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Item 1. Financial Statements

2024-11-12 compared with 2024-08-14 · 168 added, 91 removed, 201 unchanged (56% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2024 (UNAUDITED) AND MARCH 31, 2024

SEPTEMBER 29, 2024 (UNAUDITED) AND MARCH 31, 2024

(amounts in thousands, except share and per share amounts)

June 30, 2024

September 29, 2024

March 31, 2024

2 unchanged sentences

$ 1,982 $ 829

Accounts receivable (net of allowances of $ 1,631 at June 30, 2024 and $ 1,486 at March 31, 2024):

Accounts receivable (net of allowances of $ 1,444 at September 29, 2024 and $ 1,486 at March 31, 2024):

Due from factor

32 unchanged sentences

Other accrued liabilities

Current maturities of long-term debt

Total current liabilities

9 unchanged sentences

Common stock - $ 0.01 par value per share;

Authorized 40,000,000 shares at June 30, 2024 and March 31, 2024;

Issued 13,208,226 shares at June 30, 2024 and March 31, 2024

Authorized 40,000,000 shares at September 29, 2024 and March 31, 2024;

Issued 13,299,402 shares at September 29, 2024 and 13,208,226 shares at March 31, 2024

Additional paid-in capital

58,279 57,888

Treasury stock - at cost - 2,897,507 shares at June 30, 2024 and March 31, 2024

Treasury stock - at cost - 2,905,661 shares at September 29, 2024 and, 2,897,507 at March 31, 2024

( 15,860 ) ( 15,821 )

7 unchanged sentences

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE-MONTH PERIODS ENDED JUNE 30, 2024 AND JULY 2, 2023

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

(amounts in thousands, except per share amounts)

Three-Month Periods Ended

June 30, 2024

$ 16,212 $ 17,123

Six-Month Periods Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Cost of products sold

12,246 12,381

Marketing and administrative expenses

(Loss) income from operations

Income from operations

Other (expense) income:

Interest expense - net of interest income

( 101 ) ( 188 )

Other income (expense) - net

(Loss) income before income tax expense

Income tax (benefit) expense

Net (loss) income

$ ( 322 ) $ 366

Income before income tax expense

Income tax expense

Weighted average shares outstanding:

10,311 10,154

Effect of dilutive securities

10,311 10,163

Basic (loss) earnings per share

$ ( 0.03 ) $ 0.04

Diluted (loss) earnings per share

$ ( 0.03 ) $ 0.04

Earnings per share - basic and diluted

See notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

THREE-MONTH PERIODS ENDED JUNE 30, 2024 AND JULY 2, 2023

THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

Common Shares

Treasury Shares

Number of Shares

Paid-in Capital

Retained Earnings

Shareholders' Equity

Shareholders'

(Dollar amounts in thousands)

Three-Month Periods

Balances - July 2, 2023

13,051,814 $ 131 ( 2,897,507 ) $ ( 15,821 ) $ 57,317 $ 7,332 $ 48,959

Issuance of shares

86,412 - - - - - -

Stock-based compensation

- - - - 192 - 192

Acquisition of treasury stock

- - - - - - -

- - - - - 1,822 1,822

Dividend declared on common stock - $ 0.08 per share

- - - - - ( 820 ) ( 820 )

Balances - October 1, 2023

13,138,226 $ 131 ( 2,897,507 ) $ ( 15,821 ) $ 57,509 $ 8,334 $ 50,153

Balances - June 30, 2024

13,208,226 $ 132 ( 2,897,507 ) $ ( 15,821 ) $ 58,090 $ 8,255 $ 50,656

Issuance of shares

91,176 - - - - - -

Stock-based compensation

- - - - 189 - 189

Acquisition of treasury stock

- - ( 8,154 ) ( 39 ) - - ( 39 )

- - - - - 860 860

Dividend declared on common stock - $ 0.08 per share

- - - - - ( 831 ) ( 831 )

Balances - September 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,279 $ 8,284 $ 50,835

Six-Month Periods

Balances - April 2, 2023

13,051,814 $ 131 ( 2,897,507 ) $ ( 15,821 ) $ 57,126 $ 7,778 $ 49,214

Issuance of shares

86,412 - - - - - -

Stock-based compensation

- - - - 383 - 383

Acquisition of treasury stock

- - - - - - -

- - - - - 2,188 2,188

Dividend declared on common stock - $ 0.16 per share

- - - - - ( 1,632 ) ( 1,632 )

Balances - July 2, 2023

Balances - October 1, 2023

13,138,226 $ 131 ( 2,897,507 ) $ ( 15,821 ) $ 57,509 $ 8,334 $ 50,153

1 unchanged sentence

13,208,226 $ 132 ( 2,897,507 ) $ ( 15,821 ) $ 57,888 $ 9,402 $ 51,601

Issuance of shares

91,176 - - - - - -

Stock-based compensation

- - - - 391 - 391

Acquisition of treasury stock

- - ( 8,154 ) ( 39 ) - - ( 39 )

- - - - - 538 538

Dividends declared on common stock - $ 0.16 per share

- - - - - ( 1,656 ) ( 1,656 )

Balances - June 30, 2024

Balances - September 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,279 $ 8,284 $ 50,835

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE-MONTH PERIODS ENDED JUNE 30, 2024 AND JULY 2, 2023

SIX-MONTH PERIODS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

(amounts in thousands)

Three-Month Periods Ended

June 30, 2024

Six-Month Periods Ended

September 29, 2024

October 1, 2023

Operating activities:

Net (loss) income

$ ( 322 ) $ 366

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property, plant and equipment

2 unchanged sentences

Deferred income taxes

( 304 ) ( 324 )

Reserve for unrecognized tax liabilities

2 unchanged sentences

Accounts receivable

( 901 ) ( 3,513 )

Prepaid expenses

Lease liabilities

( 1,103 ) ( 424 )

Accounts payable

Accrued liabilities

( 159 ) ( 210 )

Net cash provided by operating activities

Investing activities:

Cash used in investing activities:

Capital expenditures for property, plant and equipment

( 284 ) ( 355 )

Payment to acquire Baby Boom

Aggregate adjustment from the Manhattan and MTE acquisition

Net cash used in investing activities

( 284 ) ( 355 )

Financing activities:

Repayments under revolving line of credit

( 21,329 ) ( 20,427 )

Borrowings under revolving line of credit

14,683 14,262

Payments on Term Loan

Proceeds from Term Loan

Shares withheld to pay taxes on stock compensation

Dividends paid

( 809 ) ( 806 )

Net cash used in financing activities

( 7,455 ) ( 6,971 )

Net increase (decrease) in cash and cash equivalents

Net cash provided (used in) financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$ 1,103 $ 765

Supplemental cash flow information:

4 unchanged sentences

Dividends declared but unpaid

( 858 ) ( 821 )

See notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 2024 AND JULY 2, 2023

FOR THE THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

Note 1 – Interim Financial Statements

4 unchanged sentences

References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “FASB ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by nongovernmental entities.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements contained herein include all adjustments necessary to present fairly the financial position of the Company as of June 30, 2024 and the results of its operations and cash flows for the periods presented.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements contained herein include all adjustments necessary to present fairly the financial position of the Company as of September 29, 2024 and the results of its operations and cash flows for the periods presented.

Such adjustments include normal, recurring accruals, as well as the elimination of all significant intercompany balances and transactions.

Operating results for the three -months ended June 30, 2024 are not necessarily indicative of the results that may be expected by the Company for its fiscal year ending March 30, 2025.

Operating results for the three - and six -month periods ended September 29, 2024 are not necessarily indicative of the results that may be expected by the Company for its fiscal year ending March 30, 2025.

For further information, refer to the Company’s consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024, included in the Company’s Annual Report on Form 10 -K filed with the United States Securities and Exchange Commission (the “SEC”).

8 unchanged sentences

2023 - 07 retrospectively to disclosures of all prior periods presented.

The Company has adopted ASU No.

2023 - 07 effective as of April 1, 2024 and is evaluating the guidance of the ASU against its existing disclosures related to segment reporting

The Company is in the process of adopting ASU No.

2023 - 07 effective as of April 1, 2024.

In December 2023, the FASB issued ASU No.

4 unchanged sentences

2023 - 09 against its existing disclosures related to income tax disclosures.

The Company has determined that all other ASUs issued which had become effective as of June 30, 2024, or which will become effective at some future date, are not expected to have a material impact on the Company’s consolidated financial statements.

Earnings (Loss) Per Share:

Due to the net loss incurred by the Company in the three -month period ended June 30, 2024, diluted shares used in the calculation of the diluted loss per share represented basic shares because the inclusion of the potentially dilutive effect of the exercisable stock options would have resulted in anti-dilution.

The Company has determined that all other ASUs issued which had become effective as of September 29, 2024, or which will become effective at some future date, are not expected to have a material impact on the Company’s consolidated financial statements.

Note 2 – Advertising Costs

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and amounted to $ 127,000 and $ 192,000 for the three months ended June 30, 2024 and July 2, 2023, respectively.

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income and amounted to $ 133,000 and $ 172,000 for the three months ended September 29, 2024 and October 1, 2023, respectively, and amounted to $ 260,000 and $ 364,000 for the six months ended September 29, 2024 and October 1, 2023, respectively.

Note 3 – Segment and Related Information

The Company operates primarily in one principal segment, infant, toddler and juvenile products.

These products consist of infant and toddler bedding, blankets, accessories, bibs, toys and disposable products.

Net sales of bedding, blankets and accessories and net sales of bibs, toys and disposable products for the three months ended June 30, 2024 and July 2, 2023 are as follows (in thousands):

These products consist of infant and toddler bedding, diaper bags, bibs, toys and disposable products.

Net sales of bedding and diaper bags and net sales of bibs, toys and disposable products for the three - and six - month periods ended September 29, 2024 and October 1, 2023 are as follows (in thousands):

Three-Month Periods Ended

June 30, 2024

Bedding, blankets and accessories

Six-Month Periods Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Bedding and diaper bags

$ 11,996 $ 9,776 $ 18,247 $ 15,349

Bibs, toys and disposable products

12,464 14,353 22,425 25,903

Total net sales

3 unchanged sentences

These royalty amounts are accrued based upon historical sales rates adjusted for current sales trends by customers.

Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of operations and amounted to $ 1.1 million and $ 977,000 for the three months ended June 30, 2024 and July 2, 2023, respectively.

Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of income and amounted to $ 1.7 million and $ 1.5 million for the three months ended September 29, 2024 and October 1, 2023, respectively, and amounted to $ 2.8 and $ 2.5 million for the six months ended September 29, 2024 and October 1, 2023, respectively.

Note 5 – Income Taxes

2 unchanged sentences

The statute of limitations varies by jurisdiction;

tax years open to examination or other adjustment as of June 30, 2024 were the fiscal years ended March 31, 2024, April 2, 2023, April 3, 2022, March 28, 2021, and March 29, 2020.

tax years open to examination or other adjustment as of September 29, 2024 were the fiscal years ended March 31, 2024, April 2, 2023, April 3, 2022, March 28, 2021, and March 29, 2020.

Although management believes that the calculations and positions taken on its filed income tax returns are reasonable and justifiable, the outcome of an examination could result in an adjustment to the position that the Company took on such income tax returns.

3 unchanged sentences

Note 6 – Inventories

As of June 30, 2024 and March 31, 2024, the Company’s balances of inventory were $ 30.6 million and $ 29.7 million, respectively, nearly all of which were finished goods.

As of September 29, 2024 and March 31, 2024, the Company’s balances of inventory were $ 33.4 million and $ 29.7 million, respectively, nearly all of which were finished goods.

Note 7 – Acquisition

On July 19, 2024 ( the “Closing Date”), NoJo Baby & Kids, Inc.

(“NoJo”), a wholly-owned subsidiary of the Company acquired substantially all of the assets, and assumed certain specified liabilities, of Baby Boom Consumer Products, Inc.

(“Baby Boom”) (“the Acquisition”), for a purchase price of $ 18.0 million in cash, subject to a dollar-for-dollar adjustment to the extent that the working capital at closing was greater or less than the target working capital of approximately $ 6.5 million.

The Acquisition was funded by the Company using the proceeds of an $ 8.0 million term loan from The CIT Group/Commercial Services, Inc.

(“CIT”) and additional borrowings under the Company’s revolving line of credit with CIT.

The Acquisition has been accounted for in accordance with FASB ASC Topic 805, Business Combinations .

The Company is currently determining the allocation of the acquisition cost with the assistance of an independent third party.

The identifiable assets acquired were recorded at their estimated fair value, which has been preliminarily determined based on available information and the use of multiple valuation approaches.

The estimated useful lives of the identifiable intangible assets acquired were determined based upon the remaining time that these assets are expected to directly or indirectly contribute to the future cash flow of the Company.

Certain data necessary to complete the acquisition cost allocation is not yet available, including the final appraisals and valuations of the assets acquired and liabilities assumed.

The acquisition cost paid on the Closing Date amounted to $ 16.4 million, which included an estimate for the net working capital adjustment.

The following table represents the Company’s preliminary allocation of the acquisition cost (in thousands) to the identifiable assets acquired and the liabilities assumed based on their respective estimated fair values as of the Closing Date.

The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

Tangible assets:

Accounts receivable

Prepaid expenses and other current assets

Total tangible assets

Amortizable intangible assets:

Licensing relationships

Total amortizable intangible assets

Total acquired assets

Liabilities assumed:

Accounts payable

Total liabilities assumed

Net acquisition cost

The Company expects to complete the acquisition cost allocation during the 12 -month period following the Closing Date, during which time the values of the assets acquired and liabilities assumed, including the goodwill, may need to be revised as appropriate.

Based upon the preliminary allocation of the acquisition cost, the Company recognized $ 5.3 million of goodwill as of the Closing Date, the entirety of which was assigned to the reporting unit of the Company that produces and markets infant and toddler bedding and diaper bags, and the entirety of which is expected to be deductible for income tax purposes.

The goodwill recognized primarily consists of synergies expected from combining operations of Baby Boom and the Company and intangible assets acquired that do not qualify for separate recognition.

The assets acquired in the Acquisition generated net sales of $ 3.4 million of bedding and diaper bag products for the three -month period ended September 29, 2024.

Amortization expense associated with the acquired amortizable intangible assets was $ 65,000 during the three and six months ended September 29, 2024, respectively, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income.

Amortization is computed using the straight-line method over the estimated useful lives of the assets, which are 15 years for the tradename, 14 years for the customer and licensing relationships and 14 years on a weighted-average basis for the grouping taken together.

The Company has determined, on a pro forma basis, that the combined net sales and the combined net income of the Company and Baby Boom, giving effect to the Acquisition as if it had been completed on April 3, 2023, would have been $ 25.6 million and $ 1.1 million, respectively, for the three -month period ended September 29, 2024, and would have been $ 45.7 million and $ 1.3 million, respectively, for the six -month period ended September 29, 2024.

The combined net sales and the combined net income would have been $ 29.7 million and $ 1.8 million, respectively, for the three -month period ended October 1, 2023, and would have been $ 52.4 million and $ 2.2 million, respectively, for the six -month period ended October 1, 2023.

The combined net income includes adjustments related to the amortization of the amortizable intangible assets acquired and estimates of the interest expense and income tax expense or benefit that would have been incurred, but otherwise do not reflect the costs of any integration activities or benefits that may result from the realization of future cost savings from operating efficiencies, or any revenue, tax or other synergies that may result from the Acquisition.

Note 8 – Financing Arrangements

Factoring Agreements:

To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to The CIT Group/Commercial Services, Inc.

("CIT"), a subsidiary of First Citizens Bank, pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below.

To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to CIT, a subsidiary of First Citizens Bank, pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below.

Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT.

3 unchanged sentences

If such a termination or limitation occurs, then the Company either assumes (and may seek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations, amounted to $ 74,000 and $ 67,000 for the three -month period ended June 30, 2024 and July 2, 2023, respectively.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $ 94,000 and $ 92,000 for the three -month periods ended September 29, 2024 and October 1, 2023, respectively, and amounted to $ 168,000 and $ 159,000 for the six -month periods ended September 29, 2024 and October 1, 2023, respectively.

Credit Facility:

The Company’s credit facility as of June 30, 2024 consisted of a revolving line of credit under a financing agreement with CIT of up to $ 35.0 million, which includes a $ 1.5 million sub-limit for letters of credit, bearing interest at prime minus 0.5 % or the Secured Overnight Financing Rate (“SOFR”) plus 1.6 %, and is secured by a first lien on all assets of the Company.

At June 30, 2024, the Company had elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 6.9 %.

The Company’s credit facility, as most recently amended on July 19, 2024, includes a revolving line of credit and a term loan of $ 8.0 million under a financing agreement with CIT.

The credit facility includes a revolving line of credit of up to $ 40.0 million, which includes a $ 1.5 million sub-limit for letters of credit, bearing interest at prime minus 0.5 % or the Secured Overnight Financing Rate (“SOFR”) plus 1.6 %, and is secured by a first lien on all assets of the Company.

At September 29, 2024, the Company had elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 6.8 %.

The financing agreement also provides for the payment by CIT to the Company of interest at prime as of the beginning of the calendar month minus 2.0 % on daily negative balances, if any, held at CIT.

The financing agreement was scheduled to mature on July 11, 2028, but was amended on July 19, 2024 to extend the maturity date to July 19, 2029 and to increase the borrowing capacity on revolving line of credit to $ 40.0 million.

At June 30, 2024 and March 31, 2024, the balances on the revolving line of credit were $ 1.5 million and $ 8.1 million, respectively, there was no letter of credit outstanding and $ 17.6 million and $ 19.2 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

At September 29, 2024 and March 31, 2024, the balances on the revolving line of credit were $ 13.1 million and $ 8.1 million, respectively, there was no letter of credit outstanding and $ 13.6 million and $ 19.2 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

The financing agreement contains usual and customary covenants for agreements of that type, including limitations on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions, transactions with affiliates, and changes in or amendments to the organizational documents for the Company and its subsidiaries.

The Company believes it was in compliance with these covenants as of June 30, 2024.

The Company believes it was in compliance with these covenants as of September 29, 2024.

The Company’s credit facility as of September 29, 2024 also includes an $ 8.0 million term loan, issued July 19, 2024, which is payable by the Company in 48 equal monthly installments and bears interest at SOFR plus 2.25 % ( 7.4 % at September 29, 2024).

At September 29, 2024 and March 31, 2024, the balances on the term loan were $ 7.7 million and $ 0 , respectively.

Credit Concentration:

The Company’s accounts receivable at June 30, 2024 amounted to $ 15.8 million, net of allowances of $ 1.6 million.

The Company’s accounts receivable at September 29, 2024 amounted to $ 24.4 million, net of allowances of $ 1.4 million.

Of this amount, $ 17.2 million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring agreements.

4 unchanged sentences

For the purpose of presenting and measuring for the impairment of goodwill, the Company has two reporting units:

one that produces and markets infant and toddler bedding, blankets and accessories and another that produces and markets infant and toddler bibs, toys and disposable products.

The Company’s reporting units have recognized goodwill as of June 30, 2024 and March 31, 2024 of $ 30.8 million, which is reflected in the accompanying condensed consolidated balance sheets net of accumulated impairment charges of $ 22.9 million, for a net reported balance of $ 7.9 million.

one that produces and markets infant and toddler bedding and diaper bags and another that produces and markets infant and toddler bibs, toys and disposable products.

The Company measures for impairment the goodwill within its reporting units annually as of the first day of the Company’s fiscal year.

5 unchanged sentences

Based on this assessment, the Company concluded that the goodwill for each of the Company’s reporting units was not considered at risk of impairment.

Note 10 – Concentrations

Product Sourcing:

Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China.

The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties.

Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products may be readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.

The Company’s management and quality assurance personnel visit the third -party facilities regularly to monitor and audit product quality and to ensure compliance with labor requirements and social and environmental standards.

In addition, the Company closely monitors the currency exchange rate.

The impact of future fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty.

The Company maintains foreign representative offices located in Shanghai and Shenzhen, China, which are responsible for the coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social compliance and quality.

No supplier represented at least 10% of the Company’s total suppliers.

Licensed Products:

Certain products are manufactured and sold pursuant to licensing agreements for trademarks.

Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements.

The licensing agreements are generally for an initial term of one to three years and may or may not be subject to renewal or extension.

Sales of licensed products represented 40 % of the Company’s gross sales in fiscal year 2024, which included 24 % of sales under the Company’s license agreements with affiliated companies of The Walt Disney Company, which expire as set forth below:

License Agreement

Infant Bedding

December 31, 2024

Infant Feeding and Bath

December 31, 2025

Toddler Bedding

December 31, 2024

STAR WARS Toddler Bedding

December 31, 2024

STAR WARS - Lego Plush

December 31, 2025

The Company’s customers consist principally of mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs.

The Company does not enter into long-term or other purchase agreements with its customers.

The table below sets forth those customers that represented at least 10% of the Company’s gross sales in fiscal years 2024 and 2023.

Amazon.com, Inc.

Note 11 – Subsequent Events

On July 19, 2024 ( the “Closing Date”), NoJo Baby & Kids, Inc.

("NoJo"), a wholly-owned subsidiary of the Company, acquired substantially all of the assets, and assumed certain specified liabilities, of Baby Boom Consumer Products, Inc.

(the “Baby Boom Acquisition”), for a purchase price of $ 18.0 million, subject to adjustments to the extent that actual net working capital as of the Closing Date differs from target net working capital of $ 6.5 million.

The purchase price was funded by the Company using proceeds of an $ 8.0 million term loan from CIT and additional borrowings under the Company’s revolving line of credit.

The Company and CIT also on July 19, 2024 amended the financing agreement to (i) provide for the $ 8.0 million term loan mentioned above, which is payable by the Company in 48 equal monthly installments and which bears interest at SOFR plus 2.25%;

(ii) extend the maturity date from July 11, 2028 to July 19, 2029;

and (iii) increase the borrowing capacity on the revolving line of credit from $ 35.0 million to $ 40.0 million.

The Company is in the process of obtaining all relevant information relating to the Baby Boom Acquisition.

As a result, the Company is not able to provide certain disclosures required by FASB ASC Topic 805.

The initial accounting for the acquisition was incomplete at the time of the financial statements.

The Company has evaluated all other events which have occurred between June 30, 2024 and the date that the accompanying unaudited condensed consolidated financial statements were issued, and has determined that there are no other material subsequent events that require disclosure.

The Company has evaluated all other events which have occurred between September 29, 2024 and the date that the accompanying unaudited condensed consolidated financial statements were issued, and has determined that there are no other material subsequent events that require disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements