets) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Other Assets, Noncurrent [Abstract] | |||||
| Deferred tax asset, net | $ 2,970,289 | $ 2,694,550 | |||
| Other | 767,618 | 794,763 | |||
| Total Other Long-term Assets | $ 3,737,907 | [1] | $ 3,489,313 | ||
| |||||
Other Long-term Liabilities (Schedule of Other Long-term Liabilities) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Other Liabilities, Noncurrent [Abstract] | |||||
| Deferred tax liability | $ 568,452 | $ 709,945 | |||
| Other | 5,363 | 5,363 | |||
| Total Other Long-term Liabilities | $ 573,815 | [1] | $ 715,308 | ||
| |||||
Lines of Credit (Details) |
9 Months Ended | |||
|---|---|---|---|---|
|
Oct. 04, 2020
USD ($)
|
Oct. 04, 2020
GBP (£)
|
Dec. 29, 2019
USD ($)
|
Dec. 29, 2019
GBP (£)
|
|
| Wells Fargo Capital Finance, LLC [Member] | ||||
| Line of credit maximum amount | $ 30,000,000 | |||
| Line of credit premium over base rate | 2.25% | |||
| Line of credit interest rate description | Interest is payable monthly at the Eurodollar rate plus 2.25% or Wells Fargo Capital Finance, LLC’s prime rate at the Company’s election on outstanding balances up to $6,000,000 and prime rate on amounts in excess of $6,000,000. | |||
| Line of credit amount outstanding | $ 10,566,665 | $ 10,328,913 | ||
| Line of credit amount additional availability | 368,000 | |||
| Line of credit with total cash balance | 237,498 | |||
| Line of credit liquidity amount | $ 605,000 | |||
| Line of credit, maturity date | Jun. 15, 2023 | |||
| Lloyds Bank Commercial Finance Limited [Member] | Wardle Storeys [Member] | ||||
| Line of credit maximum amount | $ 13,600,000 | |||
| Line of credit interest rate description | The line has several tranches based on currency or underlying security. Interest is payable monthly at the base rate (U.K. LIBOR or Lloyds Bank Base Rate as published) plus 1.95% to 2.45% depending on the tranche. | |||
| Line of credit amount outstanding | $ 7,885,824 | $ 10,201,860 | ||
| Line of credit amount additional availability | 1,300,000 | |||
| Line of credit with total cash balance | 507,370 | |||
| Line of credit liquidity amount | $ 1,800,000 | |||
| Lloyds Bank Commercial Finance Limited [Member] | Wardle Storeys [Member] | British Pound Sterling [Member] | ||||
| Line of credit maximum amount | £ | £ 10,500,000 | |||
| Line of credit amount outstanding | £ | £ 6,095,747 | £ 7,787,002 | ||
| Lloyds Bank Commercial Finance Limited [Member] | Wardle Storeys [Member] | Minimum [Member] | ||||
| Line of credit premium over base rate | 1.95% | |||
| Lloyds Bank Commercial Finance Limited [Member] | Wardle Storeys [Member] | Maximum [Member] | ||||
| Line of credit premium over base rate | 2.45% | |||
Long-Term Debt (Schedule of Long-term debt) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Debt Instrument [Line Items] | |||||
| Long-term debt | $ 4,744,256 | $ 4,130,783 | |||
| Less: Current portion | (1,092,420) | [1] | (1,238,541) | ||
| Long-Term Portion | 3,651,836 | [1] | 2,892,242 | ||
| Notes Payable [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 2,595,048 | 1,377,882 | |||
| Notes Payable [Member] | Wells Fargo Capital Finance, LLC [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 837,866 | 1,099,700 | |||
| Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 48,671 | 60,971 | |||
| Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 162,973 | 217,211 | |||
| Notes Payable [Member] | Automotive lenders [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 1,545,538 | ||||
| Equipment Financing Obligation [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 2,149,208 | 2,752,901 | |||
| Equipment Financing Obligation [Member] | Lloyds Bank Commercial Finance Limited [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 1,337,288 | 1,519,557 | |||
| Equipment Financing Obligation [Member] | Kennet Equipment Leasing Limited [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | 52,462 | 238,514 | |||
| Equipment Financing Obligation [Member] | Regents Capital Corporation [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Long-term debt | $ 759,458 | $ 994,830 | |||
| |||||
Long-Term Debt (Schedule of Long-term debt Interest Rate) (Details) |
3 Months Ended | 9 Months Ended |
|---|---|---|
|
Oct. 04, 2020
USD ($)
|
Oct. 04, 2020 |
|
| Notes Payable [Member] | Wells Fargo Capital Finance, LLC [Member] | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, interest rate basis | Prime | |
| Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | ||
| Debt Instrument [Line Items] | ||
| Long term debt, interest rate | 4.23% | 4.23% |
| Notes Payable [Member] | Lloyds Bank Commercial Finance Limited [Member] | LIBOR [Member] | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, interest rate above basis | 3.50% | |
| Long-term debt, interest rate basis | LIBOR | |
| Notes Payable [Member] | Automotive lenders [Member] | ||
| Debt Instrument [Line Items] | ||
| Long term debt, interest rate | 0.00% | 0.00% |
| Equipment Financing Obligation [Member] | Kennet Equipment Leasing Limited [Member] | ||
| Debt Instrument [Line Items] | ||
| Long term debt, interest rate | 10.90% | 10.90% |
| Equipment Financing Obligation [Member] | Regents Capital Corporation [Member] | Minimum [Member] | ||
| Debt Instrument [Line Items] | ||
| Long term debt, interest rate | 6.20% | 6.20% |
| Equipment Financing Obligation [Member] | Regents Capital Corporation [Member] | Maximum [Member] | ||
| Debt Instrument [Line Items] | ||
| Long term debt, interest rate | 7.24% | 7.24% |
| Equipment Financing Obligation [Member] | Lloyds Bank Commercial Finance Limited [Member] | ||
| Debt Instrument [Line Items] | ||
| Long term debt, interest rate | 3.95% | 3.95% |
| Loans from Automotive Lenders [Member] | ||
| Debt Instrument [Line Items] | ||
| Proceeds from issuance of debt | $ 1,545,538 |
Related Party Obligations (Narrative) (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |
|---|---|---|---|---|
Mar. 20, 2020 |
Oct. 04, 2020 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|
| Repayments of related party debt | $ 968,801 | $ 628,023 | ||
| Company's Majority Owners [Member] | ||||
| Repayments of related party debt | $ 200,000 | |||
| Long-term debt, interest rate | 14.95% | |||
| Long-term debt, periodic payment | $ 45,533 | |||
| Long-term debt, security deposit | $ 267,500 | $ 267,500 | ||
| Long-term debt, maturity date | Oct. 31, 2033 | |||
| Subordinated secured promissory note [Member] | ||||
| Repayments of related party debt | $ 200,000 | |||
| Long-term debt, interest rate | 10.00% | |||
| Senior subordinated promissory note [Member] | ||||
| Long-term debt, interest rate | 9.25% | |||
| Long-term debt, maturity date | Jan. 15, 2022 | |||
| Subordinated secured promissory note [Member] | ||||
| Long-term debt, interest rate | 8.00% | |||
| Long-term debt, periodic payment | $ 783,958 | |||
| Long-term debt, maturity date | Apr. 05, 2023 | |||
Related Party Obligations (Long-term debt to related parties) (Details) - USD ($) |
9 Months Ended | ||||
|---|---|---|---|---|---|
Oct. 04, 2020 |
Dec. 29, 2019 |
||||
| Total debt to related parties | $ 3,774,613 | $ 3,190,655 | |||
| Less: Current portion of debt to related parties | |||||
| Total Long-term Debt to Related Parties | 3,774,613 | [1] | 3,190,655 | ||
| Senior subordinated promissory note [Member] | |||||
| Total debt to related parties | $ 2,000,000 | 2,000,000 | |||
| Long-term debt, interest rate | 9.25% | ||||
| Senior secured promissory note [Member] | |||||
| Total debt to related parties | $ 765,655 | 765,655 | |||
| Long-term debt, interest rate | 10.00% | ||||
| Subordinated secured promissory note [Member] | |||||
| Total debt to related parties | $ 225,000 | 225,000 | |||
| Long-term debt, interest rate | 8.00% | ||||
| Subordinated secured promissory note 2 [Member] | |||||
| Total debt to related parties | 200,000 | ||||
| Long-term debt, interest rate | 8.00% | ||||
| Subordinated secured promissory note 3 [Member] | |||||
| Total debt to related parties | $ 783,958 | ||||
| Long-term debt, interest rate | 0.00% | ||||
| |||||
Related Party Obligations (Lease Financing Obligation) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Related Party Lease Financing Obligation Details | |||||
| Related party lease financing obligation | $ 2,686,686 | $ 2,780,487 | |||
| Less: Current portion | (145,214) | (133,517) | |||
| Long-Term Portion | $ 2,541,472 | [1] | $ 2,646,970 | ||
| |||||
Related Party Obligations (Current Related Party Obligations) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Related Party Obligations Current Related Party Obligations Details | |||||
| Current portion of related party lease financing obligation | $ 145,214 | $ 133,517 | |||
| Related party subordinated secured promissory note | 350,000 | ||||
| Related party subordinated secured promissory note | 125,000 | ||||
| Related Party Obligation | $ 145,214 | [1] | $ 608,517 | ||
| |||||
Leases (Schedule of Operating Lease Expense) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|
| Lessee Disclosure [Abstract] | ||||
| Operating lease expense | $ 249,069 | $ 285,732 | $ 746,045 | $ 849,936 |
| Finance lease expense: | ||||
| Amortization of right-of-use assets | 49,803 | 56,145 | 158,658 | 172,236 |
| Interest on lease liabilities | 7,090 | 12,960 | 24,441 | 44,483 |
| Total finance lease expense | $ 56,893 | $ 69,105 | $ 183,099 | $ 216,719 |
Leases (Schedule of Cash Paid for Lease Liabilities) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|
| Lessee Disclosure [Abstract] | ||||
| Operating cash flows from operating leases | $ 249,920 | $ 274,760 | $ 670,267 | $ 708,897 |
| Operating cash flows from finance leases | 7,090 | 12,960 | 24,441 | 44,483 |
| Financing cash flows from finance leases | $ 71,720 | $ 156,048 | $ 289,948 | $ 484,834 |
Leases (Schedule of Right-of-use assets Obtained in Exchange for Lease Obligations) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 05, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|
| Lessee Disclosure [Abstract] | ||||
| Operating leases | $ 287,828 | |||
| Finance leases | $ 13,197 | |||
Leases (Schedule of Supplemental Information Related to Operating Leases) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
Jan. 02, 2019 |
|||
|---|---|---|---|---|---|---|
| Operating leases: | ||||||
| Operating lease right-of-use assets | $ 6,088,870 | [1] | $ 6,607,963 | $ 6,815,376 | ||
| Accrued expenses and other liabilities | 438,547 | 497,225 | ||||
| Operating lease liabilities | 5,713,922 | [1] | 6,106,568 | |||
| Total operating lease liabilities | $ 6,152,469 | $ 6,603,793 | $ 6,815,376 | |||
| Weighted average remaining lease term | 15 years 7 months 28 days | 15 years 9 months | ||||
| Weighted average discount rate | 7.23% | 7.16% | ||||
| ||||||
Leases (Schedule of Supplemental Information Related to Finance Leases) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
|||
|---|---|---|---|---|---|
| Finance leases: | |||||
| Property and equipment, net | $ 2,281,411 | $ 2,458,155 | |||
| Current maturities of finance lease liabilities | 269,528 | [1] | 364,872 | ||
| Finance lease liabilities, less current portion | 294,955 | 492,613 | |||
| Total finance lease liabilities | $ 564,483 | $ 857,485 | |||
| Weighted average remaining lease term | 2 years 1 month 6 days | 2 years 6 months | |||
| Weighted average discount rate | 4.63% | 4.73% | |||
| |||||
Leases (Schedule of Maturities of Lease Liabilities) (Details) - USD ($) |
Oct. 04, 2020 |
Dec. 29, 2019 |
Jan. 02, 2019 |
|---|---|---|---|
| Operating leases | |||
| Due in one year or less | $ 864,803 | ||
| Due after one year through two years | 827,359 | ||
| Due after two years through three years | 716,012 | ||
| Due after three years through four years | 521,663 | ||
| Due after four years through five years | 504,331 | ||
| Thereafter | 7,533,702 | ||
| Total lease payments | 10,967,870 | ||
| Less: Interest | (4,815,401) | ||
| Total operating lease liabilities | 6,152,469 | $ 6,603,793 | $ 6,815,376 |
| Finance Leases | |||
| Due in one year or less | 289,047 | ||
| Due after one year through two years | 246,458 | ||
| Due after two years through three years | 56,096 | ||
| Due after three years through four years | 1,822 | ||
| Due after four years through five years | |||
| Thereafter | |||
| Total lease payments | 593,423 | ||
| Less: Interest | (28,940) | ||
| Total finance lease liabilities | $ 564,483 | $ 857,485 |
Accumulated Other Comprehensive Loss (Details) |
9 Months Ended | |||
|---|---|---|---|---|
|
Oct. 04, 2020
USD ($)
| ||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
| Balance | $ (1,297,439) | |||
| Other comprehensive loss before reclassifications | (112,180) | |||
| Balance | (1,409,619) | [1] | ||
| Minimum Benefit Liability Adjustments [Member] | ||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
| Balance | 5,694 | |||
| Other comprehensive loss before reclassifications | ||||
| Balance | 5,694 | |||
| Foreign Currency Translation Adjustment [Member] | ||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
| Balance | (1,303,133) | |||
| Other comprehensive loss before reclassifications | (112,180) | |||
| Balance | $ (1,415,313) | |||
| ||||
Stock Based Compensation (Narrative) (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
|
| Stock-based compensation expense | $ 44,166 | |
| Minimum [Member] | ||
| Weighted average option exercise price | $ 14.02 | $ 14.02 |
| Maximum [Member] | ||
| Weighted average option exercise price | $ 13.99 | $ 13.99 |
Stock Based Compensation (Option Activity) (Details) - USD ($) |
9 Months Ended | ||||
|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
||||
| Total Stock Options | |||||
| Outstanding | 151,800 | 189,300 | [1] | ||
| Granted | [1] | ||||
| Vested | [1] | ||||
| Exercised | |||||
| Forfeited or cancelled | (7,500) | [1] | |||
| Outstanding | 151,800 | 181,800 | [1] | ||
| Total Weighted Average Exercise Price | |||||
| Outstanding | $ 14.02 | $ 13.98 | [1] | ||
| Granted | [1] | ||||
| Vested | [1] | ||||
| Exercised | |||||
| Forfeited or cancelled | 13.85 | [1] | |||
| Outstanding | $ 14.02 | $ 13.99 | [1] | ||
| Exercisable | |||||
| Outstanding | 151,800 | 166,867 | [1] | ||
| Granted | [1] | ||||
| Vested | 22,433 | [1] | |||
| Exercised | |||||
| Forfeited or cancelled | (7,500) | [1] | |||
| Outstanding | 151,800 | 181,800 | [1] | ||
| Exercisable Weighted Average Exercise Price | |||||
| Outstanding | $ 14.02 | $ 13.46 | [1] | ||
| Granted | [1] | ||||
| Vested | 17.85 | [1] | |||
| Exercised | |||||
| Forfeited or cancelled | 13.85 | [1] | |||
| Outstanding | $ 14.02 | $ 13.99 | [1] | ||
| Nonvested | |||||
| Outstanding | 22,433 | [1] | |||
| Granted | [1] | ||||
| Vested | (22,433) | [1] | |||
| Forfeited or cancelled | [1] | ||||
| Outstanding | [1] | ||||
| Nonvested Weighted Average Exercise Price | |||||
| Outstanding | $ 17.85 | [1] | |||
| Granted | [1] | ||||
| Vested | 17.85 | [1] | |||
| Forfeited or cancelled | [1] | ||||
| Outstanding | [1] | ||||
| Aggregate intrinsic value | |||||
| Outstanding | |||||
| Exercisable | |||||
| Nonvested | |||||
| |||||
Loss per Common Share (Narrative) (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|||||
| Weighted average effect of dilutive securities | [1] | [1] | ||||||
| Option exercise price | ||||||||
| Stock Option [Member] | ||||||||
| Weighted average effect of dilutive securities | 151,800 | 181,800 | 151,800 | 181,800 | ||||
| Stock Option [Member] | Minimum [Member] | ||||||||
| Option exercise price | $ 14.02 | $ 14.02 | ||||||
| Stock Option [Member] | Maximum [Member] | ||||||||
| Option exercise price | $ 13.99 | $ 13.99 | ||||||
| ||||||||
Loss per Common Share (Schedule of Loss per Common Share) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
[1] | Oct. 04, 2020 |
Sep. 29, 2019 |
[1] | |||
| Numerator | ||||||||
| Net loss allocable to common shareholders | $ (1,822,633) | $ (499,998) | $ (3,395,389) | $ (1,066,339) | ||||
| Denominator | ||||||||
| Denominator for basic earnings per share - weighted average shares outstanding | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||
| Weighted average effect of dilutive securities | ||||||||
| Denominator for dilutive earnings per share - weighted average shares outstanding | 3,736,006 | 3,736,006 | 3,736,006 | 3,736,988 | ||||
| Basic and Diluted Net Loss Per Share | ||||||||
| Net loss allocable to common shareholders | $ (0.49) | $ (0.13) | $ (0.91) | $ (0.29) | ||||
| Effect of dilutive securities | ||||||||
| Net loss allocable to common shareholders | $ (0.49) | $ (0.13) | $ (0.91) | $ (0.29) | ||||
| ||||||||
Revenue (Schedule of Disaggregated Revenue) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | $ 15,171,898 | $ 22,033,539 | [1] | $ 43,528,393 | $ 71,523,182 | [1] | ||
| Automotive Sector [Member] | ||||||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | 9,064,735 | 14,133,223 | 24,866,376 | 46,433,893 | ||||
| Industrial Sector [Member] | ||||||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | 6,107,163 | 7,900,316 | 18,662,017 | 25,089,289 | ||||
| North America [Member] | ||||||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | 7,562,196 | 11,213,393 | 23,714,242 | 35,527,931 | ||||
| Europe [Member] | ||||||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | 6,529,779 | 9,362,032 | 17,139,460 | 31,968,702 | ||||
| Asia [Member] | ||||||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | 885,984 | 1,383,081 | 2,214,264 | 3,799,104 | ||||
| Other [Member] | ||||||||
| Disaggregation of Revenue [Line Items] | ||||||||
| Total revenue | $ 193,939 | $ 75,033 | $ 460,427 | $ 227,445 | ||||
| ||||||||
Restructuring Expenses (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Oct. 04, 2020 |
Sep. 29, 2019 |
Oct. 04, 2020 |
Sep. 29, 2019 |
|||||
| Restructuring Expenses Details Abstract | ||||||||
| Other operating expenses | [1] | $ 343,003 | [1] | |||||
| ||||||||
Subsequent Events (Details) |
9 Months Ended |
|---|---|
|
Oct. 04, 2020
USD ($)
| |
| Loan from majority shareholder [Member] | |
| Subsequent Event [Line Items] | |
| Proceeds from issuance of debt | $ 384,000 |
| Loans from other stakeholders [Member] | |
| Subsequent Event [Line Items] | |
| Proceeds from issuance of debt | 1,600,000 |
| Additional availability [Member] | |
| Subsequent Event [Line Items] | |
| Proceeds from issuance of debt | $ 400,000 |