![]() |
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer ☐
|
|
|
Accelerated filer ☐
|
Smaller reporting company
|
|
Emerging growth company
|
2
|
|
2
|
|
6
|
|
17 | |
25 | |
30 |
|
30 |
|
30 |
|
30 | |
31 | |
33 |
Item 1. |
Condensed Consolidated Financial Statements.
|
March 31, | December 31, | |||||||
2023
|
2022
|
|||||||
(Unaudited) | ||||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable-trade, net of allowance for doubtful accounts of $
|
|
|
||||||
Inventory
|
|
|
||||||
Income tax receivable
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, at cost
|
|
|
||||||
Less accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Property and equipment, net
|
|
|
||||||
Operating lease assets
|
|
|
||||||
Financing lease assets
|
|
|
||||||
Other intangibles, net of accumulated amortization of $
|
|
|
||||||
Other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable-trade
|
$
|
|
$
|
|
||||
Accrued expenses and other liabilities
|
|
|
||||||
Income taxes payable |
||||||||
Current portion of operating lease liabilities
|
|
|
||||||
Current portion of finance lease liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Uncertain tax positions
|
|
|
||||||
Other non-current liabilities
|
|
|
||||||
Operating lease liabilities, non-current
|
|
|
||||||
Finance lease liabilities, non-current
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES (Note 6)
|
||||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock, $
|
|
|
||||||
Paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Treasury stock at cost (
|
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss, net of tax
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Net sales
|
$
|
|
$
|
|
||||
Cost of sales
|
|
|
||||||
Gross profit
|
|
|
||||||
Operating expenses
|
|
|
||||||
Income from operations
|
|
|
||||||
Other (income) expense:
|
||||||||
Interest expense
|
|
|
||||||
Other, net
|
|
(
|
)
|
|||||
Total other income
|
|
(
|
)
|
|||||
Income before income taxes
|
|
|
||||||
Income tax provision
|
|
|
||||||
Net income
|
$
|
|
$
|
|
||||
Foreign currency translation adjustments, net of tax
|
(
|
)
|
|
|||||
Comprehensive income
|
$
|
|
$
|
|
||||
Net income per common share:
|
||||||||
Basic
|
$
|
|
$
|
|
||||
Diluted
|
$
|
|
$
|
|
||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
|
|
||||||
Diluted
|
|
|
For the Three Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Operating lease asset amortization
|
|
|
||||||
Loss on disposal of assets |
||||||||
Stock-based compensation
|
|
|
||||||
Deferred income taxes
|
|
(
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable-trade
|
(
|
)
|
(
|
)
|
||||
Inventory
|
|
|
||||||
Prepaid expenses
|
(
|
)
|
|
|||||
Other current assets
|
(
|
)
|
|
|||||
Accounts payable-trade
|
(
|
)
|
(
|
)
|
||||
Accrued expenses and other liabilities
|
(
|
)
|
(
|
)
|
||||
Income taxes, net
|
|
|
||||||
Other assets
|
(
|
)
|
|
|||||
Operating lease liabilities
|
(
|
)
|
(
|
)
|
||||
Total adjustments
|
|
(
|
)
|
|||||
Net cash provided by operating activities
|
|
|
||||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Payment of finance lease obligations
|
|
(
|
)
|
|||||
Net cash used in financing activities
|
|
(
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(
|
)
|
|
|||||
Net increase in cash and cash equivalents
|
|
|
||||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
Number of
Shares
Common
Stock
Outstanding
|
Par Value
|
Paid-in Capital
|
Treasury Stock
|
Retained Earnings
|
Accumulated
Other Comprehensive Income (Loss) |
Total
|
||||||||||||||||||||||
Balance, December 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation expense
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Vesting of restricted stock units
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustments, net of tax
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance, March 31, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Balance, December 31, 2021
|
|
$ |
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Stock-based compensation expense
|
-
|
|
|
|
|
|
||||||||||||||||||||||
Vesting of restricted stock units
|
|
|
|
|
|
|
||||||||||||||||||||||
Net income
|
- |
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustments, net of tax
|
- |
|
|
|
|
|
|
|||||||||||||||||||||
Balance, March 31, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
United States
|
$
|
|
$
|
|
||||
Canada
|
|
|
||||||
Other | ||||||||
Net sales
|
$
|
|
$
|
|
(in thousands)
|
March 31, 2023
|
December 31, 2022
|
||||||
On hand:
|
||||||||
Finished goods held for sale
|
$
|
|
$
|
|
||||
Raw materials and work in process
|
|
|
||||||
Inventory in transit
|
|
|
||||||
TOTAL
|
$
|
|
$
|
|
●
|
Level 1 – observable inputs that reflect quoted prices in active markets for identical assets or liabilities.
|
●
|
Level 2 – significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that
are not active; or other inputs that are observable or can be corroborated by observable market data.
|
●
|
Level 3 – significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.
|
Shares
(in thousands)
|
Weighted Average
Share Price
|
|||||||
Balance, January 1, 2023
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Forfeited
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Balance, March 31, 2023
|
|
$
|
|
Unrecognized Expense
|
||||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026 |
||||
|
$
|
|
|
Three Months Ended March 31,
|
|||||||
(in thousands, except share data) |
2023
|
2022
|
||||||
Numerator: | ||||||||
Net income
|
$
|
|
$
|
|
||||
Denominator:
|
||||||||
Basic weighted-average common shares outstanding
|
|
|
||||||
Dilutive effect of service-based restricted stock awards granted to Board of Directors under the Plan
|
||||||||
Dilutive effect of service-based restricted stock awards granted to employees under the Plan |
||||||||
Diluted weighted-average common shares outstanding
|
|
|
Three Months Ended March 31,
|
||||||||||||||||
(in thousands)
|
2023
|
2022
|
$ Change
|
% Change
|
||||||||||||
Sales
|
$
|
20,360
|
$
|
20,500
|
$
|
(140
|
)
|
(0.7
|
)%
|
|||||||
Gross profit
|
11,819
|
11,931
|
(112
|
)
|
(0.9
|
)%
|
||||||||||
Gross margin percentage
|
58.1
|
%
|
58.2
|
%
|
(0.1
|
)%
|
||||||||||
Operating expenses
|
10,838
|
11,102
|
(264
|
)
|
(2.4
|
)%
|
||||||||||
Income from operations
|
$
|
981
|
$
|
829
|
$
|
152
|
18.3
|
%
|
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Operating expenses
|
$
|
10,838
|
$
|
11,102
|
||||
Non-routine items related to restatement
|
-
|
(77
|
)
|
|||||
Adjusted operating expenses
|
$
|
10,838
|
$
|
11,025
|
||||
|
||||||||
Operating expenses % of sales
|
53.2
|
%
|
54.2
|
%
|
||||
Adjusted operating expenses % of sales
|
53.2
|
%
|
53.8
|
%
|
Three Months Ended March 31,
|
||||||||
(amounts in thousands)
|
2023
|
2022
|
||||||
Net cash provided by operating activities
|
$
|
797
|
$
|
277
|
||||
Net cash used in investing activities
|
(87
|
)
|
(164
|
)
|
||||
Net cash used in financing activities
|
-
|
(4
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(39
|
)
|
71
|
|||||
Net increase in cash and cash equivalents
|
$
|
671
|
$
|
180
|
Three Months Ended March 31,
|
||||||||
(amounts in thousands)
|
2023
|
2022
|
||||||
Net cash provided by operating activities
|
$
|
795
|
$
|
277
|
||||
Net cash used in investing activities
|
(87
|
)
|
(164
|
)
|
||||
Net cash used in financing activities
|
-
|
(4
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(38
|
)
|
71
|
|||||
Net increase in cash and cash equivalents
|
$
|
670
|
$
|
180
|
Item 4. |
Controls and Procedures.
|
• |
Replaced critical roles within our accounting team with full-time employees with expertise in GAAP accounting, SEC reporting and disclosure, internal audit and internal controls;
|
• |
Replaced our legacy accounting systems with an integrated enterprise resource planning (“ERP”) solution which includes general ledger, warehouse management and factory production modules designed to calculate inventory on a FIFO basis;
|
• |
Implemented a new point-of-sale system for most of our stores that is fully integrated with our new ERP system. The remaining two stores will be converted in 2023;
|
• |
Implemented new accounting processes and procedures aligned with our new ERP system that incorporate best practices to minimize errors and putting into action control activities that will prevent misstatements and that address
appropriate segregation of duties;
|
• |
Updated process narrative documentation in the following areas: (i) fixed assets and lease accounting, (ii) information technology (IT) governance, and (iii) HR and payroll;
|
• |
Created a risk controls matrix which includes, among other things, a comprehensive list of key and mitigating controls, a description of the risk the control is designed to mitigate, the individual responsible for each control, the
frequency in which the control is performed, and a mapping of each control to the five COSO Framework components (control environment, risk assessment, control activities, information and communication, or monitoring activities);
|
• |
Established a greater sense of accountability by requiring sub-certifications below the CEO level for certain key accounting, finance and operations personnel.
|
• |
Ongoing recruitment and hiring of permanent, qualified public-company accounting personnel;
|
• |
Converting remaining stores onto our new point-of-sale system;
|
• |
Continuing to implement new accounting procedures and activities aligned with our new ERP system that improve upon the reliability of financial reporting and the preparation of financial statements in accordance with GAAP;
|
• |
Continuing to improve the accounting close process, including periodic review and update of our accounting close checklists for completeness of duties, accuracy of owners and deadlines to maintain accountability, timely review of
account reconciliations and calculations involving judgement, and timely reporting of financial results;
|
• |
Continuing to refine and improve narrative documentation in particular in the following areas: (i) financial reporting, (ii) inventory, (iii) purchasing and accounts payable, (iv) revenue, (v) general accounting, treasury, and
financial planning & analysis, and (vi) tax;
|
• |
Periodically reviewing our risk controls matrix and process narrative documentation to ensure changes such as personnel, information sources, processes, systems, and frequency in performing the control are properly reflected in a
timely manner;
|
• |
Reporting the progress and results of our remediation plan to the Audit Committee on a recurring basis, including the identification, status, and resolution of internal control deficiencies; and
|
• |
Creating a comprehensive approach to regularly evaluate the operating effectiveness of our disclosure controls and procedures and our internal control over financial reporting using the COSO Framework as a guide.
|
• |
Recurring meetings with leadership, finance and accounting and other key functional areas to train staff on processes for oversight and emphasize each individual’s accountability for internal control compliance, and to create a pattern
of regular discussion of such controls.
|
• |
Regular periodic communications from the CEO and other key senior leaders on the Company’s mission, core values, Code of Business Conduct and Ethics, whistleblower policies, and each employee’s individual responsibility for internal
control compliance.
|
• |
Reorganization of the finance and accounting team to address segregation of duties issues, oversight, and review of work, and recruiting and hiring qualified, competent employees with relevant experience for the roles.
|
• |
Regular performance evaluations to include position-specific criteria for functional competence, including performance of internal control responsibilities.
|
• |
Completing the implementation of our new point-of-sale system, which is fully integrated with our ERP system.
|
• |
Continuing to implement functionality in our ERP system to improve on our internal controls over financial reporting, such as implementing the ERP’s bank reconciliation module.
|
• |
Continuing to implement newly-designed processes, structures, delegation of authority and controls, in accordance with the COSO Framework, including:
|
o |
Quarterly updates for our Controller regarding upcoming accounting pronouncement and proposed changes to GAAP accounting standards, tax regulations, and other requirements that may impact the Company’s financial reporting;
|
o |
Timely reviews each quarter of the most significant accounting estimates and judgments;
|
o |
Validation of results through detailed variance analyses and reconciliation of account balances performed on a timely basis;
|
o |
Monthly business review of actual financial performance compared to forecasts with participation from leadership across the organization; and
|
o |
Establishing a disclosure committee comprised of key management throughout the different areas of the organization to evaluate the appropriateness of disclosures in the Company’s periodic filings on Forms 10-K and 10-Q and to support
the CEO with the certification process.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||||||||
Period
|
(a) Total
number of
shares
purchased
|
(b)
Average
price paid
per share
|
(c) Total number of
shares purchased as
part of publicly
announced plans or
programs
|
(d) Maximum value
of shares that may
yet be purchased
under the plans or
programs
|
||||||||||||
January 1 – January 31, 2023
|
—
|
—
|
—
|
$
|
4,997,000
|
|||||||||||
February 1 – February 28, 2023
|
—
|
—
|
—
|
$
|
4,997,000
|
|||||||||||
March 1 – March 31, 2023
|
—
|
—
|
—
|
$
|
4,997,000
|
|||||||||||
Total
|
—
|
—
|
—
|
Exhibit
Number
|
Description
|
3.1
|
|
3.2
|
|
3.3
|
|
Certificate of Amendment of Certificate of Incorporation, dated March 1, 2023
|
|
4.1
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
10.7
|
|
10.8
|
|
10.9
|
Form of Stock Purchase Agreement dated December 8, 2021 between the Company and Right Lane I, LP,
filed as Exhibit 10.9 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 16, 2022 and incorporated by reference herein.
|
14.1
|
|
21.1
|
|
13a-14(a) or 15d-14(a) Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2022.
|
|
*101.INS
|
XBRL Instance Document.
|
*101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Document.
|
*101.DEF
|
XBRL Taxonomy Extension Definition Document.
|
*101.LAB
|
XBRL Taxonomy Extension Labels Document.
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Document.
|
TANDY LEATHER FACTORY, INC.
|
||
(Registrant)
|
||
Date: May 15, 2023
|
By:
|
/s/ Janet Carr
|
Janet Carr
|
||
Chief Executive Officer
|
1. |
I have reviewed this quarterly report on Form 10-Q of Tandy Leather Factory, Inc.; 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 report;
|
2. |
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 registrant as of, and
for, the periods presented in this report;
|
3. |
The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
|
4. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’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 registrant’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 registrant’s internal controls over financial reporting.
|
Date: May 15, 2023
|
By:
|
/s/ Janet Carr
|
Janet Carr
|
||
Chief Executive Officer
|
||
(principal executive officer and principal financial officer)
|
i. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
ii. |
The information contained in the Report fully presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
Date: May 15, 2023
|
By:
|
/s/ Janet Carr
|
Janet Carr
|
||
Chief Executive Officer
|
||
(principal executive officer and principal financial officer)
|
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
CURRENT ASSETS: | ||
Allowance for doubtful accounts | $ 48 | $ 56 |
Accumulated amortization | $ 549 | $ 549 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.0024 | $ 0.0024 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 9,734,984 | 9,717,525 |
Common stock, shares outstanding (in shares) | 8,310,667 | 8,293,149 |
Treasury stock, shares (in shares) | 1,424,376 | 1,424,376 |
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract] | ||
Net sales | $ 20,360 | $ 20,500 |
Cost of sales | 8,541 | 8,569 |
Gross profit | 11,819 | 11,931 |
Operating expenses | 10,838 | 11,102 |
Income from operations | 981 | 829 |
Other (income) expense: | ||
Interest expense | 0 | 2 |
Other, net | 39 | (15) |
Total other income | 39 | (13) |
Income before income taxes | 942 | 842 |
Income tax provision | 278 | 197 |
Net income | 664 | 645 |
Foreign currency translation adjustments, net of tax | (39) | 65 |
Comprehensive income | $ 625 | $ 710 |
Net income per common share: | ||
Basic (in dollars per share) | $ 0.08 | $ 0.08 |
Diluted (in dollars per share) | $ 0.08 | $ 0.08 |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 8,303,117 | 8,574,888 |
Diluted (in shares) | 8,356,166 | 8,580,182 |
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES |
1. BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES
Tandy Leather Factory, Inc. (“TLF,” “we,” “our,” “us,” “the” Company,” “Tandy,” or “Tandy Leather” mean Tandy Leather Factory, Inc., together with its subsidiaries) is one of the world’s largest specialty retailers of leather and leathercraft-related items. Founded in 1919 in Fort Worth, Texas, the Company introduced leathercrafting to millions of American and later
Canadian and other international customers and has built a track record as the trusted source of quality leather, tools, hardware, supplies, kits and teaching materials for leatherworkers everywhere. Today, our mission remains to build on our
legacy of inspiring the timeless art and trade of leatherworking.
What differentiates Tandy from the competition is our high brand awareness and strong brand equity and loyalty, our network of retail stores that provides
convenience, a high-touch customer service experience, and a hub for the local leathercrafting community, and our 100-year heritage. We believe that this combination of qualities is unique to Tandy and gives the brand competitive advantages that
are difficult for others to replicate.
We sell our products primarily through company-owned stores and through orders generated from our global websites, and through direct account representatives in our commercial division. We also manufacture leather lace, cut
leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”), splitting, and some assembly. We maintain our principal
offices at 1900 Southeast Loop 820, Fort Worth, Texas 76140.
The Company currently operates a total of 102 retail
stores. There are 91 stores in the United States (“U.S.”), ten stores in Canada and one store in Spain.
The Company’s common shares currently trade on the Nasdaq Capital Market under the symbol “TLF.”
We operate as a
segment and report on a consolidated basis.The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the
instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual audited financial statements. In the opinion of management, the accompanying unaudited
Condensed Consolidated Financial Statements for Tandy Leather Factory, Inc. and its consolidated subsidiaries contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our financial position as of March
31, 2023 and December 31, 2022, our results of operations and our cash flows for the three months ended March 31, 2023 and 2022, and our statements of stockholders’ equity as of and for the three months ended March 31, 2023 and 2022. The
preparation of financial statements in accordance with GAAP requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis for the Company’s conclusions. The Company continually evaluates the information used to make these estimates as the business and the economic
environment changes. Actual results may differ from these estimates, and estimates are subject to change due to modifications in the underlying conditions or assumptions. These unaudited Condensed Consolidated Financial Statements should be
read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in our Form 10-K for the year ended December 31, 2022.
Significant Accounting Policies
Cash and cash equivalents. The Company considers investments with a maturity when purchased of three months or less
to be cash equivalents. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents.
Foreign currency translation and transactions. Foreign currency translation adjustments arise from activities of our
foreign subsidiaries. Results of operations are translated into U.S. dollars using the average exchange rates during the period, while assets and liabilities are translated using period-end exchange rates. Foreign currency translation
adjustments of assets and liabilities are recorded in stockholders’ equity and presented net of tax. Gains and losses resulting from foreign currency transactions are reported in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) under the caption “Foreign currency
translation adjustments, net of tax” for all periods presented.
Revenue Recognition. Our revenue is earned from sales of merchandise and generally occurs via three methods: (1) at
the store counter, (2) via web sales, and (3) sales of product directly to commercial customers. We recognize revenue when we satisfy the performance obligation of transferring control of product merchandise over to a customer. At the store
counter, our performance obligation is met, and revenue is recognized when a sales transaction occurs with a customer. When merchandise is shipped to a customer, our performance obligation is met, and revenue is recognized when control passes to
the customer. Shipping terms are normally free on board (“FOB”) shipping point and control passes when the merchandise is shipped to the customer. Sales tax and comparable foreign tax are excluded from net sales, while shipping charged to our
customers is included in net sales. Net sales are based on the amount of consideration that we expect to receive, reduced by estimates for future merchandise returns.
The sales return allowance is based each year on historical customer return behavior and other known factors and reduces net sales and cost of sales, accordingly. The sales return allowance included in accrued expense and other
liabilities was $0.1 million, $0.1
million, and $0.2 million as of March 31, 2023, December 31, 2022, and January 1, 2022. The estimated value of merchandise expected
to be returned included in other current assets was $0.1 million as of March 31, 2023, December 31, 2022, and January 1, 2022.
We record a gift card liability for the unfulfilled performance obligation on the date we issue a gift card to a customer. We record revenue and reduce the gift card liability as the customer redeems the gift card. In addition, for gift
card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period, which is one year. As of March 31, 2023, December 31, 2022 and January1, 2022, our gift card liability, included in accrued expenses and other liabilities, was $0.2 million, $0.3 million and $0.4 million, respectively. We recognized gift card revenue of $0.2 million for the three months ended March 31, 2023 from the December 31, 2022 deferred revenue balance and $0.1
million for the three months ended March 31, 2022 from the January 1, 2022 deferred revenue balance.
For the three
months ended March 31, 2023 and 2022, we recognized $0.2 million in net sales associated with gift cards.
Disaggregated Revenue. In the following table, revenue for the three months ended March
31, 2023 and 2022 is disaggregated by geographic areas as follows:
Geographic sales information is based on the location of the customer. As a percentage of our consolidated net sales, excluding
Canada, our other international net sales were less than 2.0% for the three months ended March 31, 2023, and 2022 respectively.
Discounts. We offer a single retail price level, plus three volume-based levels for commercial customers. Discounts from those price levels are offered to business, military/first responders and employee customers. Such
discounts do not convey a material right to these customers since the discounted pricing they receive at the point of sale is not dependent upon any previous or subsequent purchases. As a result, sales are reported after deduction of discounts at
the point of sale. We do not pay slotting fees or make other payments to resellers.
Operating expenses. Operating expenses
include all selling, general and administrative costs, including wages and benefits, rent and occupancy costs, depreciation, advertising, store operating expenses, outbound freight charges (to ship merchandise to customers), and corporate office
costs.
Property and equipment, net of accumulated depreciation. Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets, which are to ten years for equipment and machinery,
to fifteen years for furniture and fixtures, five years for vehicles, and forty years for buildings and related improvements. Leasehold
improvements are amortized over the lesser of the life of the lease or the useful life of the asset. Repairs and maintenance costs are expensed as incurred.
Inventory. Inventory is stated at the lower of first-in, first-out (“FIFO”) cost or net realizable value, and FIFO
layers are maintained at the location level. Finished goods held for sale include the cost of merchandise purchases, the costs to bring the merchandise to our Texas distribution center, warehousing and handling expenditures, and distributing and
delivering merchandise to our stores. These costs include depreciation of long-lived assets utilized in acquiring, warehousing and distributing inventory. Manufacturing inventory including raw materials and work-in-process is valued on a
first‑in, first out basis using full absorption accounting which includes material, labor, and other applicable manufacturing overhead. Carrying values of inventory are analyzed and, to the extent that the cost of inventory exceeds the net
realizable value, provisions are made to reduce the carrying amount of the inventory.
We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light),
(ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to
be taken to adequately value our inventory at the lower of cost or net realizable value.
Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell,
differences in these estimates could result in ultimate valuations that differ from the recorded asset.
The majority of inventory purchases and commitments are made in U.S. dollars in order to limit the Company’s exposure to foreign currency fluctuations. Goods shipped
to us are recorded as inventory owned by us when the risk of loss shifts to us from the supplier.
Inventory is physically counted twice annually in the Texas distribution center. At the store level, inventory is physically counted each
quarter. Inventory is then adjusted in our accounting system to reflect actual count results.
Leases. We lease certain real estate for our retail store locations and
warehouse equipment for our Texas distribution center under long-term lease agreements. We determine if an arrangement is a lease at inception and recognize right-of-use (“ROU”) assets and lease liabilities at commencement date based on the
present value of the lease payments over the lease term. We elected not to record leases with an initial term of 12 months or less on the balance sheet for all our asset classes.
For operating leases, the present value of our lease liabilities may include: (1) rental payments adjusted for inflation or market rates, and (2) lease terms with
options to renew the lease or options to purchase leased equipment, when it is reasonably certain we will exercise such an option. The exercise of lease renewal or purchase option is generally at our discretion. Payments based on a change in an
index or market rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. We discount lease payments using our incremental borrowing rate based on information available as of the
measurement date.
We recognize rent expense related to our operating leases assets on a straight-line basis over the lease term. Rent expense is recorded in operating expenses. The net adjustment between rent expense and the
actual cash paid during the fiscal year has been recorded as accrued expenses and other liabilities in the accompanying consolidated balance
For finance leases, our right-of-use assets are amortized on a straight-line basis over the earlier of the useful life of the right-of-use asset or the end of the
lease term with rent expense recorded to operating expenses. We adjust the lease liability to reflect lease payments made during the period and interest incurred on the lease liability using the effective interest method. The interest expense incurred is recorded in interest expense on the Condensed Consolidated
Statements of Operations and Comprehensive Income.
The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term. We also perform interim reviews of our lease
assets for impairment when evidence exists that the carrying value of an asset group, including a lease asset, may not be recoverable.
None of our lease agreements contain contingent rental payments, material residual value guarantees or material restrictive covenants. We have no sublease
agreements and no lease agreements in which we are named as a lessor.
Impairment of Long-Lived Assets. We evaluate long-lived assets on a quarterly basis to identify events or changes in
circumstances (“triggering events”) that indicate the carrying value of certain assets may not be recoverable. Upon the occurrence of a triggering event, ROU lease assets, property and equipment and definite-lived intangible assets are reviewed
for impairment and an impairment loss is recorded in the period in which it is determined that the carrying amount of the assets is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash
flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset
within the asset group. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be primarily at the individual store level. If the estimated undiscounted future net cash flows for a given
store are less than the carrying amount of the related store assets, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related assets. The impairment loss is then allocated across the asset
group’s major classifications which in this case are operating lease assets and property and equipment. Triggering events at the store level could include material declines in operational and financial performance or planned changes in the use of
assets, such as store relocation or store closure. This evaluation requires management to make judgements relating to future cash flows, growth rates and economic and market conditions. The fair value of an asset group is estimated using a
discounted cash flow valuation method.
Fair Value of Financial Instruments. We measure fair value as an exit price, which is the amount that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, accounting standards establish a three-tier fair value hierarchy, which prioritizes the
inputs used in the valuation methodologies in measuring fair value:
Classification of the financial asset or liability within the hierarchy is
determined based on the lowest level input that is significant to the fair value measurement.
Our principal financial instruments held consist of accounts receivable - trade, accounts payable - trade, as of March 31, 2023 and December 31, 2022, all of which fall under Level 3 of the fair value hierarchy. As of March
31, 2023 and December 31, 2022, the carrying values of our financial instruments, included in our Consolidated Balance Sheets, approximated their fair values. There were no transfers into or out of Levels 1, 2 and 3 during the three months ended March 31, 2023 and 2022.
Income Taxes. Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current
tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable
income. To the extent it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized, a valuation allowance is recorded. Our evaluation regarding whether a valuation allowance is required or should be adjusted also
considers, among other things, the nature, frequency, and severity of recent losses, forecasts of future profitability and the duration of statutory carryforward periods.
Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those temporary differences are expected to reverse. The
effect on deferred taxes from a change in tax rate is recognized through continuing operations in the period that includes the enactment date of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities
in the future.
A tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including
resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.
We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgement changes as a result of the evaluation of new information not
previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. These differences will be reflected as
increases or decreases to income tax expense and the effective tax rate in the period in which new information becomes available. We recognize interest and/or penalties related to all tax positions in income tax expense. To the extent that
accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made.
We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as
the timing and amount of deductions and allocation of taxable income to the various jurisdictions.
Stock-based compensation. The Company’s stock-based compensation relates primarily to restricted stock unit (“RSU”)
awards. Accounting guidance requires measurement and recognition of compensation expense at an amount equal to the grant date fair value. Compensation expense is recognized for service-based stock awards on a straight-line basis or ratably over
the requisite service period, based on the closing price of the Company’s stock on the date of grant. The service-based awards typically vest ratably over the requisite service period, provided that the participant is employed on the vesting
date. Compensation expense is reduced by actual forfeitures as they occur over the requisite service period of the awards.
Performance-based RSUs vest, if at all, upon the Company satisfying certain performance targets. The Company records compensation expense for awards with a
performance condition when it is probable that the condition will be achieved. If the Company determines it is not probable a performance condition will be achieved, no compensation expense is recognized. If the Company changes its assessment in
a subsequent period and concludes it is probable a performance condition will be achieved, the Company will recognize compensation expense ratably between the period of the change in assessment through the expected date of satisfying the
performance condition for vesting. If the Company subsequently assesses that it is no longer probable that a performance condition will be achieved, the accumulated expense that has been previously recognized will be reversed. The compensation
expense ultimately recognized, if any, related to performance-based awards will equal the grant date fair value based on the number of shares for which the performance condition has been satisfied. We issue shares from authorized shares upon the
lapsing of vesting restrictions on RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards. The payments of the employees’ tax liability for a portion of the vested shares are satisfied by withholding shares with a fair value equal to the tax liability.
Accounts Receivable - Trade and Expected Credit Losses. Our receivables primarily arise from the sale of merchandise
to customers that have applied for and been granted credit. Accounts receivable are stated at amounts due, net of an allowance for doubtful accounts. Accounts receivable are generally due within 30 days of invoicing. We estimate expected credit
losses based on factors such as the composition of accounts receivable, the age of the accounts, historical bad debt experience, and our evaluation of the financial condition and past collection history of each customer. Management believes that
the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2023, because the composition of the trade receivables at that date is consistent with that
used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time). Accordingly, the allowance for expected credit losses at March
31, 2023, December 31, 2022, and December 31, 2021 each totaled less than $0.1 million.
Other Intangible Assets. Our intangible assets and related accumulated amortization relate to trademarks and
copyrights that are definite-lived intangibles and are subject to amortization. The weighted average amortization period is 15 years
for trademarks and copyrights. Amortization expense related to other intangible assets of less than $0.01 million during the three
months ended March 31, 2023 and 2022 was recorded in operating expenses. Based on the current amount of intangible assets subject to amortization, we estimate amortization expense to be less than $0.01 million annually over the next five years.
Comprehensive Income. Comprehensive income includes net income and certain other items that are recorded directly to
stockholders’ equity. The Company’s only source of other comprehensive income is foreign currency translation adjustments, and those adjustments are presented net of tax.
Reclassifications. Certain amounts that were identified in the fourth quarter of 2022 as an out-of-period adjustment for unreconciled inventory
receipts for in-transit inventory and noted in our 2022 Form 10-K have been adjusted in our presentation of first quarter 2022 inventory and accounts payable in the operating activities section of the consolidated statement of cash flows. The
impact of this reclassification was approximately $0.4 million.
|
NOTES PAYABLE AND LONG-TERM DEBT |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
NOTES PAYABLE AND LONG-TERM DEBT [Abstract] | |
NOTES PAYABLE AND LONG-TERM DEBT |
2. NOTES PAYABLE AND LONG-TERM DEBT
During the second quarter of 2020, the Company borrowed $0.4
million from Banco Santander S.A. under the Institute of Official Credit Guarantee for Small and Medium-sized Enterprises in order to facilitate the continuation of employment and to attenuate the economic effects of the coronavirus (“COVID-19”)
virus. This loan was provided for by the Spanish government as part of a COVID-19 relief program, and on June 6, 2022, the Company repaid this loan in full.
On January 3, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. Under the Credit Agreement, the bank will provide the Company a credit facility
of up to $5,000,000 on standard terms and conditions, including affirmative and negative covenants set forth in the Credit Agreement.
As security for the credit facility, the Company has pledged as collateral certain of its assets, including the Company’s cash in deposit accounts, inventory and equipment. As of the date of this filing, no funds had been borrowed under this facility.
|
INCOME TAX |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
INCOME TAX [Abstract] | |
INCOME TAX |
3. INCOME TAX
Our effective tax rate for the three months ended March 31, 2023 and 2022 was 29.5% and 23.4%, respectively. Our effective tax rate differs from the federal statutory rate
primarily due to U.S. state income tax expense, expenses that are nondeductible for tax purposes, the change in our valuation allowance associated with our deferred tax assets, and differences in tax rates in foreign jurisdictions.
|
STOCK-BASED COMPENSATION |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION |
4. STOCK-BASED COMPENSATION
The Tandy Leather Factory, Inc. 2013 Restricted Stock Plan (the “2013 Plan”) was adopted by our Board of Directors in January 2013 and approved by our stockholders in
June 2013. The 2013 Plan initially reserved up to 300,000 shares for restricted stock and restricted stock unit (“RSU”) awards to our
executive officers, non-employee directors and other key employees. In June 2020, our stockholders approved an increase to the plan reserve to 800,000
shares of our common stock and extended the 2013 Plan to June 2023. As of March 31, 2023, there were 433,151 shares available for future
awards. Awards granted under the 2013 Plan may be service-based awards or performance-based awards, and may be subject to a graded vesting schedule with a minimum vesting period of four years, unless otherwise determined by the Compensation Committee of the Board of Directors that administers the plan.
In January 2022, we granted a total of 27,249 RSUs to the Company’s Chief
Executive Officer (“CEO”), which vested immediately. These shares were granted in lieu of $0.1 million in salary that the CEO declined
in 2020 during the period of COVID-related store closures and business uncertainty. The timing of the grant was conditioned on the Company becoming fully current in its periodic SEC filings, which occurred in December 2021.
In April 2022, we granted a total of 120,231 RSUs to certain key employees which
will vest over a three-year service period. And in June 2022, we granted a total of 14,000 RSUs to the Company’s Board of Directors which will vest over a four-year
service period.
In addition to grants under the Company’s 2013 Restricted Stock Plan, in October 2018, we granted a total of 644,000 RSUs to the Company’s CEO, of which (i) 460,000 are
service-based RSUs that vest ratably over a period of five years from the grant date based on our CEO’s continued employment in her role,
(ii) 92,000 are performance-based RSUs that will vest if the Company’s operating income exceeds $12 million dollars two fiscal years in a row, and (iii) 92,000 are
performance-based RSUs that will vest if the Company’s operating income exceeds $14 million dollars in one fiscal year.
A summary of the activity for non-vested restricted stock and RSU awards as of March 31, 2023 is presented below:
The Company’s stock-based compensation relates primarily to RSU awards. For these service-based awards, our stock-based compensation expense, included in operating
expenses, was $0.2 million and $0.3
million for the three months ended March 31, 2023 and 2022, respectively.
As of March 31, 2023, the Company has concluded it is not probable that the performance conditions related to performance-based RSUs granted to our CEO will be achieved,
and as a result no compensation expense related to performance-based RSUs has been recorded.
As of March 31, 2023, there was unrecognized compensation cost related to non-vested, service-based RSU awards of $0.8 million, which will be recognized in each of the following years (dollars in thousands):
We issue shares from authorized shares upon the lapsing of vesting restrictions on restricted stock and RSUs. For the three months ended March 31, 2023 and 2022, we
issued 17,518 and 47,423
shares, respectively, resulting from the vesting of RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards. The payment of the employees’ tax liability for a portion of the vested shares are satisfied by withholding shares with a fair value equal to the
tax liability.
|
EARNINGS PER SHARE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
5. EARNINGS PER SHARE
Basic earnings per share (“EPS”) are computed based on the weighted average number of common shares outstanding during the period. Diluted EPS includes additional
common shares that would have been outstanding if potential common shares with a dilutive effect, such as stock awards from the Company’s restricted stock plan, had been issued. Anti-dilutive securities represent potentially dilutive securities
which are excluded from the computation of diluted EPS as their impact would be anti-dilutive. Diluted EPS is computed using the treasury stock method.
The following table sets forth the computation of basic and diluted EPS for the three months ended March 31, 2023 and 2022:
|
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
6. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are periodically involved in litigation that arise in the ordinary course of business and operations. There are no such matters pending that we expect to have a
material impact on our financial position or operating results. Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred.
|
SHARE REPURCHASE PROGRAM AND SHARE REPURCHASES |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
SHARE REPURCHASE PROGRAM AND SHARE REPURCHASES [Abstract] | |
SHARE REPURCHASE PROGRAM AND SHARE REPURCHASES |
7. SHARE REPURCHASE PROGRAM AND SHARE REPURCHASES
On August 9, 2020, the Board of Directors approved a new program to repurchase up to $5.0 million of the Company’s common stock between August 9, 2020 and July 31, 2022. This program expired in July 2022. On August 8, 2022, the Board of Directors approved a new program to
repurchase up to $5.0 million of the Company’s common stock between that date and August 31, 2024. As of March 31, 2023, $4.9 million remained available for repurchase under this new program.
On April 11, 2022, we entered into an agreement with two
institutional shareholders of the Company to repurchase 359,500 shares of our common stock, par value $0.0024 in a private transaction. The purchase price was $5.00
per share for a total of $1.8 million. The closing of the repurchases took place on April 22, 2022, and these shares were subsequently
cancelled. Prior to the repurchase, the shares represented approximately 4.2% of our outstanding common stock. The direct share repurchase transactions
were separately authorized by our Board of Directors and did not reduce the remaining amount authorized to be repurchased under the plans described above.
|
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
Cash and cash equivalents. The Company considers investments with a maturity when purchased of three months or less
to be cash equivalents. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation and transactions |
Foreign currency translation and transactions. Foreign currency translation adjustments arise from activities of our
foreign subsidiaries. Results of operations are translated into U.S. dollars using the average exchange rates during the period, while assets and liabilities are translated using period-end exchange rates. Foreign currency translation
adjustments of assets and liabilities are recorded in stockholders’ equity and presented net of tax. Gains and losses resulting from foreign currency transactions are reported in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) under the caption “Foreign currency
translation adjustments, net of tax” for all periods presented.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition |
Revenue Recognition. Our revenue is earned from sales of merchandise and generally occurs via three methods: (1) at
the store counter, (2) via web sales, and (3) sales of product directly to commercial customers. We recognize revenue when we satisfy the performance obligation of transferring control of product merchandise over to a customer. At the store
counter, our performance obligation is met, and revenue is recognized when a sales transaction occurs with a customer. When merchandise is shipped to a customer, our performance obligation is met, and revenue is recognized when control passes to
the customer. Shipping terms are normally free on board (“FOB”) shipping point and control passes when the merchandise is shipped to the customer. Sales tax and comparable foreign tax are excluded from net sales, while shipping charged to our
customers is included in net sales. Net sales are based on the amount of consideration that we expect to receive, reduced by estimates for future merchandise returns.
The sales return allowance is based each year on historical customer return behavior and other known factors and reduces net sales and cost of sales, accordingly. The sales return allowance included in accrued expense and other
liabilities was $0.1 million, $0.1
million, and $0.2 million as of March 31, 2023, December 31, 2022, and January 1, 2022. The estimated value of merchandise expected
to be returned included in other current assets was $0.1 million as of March 31, 2023, December 31, 2022, and January 1, 2022.
We record a gift card liability for the unfulfilled performance obligation on the date we issue a gift card to a customer. We record revenue and reduce the gift card liability as the customer redeems the gift card. In addition, for gift
card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period, which is one year. As of March 31, 2023, December 31, 2022 and January1, 2022, our gift card liability, included in accrued expenses and other liabilities, was $0.2 million, $0.3 million and $0.4 million, respectively. We recognized gift card revenue of $0.2 million for the three months ended March 31, 2023 from the December 31, 2022 deferred revenue balance and $0.1
million for the three months ended March 31, 2022 from the January 1, 2022 deferred revenue balance.
For the three
months ended March 31, 2023 and 2022, we recognized $0.2 million in net sales associated with gift cards.
Disaggregated Revenue. In the following table, revenue for the three months ended March
31, 2023 and 2022 is disaggregated by geographic areas as follows:
Geographic sales information is based on the location of the customer. As a percentage of our consolidated net sales, excluding
Canada, our other international net sales were less than 2.0% for the three months ended March 31, 2023, and 2022 respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discounts |
Discounts. We offer a single retail price level, plus three volume-based levels for commercial customers. Discounts from those price levels are offered to business, military/first responders and employee customers. Such
discounts do not convey a material right to these customers since the discounted pricing they receive at the point of sale is not dependent upon any previous or subsequent purchases. As a result, sales are reported after deduction of discounts at
the point of sale. We do not pay slotting fees or make other payments to resellers.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
Operating expenses. Operating expenses
include all selling, general and administrative costs, including wages and benefits, rent and occupancy costs, depreciation, advertising, store operating expenses, outbound freight charges (to ship merchandise to customers), and corporate office
costs.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net of accumulated depreciation |
Property and equipment, net of accumulated depreciation. Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets, which are to ten years for equipment and machinery,
to fifteen years for furniture and fixtures, five years for vehicles, and forty years for buildings and related improvements. Leasehold
improvements are amortized over the lesser of the life of the lease or the useful life of the asset. Repairs and maintenance costs are expensed as incurred.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
Inventory. Inventory is stated at the lower of first-in, first-out (“FIFO”) cost or net realizable value, and FIFO
layers are maintained at the location level. Finished goods held for sale include the cost of merchandise purchases, the costs to bring the merchandise to our Texas distribution center, warehousing and handling expenditures, and distributing and
delivering merchandise to our stores. These costs include depreciation of long-lived assets utilized in acquiring, warehousing and distributing inventory. Manufacturing inventory including raw materials and work-in-process is valued on a
first‑in, first out basis using full absorption accounting which includes material, labor, and other applicable manufacturing overhead. Carrying values of inventory are analyzed and, to the extent that the cost of inventory exceeds the net
realizable value, provisions are made to reduce the carrying amount of the inventory.
We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light),
(ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to
be taken to adequately value our inventory at the lower of cost or net realizable value.
Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell,
differences in these estimates could result in ultimate valuations that differ from the recorded asset.
The majority of inventory purchases and commitments are made in U.S. dollars in order to limit the Company’s exposure to foreign currency fluctuations. Goods shipped
to us are recorded as inventory owned by us when the risk of loss shifts to us from the supplier.
Inventory is physically counted twice annually in the Texas distribution center. At the store level, inventory is physically counted each
quarter. Inventory is then adjusted in our accounting system to reflect actual count results.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
Leases. We lease certain real estate for our retail store locations and
warehouse equipment for our Texas distribution center under long-term lease agreements. We determine if an arrangement is a lease at inception and recognize right-of-use (“ROU”) assets and lease liabilities at commencement date based on the
present value of the lease payments over the lease term. We elected not to record leases with an initial term of 12 months or less on the balance sheet for all our asset classes.
For operating leases, the present value of our lease liabilities may include: (1) rental payments adjusted for inflation or market rates, and (2) lease terms with
options to renew the lease or options to purchase leased equipment, when it is reasonably certain we will exercise such an option. The exercise of lease renewal or purchase option is generally at our discretion. Payments based on a change in an
index or market rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. We discount lease payments using our incremental borrowing rate based on information available as of the
measurement date.
We recognize rent expense related to our operating leases assets on a straight-line basis over the lease term. Rent expense is recorded in operating expenses. The net adjustment between rent expense and the
actual cash paid during the fiscal year has been recorded as accrued expenses and other liabilities in the accompanying consolidated balance
For finance leases, our right-of-use assets are amortized on a straight-line basis over the earlier of the useful life of the right-of-use asset or the end of the
lease term with rent expense recorded to operating expenses. We adjust the lease liability to reflect lease payments made during the period and interest incurred on the lease liability using the effective interest method. The interest expense incurred is recorded in interest expense on the Condensed Consolidated
Statements of Operations and Comprehensive Income.
The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term. We also perform interim reviews of our lease
assets for impairment when evidence exists that the carrying value of an asset group, including a lease asset, may not be recoverable.
None of our lease agreements contain contingent rental payments, material residual value guarantees or material restrictive covenants. We have no sublease
agreements and no lease agreements in which we are named as a lessor.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long-Lived Assets |
Impairment of Long-Lived Assets. We evaluate long-lived assets on a quarterly basis to identify events or changes in
circumstances (“triggering events”) that indicate the carrying value of certain assets may not be recoverable. Upon the occurrence of a triggering event, ROU lease assets, property and equipment and definite-lived intangible assets are reviewed
for impairment and an impairment loss is recorded in the period in which it is determined that the carrying amount of the assets is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash
flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset
within the asset group. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be primarily at the individual store level. If the estimated undiscounted future net cash flows for a given
store are less than the carrying amount of the related store assets, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related assets. The impairment loss is then allocated across the asset
group’s major classifications which in this case are operating lease assets and property and equipment. Triggering events at the store level could include material declines in operational and financial performance or planned changes in the use of
assets, such as store relocation or store closure. This evaluation requires management to make judgements relating to future cash flows, growth rates and economic and market conditions. The fair value of an asset group is estimated using a
discounted cash flow valuation method.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
Fair Value of Financial Instruments. We measure fair value as an exit price, which is the amount that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, accounting standards establish a three-tier fair value hierarchy, which prioritizes the
inputs used in the valuation methodologies in measuring fair value:
Classification of the financial asset or liability within the hierarchy is
determined based on the lowest level input that is significant to the fair value measurement.
Our principal financial instruments held consist of accounts receivable - trade, accounts payable - trade, as of March 31, 2023 and December 31, 2022, all of which fall under Level 3 of the fair value hierarchy. As of March
31, 2023 and December 31, 2022, the carrying values of our financial instruments, included in our Consolidated Balance Sheets, approximated their fair values. There were no transfers into or out of Levels 1, 2 and 3 during the three months ended March 31, 2023 and 2022.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Income Taxes. Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current
tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable
income. To the extent it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized, a valuation allowance is recorded. Our evaluation regarding whether a valuation allowance is required or should be adjusted also
considers, among other things, the nature, frequency, and severity of recent losses, forecasts of future profitability and the duration of statutory carryforward periods.
Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those temporary differences are expected to reverse. The
effect on deferred taxes from a change in tax rate is recognized through continuing operations in the period that includes the enactment date of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities
in the future.
A tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including
resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.
We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgement changes as a result of the evaluation of new information not
previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. These differences will be reflected as
increases or decreases to income tax expense and the effective tax rate in the period in which new information becomes available. We recognize interest and/or penalties related to all tax positions in income tax expense. To the extent that
accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made.
We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as
the timing and amount of deductions and allocation of taxable income to the various jurisdictions.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
Stock-based compensation. The Company’s stock-based compensation relates primarily to restricted stock unit (“RSU”)
awards. Accounting guidance requires measurement and recognition of compensation expense at an amount equal to the grant date fair value. Compensation expense is recognized for service-based stock awards on a straight-line basis or ratably over
the requisite service period, based on the closing price of the Company’s stock on the date of grant. The service-based awards typically vest ratably over the requisite service period, provided that the participant is employed on the vesting
date. Compensation expense is reduced by actual forfeitures as they occur over the requisite service period of the awards.
Performance-based RSUs vest, if at all, upon the Company satisfying certain performance targets. The Company records compensation expense for awards with a
performance condition when it is probable that the condition will be achieved. If the Company determines it is not probable a performance condition will be achieved, no compensation expense is recognized. If the Company changes its assessment in
a subsequent period and concludes it is probable a performance condition will be achieved, the Company will recognize compensation expense ratably between the period of the change in assessment through the expected date of satisfying the
performance condition for vesting. If the Company subsequently assesses that it is no longer probable that a performance condition will be achieved, the accumulated expense that has been previously recognized will be reversed. The compensation
expense ultimately recognized, if any, related to performance-based awards will equal the grant date fair value based on the number of shares for which the performance condition has been satisfied. We issue shares from authorized shares upon the
lapsing of vesting restrictions on RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards. The payments of the employees’ tax liability for a portion of the vested shares are satisfied by withholding shares with a fair value equal to the tax liability.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable - Trade and Expected Credit Losses |
Accounts Receivable - Trade and Expected Credit Losses. Our receivables primarily arise from the sale of merchandise
to customers that have applied for and been granted credit. Accounts receivable are stated at amounts due, net of an allowance for doubtful accounts. Accounts receivable are generally due within 30 days of invoicing. We estimate expected credit
losses based on factors such as the composition of accounts receivable, the age of the accounts, historical bad debt experience, and our evaluation of the financial condition and past collection history of each customer. Management believes that
the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2023, because the composition of the trade receivables at that date is consistent with that
used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time). Accordingly, the allowance for expected credit losses at March
31, 2023, December 31, 2022, and December 31, 2021 each totaled less than $0.1 million.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangibles Assets |
Other Intangible Assets. Our intangible assets and related accumulated amortization relate to trademarks and
copyrights that are definite-lived intangibles and are subject to amortization. The weighted average amortization period is 15 years
for trademarks and copyrights. Amortization expense related to other intangible assets of less than $0.01 million during the three
months ended March 31, 2023 and 2022 was recorded in operating expenses. Based on the current amount of intangible assets subject to amortization, we estimate amortization expense to be less than $0.01 million annually over the next five years.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income |
Comprehensive Income. Comprehensive income includes net income and certain other items that are recorded directly to
stockholders’ equity. The Company’s only source of other comprehensive income is foreign currency translation adjustments, and those adjustments are presented net of tax.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications |
Reclassifications. Certain amounts that were identified in the fourth quarter of 2022 as an out-of-period adjustment for unreconciled inventory
receipts for in-transit inventory and noted in our 2022 Form 10-K have been adjusted in our presentation of first quarter 2022 inventory and accounts payable in the operating activities section of the consolidated statement of cash flows. The
impact of this reclassification was approximately $0.4 million.
|
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregated Revenue | In the following table, revenue for the three months ended March
31, 2023 and 2022 is disaggregated by geographic areas as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
Inventory is physically counted twice annually in the Texas distribution center. At the store level, inventory is physically counted each
quarter. Inventory is then adjusted in our accounting system to reflect actual count results.
|
STOCK-BASED COMPENSATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity of Non-vested Restricted Common Stock Awards |
A summary of the activity for non-vested restricted stock and RSU awards as of March 31, 2023 is presented below:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-vested, Service-based Awards |
As of March 31, 2023, there was unrecognized compensation cost related to non-vested, service-based RSU awards of $0.8 million, which will be recognized in each of the following years (dollars in thousands):
|
EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted EPS |
The following table sets forth the computation of basic and diluted EPS for the three months ended March 31, 2023 and 2022:
|
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES, Basis of Presentation (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
Segment
Store
| |
Description of Business [Abstract] | |
Number of stores | 102 |
Number of operating segments | Segment | 1 |
Number of reporting segments | Segment | 1 |
United States [Member] | |
Description of Business [Abstract] | |
Number of stores | 91 |
Canada [Member] | |
Description of Business [Abstract] | |
Number of stores | 10 |
Spain [Member] | |
Description of Business [Abstract] | |
Number of stores | 1 |
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES, Inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory on hand [Abstract] | ||
Finished goods held for sale | $ 33,129 | $ 35,234 |
Raw materials and work in process | 1,088 | 925 |
Inventory in transit | 1,656 | 2,068 |
Total inventory | $ 35,873 | $ 38,227 |
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES, Fair Value of Financial Instruments (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Fair Value of Financial Instruments [Abstract] | ||
Transfers into (out of) Level 3 | $ 0 | $ 0 |
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable and Expected Credit Losses (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|
Accounts Receivable and Expected Credit Losses [Abstract] | |||
Allowance for expected credit losses | $ 0.1 | $ 0.1 | $ 0.1 |
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES, Other Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Maximum [Member] | ||
Intangible Assets [Abstract] | ||
Amortization expenses | $ 10 | $ 10 |
Amortization expense, 2023 | 10 | |
Amortization expense, 2024 | 10 | |
Amortization expense, 2025 | 10 | |
Amortization expense, 2026 | 10 | |
Amortization expense, 2027 | $ 10 | |
Trademarks/Copyrights [Member] | ||
Intangible Assets [Abstract] | ||
Weighted average amortization period | 15 years |
BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES, Reclassifications (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Reclassifications [Abstract] | ||
Inventory | $ (2,356) | $ (823) |
Accounts Payable | $ (2,053) | (1,395) |
Reclassification Adjustment [Member] | ||
Reclassifications [Abstract] | ||
Inventory | 400 | |
Accounts Payable | $ 400 |
NOTES PAYABLE AND LONG-TERM DEBT (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Jun. 06, 2022 |
Mar. 31, 2023 |
Jun. 30, 2020 |
Jan. 03, 2023 |
|
JP Morgan Chase Bank, N.A. [Member] | ||||
Debt Instruments [Abstract] | ||||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | |||
Line of credit facility, funds borrowed | $ 0 | |||
Institute of Official Credit Guarantee for Small and Medium-sized Enterprises [Member] | ||||
Debt Instruments [Abstract] | ||||
Proceeds from long-term debt | $ 400,000 | |||
Payments on long-term debt | $ 400,000 |
INCOME TAX (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
INCOME TAX [Abstract] | ||
Effective tax rate | 29.50% | 23.40% |
STOCK-BASED COMPENSATION, Summary of Activity for Non-vested Restricted Stock Unit Awards (Details) - Restricted Stock and RSU [Member] shares in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Shares [Roll Forward] | |
Balance (in shares) | shares | 441 |
Granted (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Vested (in shares) | shares | (18) |
Balance (in shares) | shares | 423 |
Weighted Average Share Price [Abstract] | |
Balance (in dollars per share) | $ / shares | $ 6.46 |
Granted (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 4.85 |
Balance (in dollars per share) | $ / shares | $ 6.4 |
STOCK-BASED COMPENSATION, Non-vested Service-based Restricted Stock Unit Awards (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Service-Based Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 200,000 | $ 300,000 |
2023 | 503,000 | |
2024 | 217,000 | |
2025 | 81,000 | |
2026 | 7,000 | |
Unrecognized Expense | 808,000 | |
Performance-Based Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 0 | |
Restricted Stock and RSU [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares issued from vesting of restricted stock (in shares) | 17,518 | 47,423 |
EARNINGS PER SHARE (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Numerator [Abstract] | ||
Net income | $ 664 | $ 645 |
Denominator [Abstract] | ||
Basic weighted-average common shares outstanding (in shares) | 8,303,117 | 8,574,888 |
Diluted weighted-average common shares outstanding (in shares) | 8,356,166 | 8,580,182 |
Restricted Stock [Member] | Board of Directors [Member] | ||
Denominator [Abstract] | ||
Dilutive effect of service-based restricted stock awards granted under the Plan (in shares) | 47,050 | 0 |
Restricted Stock [Member] | Employees [Member] | ||
Denominator [Abstract] | ||
Dilutive effect of service-based restricted stock awards granted under the Plan (in shares) | 0 | 5,294 |
SHARE REPURCHASE PROGRAM AND SHARE REPURCHASES (Details) $ / shares in Units, $ in Millions |
Apr. 11, 2022
USD ($)
InstitutionalShareholder
$ / shares
shares
|
Mar. 31, 2023
USD ($)
$ / shares
|
Dec. 31, 2022
$ / shares
|
Aug. 08, 2022
USD ($)
|
Apr. 10, 2022 |
Aug. 09, 2020
USD ($)
|
---|---|---|---|---|---|---|
Share Repurchase Program and Share Repurchases [Abstract] | ||||||
Remaining repurchase of common stock | $ | $ 4.9 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0024 | $ 0.0024 | ||||
Maximum [Member] | ||||||
Share Repurchase Program and Share Repurchases [Abstract] | ||||||
Repurchase of common stock | $ | $ 5.0 | $ 5.0 | ||||
Share Repurchase Program [Member] | ||||||
Share Repurchase Program and Share Repurchases [Abstract] | ||||||
Number of institutional shareholders | InstitutionalShareholder | 2 | |||||
Repurchase of common stock (in shares) | shares | 359,500 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0024 | |||||
Purchase price per share (in dollars per share) | $ / shares | $ 5 | |||||
Purchase price | $ | $ 1.8 | |||||
Percentage of outstanding common stock | 4.20% |
>")&,OP:^'IQU>@WB"]F/ WUDUQ_%%N@CM'S9)AD
MOV2=/]MN-XB7)EI&VV H013$^7_^NJV(O0 M0>P;0![%T#=B@!W&^!FH'G)
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MF"!:NB"*>Y ZQ 5+P_L-!)[CRY5![2K$>^+%Z'6!\H[[[3W8?&M\
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M)\W+9'__X=F3I\]^S-X19E0G/(,_H7,[ 4[4HO\
M3<"OS)Q"OY= GN7]-_#Z>R?[ :__TT["7_.5=89JXN]C_G9P@^-POD_.;<,*
MG,;4"!;- \:S]^]ZH^SB#;*#/=G!6^@_F9$W,8XS')["D4 LF!4%(#-*J+6%
M!JEC*V80/KQ_-\[S[.)Z>1=6O8N/X,\+73>M0QZ:@0-UEJL0-J'\:<\>T% W
M@VKK%6'ITBO4)!50+=!@L(XI3M: M\:_O#[9%9J?PI60 9RL@E"%;#GI,,Z%
M[V$FHY=@KF*.VKZ5'"HR#"M$]<*"**'1#I433'Y'9"-!YR5YS]23CTCO[,+27*(R$H6GW"DTDJF$V/".
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M2ZI%&)PEV3"#D__%'-:-U$^(/U@Y@6&2_SJ(=E7TWT(S'"6]TG#+4;+6X2[WA=HJUUUX^]/][\*\NR6?Q;M_#:J1M5 6)):DFIV>#6,P
MW?W=;9QNPIVYTHYNX+"LZ)<'C1>@[Z6F9MUNO(']3]3L7U!+ P04 " !G
MB*]6"%\JL]<" !-!@ &0 'AL+W=OM!L/\9.7V"WOKC8V81O)+T2S:HUK/3KM6=%,TQT.W8E
M0:PAF)KB%":X?QAF-_,&Q ?NQ =VBX^-F&OF:,6*C'+Q
N6?,/5>=-US45
M?UP9N&A+#^ ^_=PC?*$%XB^77_T_4$L#!!0 ( &>(KU9Y6=-E.00 !0)
M 8 >&PO=V]R:W-H965T