UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 

FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): September 15, 2020


Kaspien Holdings Inc.
(Exact Name of Registrant as Specified in Charter)


New York
 
0-14818
 
14-1541629          
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

2818 N. Sullivan Rd. Ste 30
Spokane, WA 99216

(Address of Principal Executive Offices, and Zip Code)

(855) 300-2710

Registrant’s Telephone Number, Including Area Code

Trans World Entertainment Corporation
38 Corporate Circle,
Albany, New York 12203

 (Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


☐
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐
Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐
Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common shares, $0.01 par value per share
KSPN
NASDAQ Stock Market

ITEM 2.02.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On September 15, 2020, Kaspien Holding Inc. issued a press release announcing its financial results for its second quarter ended August 1, 2020.  A copy of Kaspien Holdings Inc. press release is furnished with this report as Exhibit 99.1 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form v8-K is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this communication are forward-looking statements. The statements contained herein that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, and similar terms and phrases, including references to assumptions, in this document to identify forward-looking statements. These forward-looking statements are made based on management’s expectations and beliefs concerning future events and are subject to uncertainties and factors that could cause actual results to differ materially from the results expressed in the statements. The following factors are among those that may cause actual results to differ materially from the Company’s forward-looking statements:  risk of disruption of current plans and operations of etailz and the potential difficulties in customer, supplier and employee retention; the outcome of any legal proceedings that may be instituted against the Company; the Company’s level of debt and related restrictions and limitations, unexpected costs, charges, expenses, or liabilities; the Company’s ability to operate as a going-concern; deteriorating economic conditions and macroeconomic factors; the impact of the COVID-19 pandemic; and other risks described in the Company’s filings with the SEC, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

The reader should keep in mind that any forward-looking statement made by us in this document, or elsewhere, pertains only as of the date on which we make it. New risks and uncertainties come up from time-to-time and it’s impossible for us to predict these events or how they may affect us. In light of these risks and uncertainties, you should keep in mind that any forward-looking statements made in this document or elsewhere might not occur.

ITEM 9.01.
FINANCIAL STATEMENTS AND EXHIBITS

(d) EXHIBITS. The following are furnished as Exhibits to this Report:
 
Exhibit No.
Description
   
99.1
Kaspien Holding Inc. Press Release dated September 15, 2020.

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated:  September 16, 2020
Kaspien Holding Inc.
   
  By:
/s/ Edwin Sapienza
 
   
Name: Edwin Sapienza
 
   
Title: Chief Financial Officer

EXHIBIT INDEX
 
Exhibit No.
Description
   
Kaspien Holding Inc. press release date September 15, 2020


Exhibit 99.1

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

           

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

3
Notes:
 

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

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

4