What changed in this filing

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Item 1. Financial Statements

2025-02-12 compared with 2024-11-12 · 110 added, 64 removed, 305 unchanged (36% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

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

September 29, 2024

December 29, 2024

March 31, 2024

2 unchanged sentences

$ 1,053 $ 829

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

Accounts receivable (net of allowances of $ 1,266 at December 29, 2024 and $ 1,486 at March 31, 2024):

Due from factor

38 unchanged sentences

Operating lease liabilities, noncurrent

10,903 12,138

Reserve for unrecognized tax liabilities

3 unchanged sentences

Common stock - $ 0.01 par value per share;

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

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

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

Additional paid-in capital

58,459 57,888

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

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

( 15,860 ) ( 15,821 )

8 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

THREE- AND NINE-MONTH PERIODS ENDED DECEMBER 29, 2024 AND DECEMBER 31, 2023

(amounts in thousands, except per share amounts)

Three-Month Periods Ended

Six-Month Periods Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Nine-Month Periods Ended

December 29, 2024

December 31, 2023

December 29, 2024

December 31, 2023

$ 23,351 $ 23,801 $ 64,023 $ 65,053

Cost of products sold

17,253 17,367 47,002 47,281

6,098 6,434 17,021 17,772

Marketing and administrative expenses

4,397 4,107 14,108 12,189

Income from operations

1,701 2,327 2,913 5,583

Other (expense) income:

Interest expense - net of interest income

( 391 ) ( 208 ) ( 840 ) ( 560 )

Gain (loss) on sale or disposition of property, plant and equipment

( 2 ) 58 ( 2 ) 58

( 33 ) 17 ( 55 ) ( 9 )

Income before income tax expense

1,275 2,194 2,016 5,072

Income tax expense

382 492 585 1,182

$ 893 $ 1,702 $ 1,431 $ 3,890

Weighted average shares outstanding:

10,394 10,241 10,353 10,198

Effect of dilutive securities

10,394 10,241 10,354 10,200

Earnings per share - basic and diluted

$ 0.09 $ 0.17 $ 0.14 $ 0.38

See notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

THREE- AND NINE-MONTH PERIODS ENDED DECEMBER 29, 2024 AND DECEMBER 31, 2023

Common Shares

3 unchanged sentences

Three-Month Periods

Balances - July 2, 2023

Balances - October 1, 2023

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

8 unchanged sentences

- - - - - ( 820 ) ( 820 )

Balances - October 1, 2023

Balances - December 31, 2023

13,138,226 $ 131 ( 2,897,507 ) $ ( 15,821 ) $ 57,699 $ 9,216 $ 51,225

Balances - June 30, 2024

Balances - September 29, 2024

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

8 unchanged sentences

- - - - - ( 832 ) ( 832 )

Balances - September 29, 2024

Balances - December 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,459 $ 8,345 $ 51,076

Six-Month Periods

Nine-Month Periods

Balances - April 2, 2023

9 unchanged sentences

- - - - - ( 2,452 ) ( 2,452 )

Balances - October 1, 2023

Balances - December 31, 2023

13,138,226 $ 131 ( 2,897,507 ) $ ( 15,821 ) $ 57,699 $ 9,216 $ 51,225

2 unchanged sentences

Issuance of shares

91,176 - - - - - -

Stock-based compensation

5 unchanged sentences

- - - - - ( 2,488 ) ( 2,488 )

Balances - September 29, 2024

Balances - December 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,459 $ 8,345 $ 51,076

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

NINE-MONTH PERIODS ENDED DECEMBER 29, 2024 AND DECEMBER 31, 2023

(amounts in thousands)

Six-Month Periods Ended

September 29, 2024

October 1, 2023

Nine-Month Periods Ended

December 29, 2024

December 31, 2023

Operating activities:

$ 1,431 $ 3,890

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

3 unchanged sentences

Deferred income taxes

( 485 ) ( 1,106 )

(Gain) loss on sale or disposition of property, plant and equipment

Reserve for unrecognized tax liabilities

2 unchanged sentences

Accounts receivable

( 678 ) ( 1,112 )

Prepaid expenses

( 671 ) ( 1,130 )

( 52 ) ( 14 )

Lease liabilities

( 3,330 ) ( 2,497 )

Accounts payable

3,528 ( 113 )

Accrued liabilities

2 unchanged sentences

Capital expenditures for property, plant and equipment

( 659 ) ( 662 )

Proceeds from sale of property, plant and equipment

Payment to acquire Baby Boom

1 unchanged sentence

Net cash used in investing activities

( 17,014 ) ( 69 )

Financing activities:

Repayments under revolving line of credit

( 59,774 ) ( 55,099 )

Borrowings under revolving line of credit

65,387 52,440

Payments on term loan

Proceeds from Term Loan

Proceeds from term loan, net of issuance cost

Shares withheld to pay taxes on stock compensation

Dividends paid

Net cash provided (used in) financing activities

Net increase in cash and cash equivalents

( 2,461 ) ( 2,433 )

Net cash provided by (used in) financing activities

10,244 ( 5,092 )

Net increase (decrease) in cash and cash equivalents

224 ( 1,059 )

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$ 1,053 $ 683

Supplemental cash flow information:

Income taxes paid

$ 629 $ 1,628

Interest paid

2 unchanged sentences

Dividends declared but unpaid

( 869 ) ( 833 )

See notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

FOR THE THREE- AND NINE-MONTH PERIODS ENDED DECEMBER 29, 2024 AND DECEMBER 31, 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 September 29, 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 December 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 - 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.

Operating results for the three - and nine -month periods ended December 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 is in the process of adopting ASU No.

2023 - 07 effective as of April 1, 2024.

The Company is evaluating the guidance of ASU No.

2023 - 07 against its existing disclosures related to segment reporting.

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 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.

In November 2024, the FASB issued ASU No.

2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ) - Disaggregation of Income Statement Expenses, the objective of which is to enhance the transparency and usefulness of financial statements by requiring public business entities to provide more detailed disclosures about their expenses.

The amendments in ASU No.

2024 - 03 are required to be adopted for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted.

The Company is evaluating the guidance of the ASU No.

2024 - 03 against its existing disclosures related to income statement expenses.

The Company has determined that all other ASUs issued which had become effective as of December 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 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.

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income and amounted to $ 151,000 and $ 267,000 for the three months ended December 29, 2024 and December 31, 2023, respectively, and amounted to $ 411,000 and $ 631,000 for the nine months ended December 29, 2024 and December 31, 2023, respectively.

Note 3 – Segment and Related Information

1 unchanged sentence

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):

Net sales of bedding and diaper bags and net sales of bibs, toys and disposable products for the three - and nine - month periods ended December 29, 2024 and December 31, 2023 are as follows (in thousands):

Three-Month Periods Ended

Six-Month Periods Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Nine-Month Periods Ended

December 29, 2024

December 31, 2023

December 29, 2024

December 31, 2023

Bedding and diaper bags

7 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 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.

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 $ 1.3 million for the three months ended December 29, 2024 and December 31, 2023, respectively, and amounted to $ 4.5 and $ 3.8 million for the nine months ended December 29, 2024 and December 31, 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 September 29, 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 December 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 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.

As of December 29, 2024 and March 31, 2024, the Company’s balances of inventory were $ 32.4 million and $ 29.7 million, respectively, nearly all of which were finished goods.

Note 7 – Acquisition

27 unchanged sentences

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.

During the three -month period ended December 29, 2024, the Company increased the amount of goodwill recognized by $ 10,000 for the resolution of pre-acquisition accounts payable.

The assets acquired in the Acquisition generated net sales of $ 3.8 million of bedding and diaper bag products for the three -month period ended December 29, 2024, and net sales of $ 7.2 million of bedding and diaper bag products for the period from the Closing Date to December 29, 2024.

Amortization expense associated with the acquired amortizable intangible assets was $ 99,000 and $ 164,000 during the three and nine months ended December 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 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 $ 69.1 million and $ 2.0 million, respectively, for the nine -month period ended December 29, 2024.

The combined net sales and the combined net income would have been $ 29.3 million and $ 1.7 million, respectively, for the three -month period ended December 31, 2023, and would have been $ 81.7 million and $ 3.9 million, respectively, for the nine -month period ended December 31, 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.

7 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 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.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $ 115,000 and $ 106,000 for the three -month periods ended December 29, 2024 and December 31, 2023, respectively, and amounted to $ 283,000 and $ 265,000 for the nine -month periods ended December 29, 2024 and December 31, 2023, respectively.

Credit Facility:

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 Company’s credit facility includes a revolving line of credit and a term loan of $ 8.0 million under a financing agreement with CIT.

The Company may borrow up to $ 40 million under the revolving line of credit, 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 December 29, 2024, the Company had elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 6.1 %.

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.

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.

At December 29, 2024 and March 31, 2024, the balances on the revolving line of credit were $ 13.7 million and $ 8.1 million, respectively, there was no letter of credit outstanding and $ 15.3 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 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.

The Company’s credit facility as of December 29, 2024 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 % ( 6.7 % at December 29, 2024).

The balances on the term loan as of December 29, 2024 was $ 7.2 million, including $ 2.0 million classified as current.

On January 2, 2025, the Company and its subsidiaries entered into a letter agreement with CIT with respect to the financing agreement, pursuant to which CIT waived the Company's non-compliance with the fixed charge coverage ratio required under the financing agreement with respect to the Company's fiscal quarters ended September 29, 2024 and December 29, 2024.

In addition, the letter agreement modified the financing agreement by changing the Excess Availability (as defined in the Financing Agreement) required to be maintained by the Company with respect to its revolving credit line under the financing agreement to $ 7,000,000 (from 50% of the outstanding balance of the Company's term loan under the financing agreement).

Upon notice to the Company, CIT may reverse such modification.

Credit Concentration:

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

The Company’s accounts receivable at December 29, 2024 amounted to $ 25.5 million, net of allowances of $ 1.3 million.

Of this amount, $ 21.7 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.

29 unchanged sentences

Infant Bedding

December 31, 2024

March 31, 2025

Infant Feeding and Bath

1 unchanged sentence

Toddler Bedding

December 31, 2024

March 31, 2025

STAR WARS Toddler Bedding

December 31, 2024

March 31, 2025

STAR WARS - Lego Plush

December 31, 2025

The Company is currently negotiating with Disney with respect to the licenses set to terminate on March 31, 2025, and anticipates that they will be extended.

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.

The table below sets forth those customers that represented at least 10% of the Company’s gross sales for the nine months ended December 29, 2024.

Amazon.com, Inc.

Note 11 – Subsequent Events

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.

On February 10, 2025, the Company and CIT amended the Company's financing agreement with CIT to:

(i) waive, with respect to the fiscal year ending March 30, 2025, and through the fiscal year ending March 29, 2026, the Company's obligation to comply with the fixed charge coverage ratio;

and (ii) increase the Excess Availability (as defined in the financing agreement) required to be maintained by the Company with respect to its revolving line of credit under the financing agreement from $ 7,000,000 to $ 7,500,000 , until further notice to the Company by CIT.

After such notice, the Excess Availability shall be 50% of the outstanding balance of the Company's term loan under the financing agreement.

The Company has evaluated all other events which have occurred between December 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