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): December 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 December 15, 2020, Kaspien Holding Inc. issued a press release announcing its financial results for its third quarter ended October 31, 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 December 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:  December 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 December 15, 2020


Exhibit 99.1
 
     
       
2818 N. Sullivan Rd. Ste 30
Contact:
 
Contact:
Spokane, WA 99216
   
Financial Relations Board
www.kaspien.com
Ed Sapienza
 
Marilynn Meek
 
Chief Financial Officer
 
(mmeek@frbir.com)
 
(518) 452-1242
 
(212) 827-3773

NEWS RELEASE

KASPIEN HOLDINGS ANNOUNCES THIRD QUARTER RESULTS
 
Net Revenue for the Third Quarter increased 36.0% and Gross Merchandise Value increased 127%

Spokane Valley, WA, December 15, 2020—Kaspien Holdings Inc. (Nasdaq: KSPN) today reported financial results for its third quarter which ended October 31, 2020.
 
“Our results this quarter are a testament to the progress we continue to make toward our mission of being the ultimate online growth partner for brands. Our third quarter was highlighted by higher net revenue, higher gross margin and improved operating earnings. In addition, our Gross Merchandise Value (GMV) increased 127% year-on-year as more and more brands benefit from the portfolio of services we’ve developed. As we head into the holiday season and year end, we are well positioned to scale what we’ve built and become a global leader in the Marketplace Seller Services industry” stated Kunal Chopra, Principal Executive Officer of Kaspien Holdings Inc.
 
Kaspien continues to make strong progress on our plans of establishing a strong and scalable platform foundation in 2020, facilitating our 2021 “scale” phase. We continue to focus on operational efficiencies, working capital optimization, new business development and platform scale. This is evidenced by our continued growth and momentum in top line performance, platform GMV and continued improvement in operating margins. Kaspien ended the quarter with nearly 40% of GMV from corresponding subscriptions partners, comprised of agency and software subscribers.
 
Third Quarter Overview
 

•
Net revenue increased 36.0% to $38.9 million compared to $28.6 million in the third quarter of fiscal 2019. The increase in net revenue was primarily attributable to strength on the Amazon US marketplace.
 

•
Gross profit for the quarter increased 43.1% to $3.9 million, or 10.0% of net revenue as compared to $2.7 million, or 9.5% of net revenue for the third quarter of 2019.  The increased profit was primarily attributable to a reduction in the cost of sales on the Amazon US Platform and operational efficiencies.
 

•
SG&A expenses for the quarter were $4.0 million, a decline of $1.2 million as compared to the third quarter of 2019. The decline in SG&A was due to a decline of $1.1 million in parent company expenses.
 

•
Loss from continuing operations was $0.6 million compared to a loss from continuing operations of $2.9 million for the third quarter of fiscal 2019.
 

•
During the quarter, the Company recorded an income tax benefit of $3.5 million related to the reversal of liabilities related to unrecognized tax benefits related to the fye business that was sold in February 2020.
 

•
Net income for the quarter was $2.6 million, or $1.39 per diluted share compared to a net loss of $23.2 million, or $12.73 per diluted share, for the same period last year. Included in the results for the third quarter 2019 was a loss from the fye business of $20.1 million.
 

•
Adjusted EBITDA (a non-GAAP measure) was $0.3 million compared to a loss of $1.0 million for the third quarter of fiscal 2019 (see note 1).
 
Thirty-nine weeks ended October 31, 2020 Overview
 

•
Net revenue for the thirty-nine weeks ended October 31, 2020 increased 15.1% to $112.8 million, compared to $98.0 million for the same period last year. The increase in net revenue was primarily attributable to strength on the Amazon US marketplace.
 

•
Gross profit for the thirty-nine weeks ended October 31, 2020 increased 35.4% to $11.6 million, or 10.3% of net revenue as compared to $8.6 million, or 8.8% of net revenue for the comparable period of 2019. The increased profit was primarily attributable to a reduction in the cost of sales on the Amazon US Platform and operational efficiencies.
 

•
SG&A expenses for thirty-nine weeks ended October 31, 2020 were $16.4 million, a decline of $1.6 million as compared to the same period of 2019.
 

•
Loss from continuing operations was $7.4 million compared to $11.2 million for the thirty-nine weeks ended November 2, 2019.
 

•
Net loss was $3.8 million, or $2.06 per diluted share, for the thirty-nine weeks ended October 31, 2020, compared to a net loss of $39.1 million, or $21.51 per diluted share, for the same period last year.
 

•
Adjusted EBITDA (a non-GAAP measure) was $0.9 million compared to a loss of $2.3 million for the same period last year (see note 1).
 

•
Cash, cash equivalents and restricted cash as of October 31, 2020 was $7.4 million, compared to $9.2 million as of November 2, 2019.
 

•
Borrowings under the credit facility at the end of the third quarter were $8.5 million compared to $27.8 million at the end of the third quarter last year. As of October 31, 2020, $3.8 million was available for borrowing.


•
Inventory was $27.2 million at the end of third quarter of 2020 as compared to $22.5 million at the end of the third quarter of 2019.
 
2
Kaspian Holdings Inc.
Condensed Consolidated Financial Results

STATEMENTS OF OPERATIONS:
                                               
(in thousands, except per share data)
                                               
   
Thirteen Weeks Ended
   
Thirty-nine Weeks Ended
 
   
October 31,
2020
   
% to
Revenue
    
November 2,
2019
    
% to
Revenue
   
October 31,
2020
   
% to
Revenue
   
November 2,
2019
   
% to
Revenue
 
                                                 
Net revenue
 
$
38,913
         
$
28,616
         
$
112,799
         
$
98,008
       
                                                         
Cost of sales
   
35,022
     
90.0
%
   
25,896
     
90.5
%
   
101,173
     
89.7
%
   
89,424
     
91.2
%
Gross profit
   
3,891
     
10.0
%
   
2,720
     
9.5
%
   
11,626
     
10.3
%
   
8,584
     
8.8
%
                                                                 
Selling, general and administrative expenses
   
3,956
     
10.2
%
   
5,140
     
18.0
%
   
16,355
     
14.5
%
   
17,940
     
18.3
%
Depreciation and amortization expenses
   
547
     
1.3
%
   
464
     
1.6
%
   
1,554
     
1.4
%
   
1,308
     
1.3
%
Loss from continuing operations
   
(612
)
   
-1.6
%
   
(2,884
)
   
-10.1
%
   
(6,283
)
   
-5.6
%
   
(10,664
)
   
-10.9
%
                                                                 
Interest expense
   
381
     
1.0
%
   
200
     
0.7
%
   
1,016
     
0.9
%
   
508
     
0.5
%
                                                                 
Net loss from continuing operations before income tax benefit
   
(993
)
   
-2.6
%
   
(3,084
)
   
-10.8
%
   
(7,299
)
   
-6.5
%
   
(11,172
)
   
-11.4
%
                                                                 
Income tax expense (benefit)
   
(3,545
)
   
-9.1
%
   
10
     
0.0
%
   
(3,545
)
   
-3.1
%
   
26
     
0.0
%
                                                                 
Net income (loss) from continuing operations
   
2,552
     
6.6
%
   
(3,094
)
   
-10.8
%
   
(3,754
)
   
-3.3
%
   
(11,198
)
   
-11.4
%
                                                                 
Net loss from fye business, net of tax
   
-
     
0.0
%
   
(20,061
)
   
-70.1
%
   
-
     
0.0
%
   
(27,887
)
   
-28.5
%
                                                                 
Net income (loss)
 
$
2,552
     
6.6
%
 
$
(23,155
)
   
-80.9
%
 
$
(3,754
)
   
-3.3
%
 
$
(39,085
)
   
-39.9
%
                                                                 
Basic income (loss) per share
                                                               
                                                                 
Basic income (loss) per share
 
$
1.40
           
$
(12.73
)
         
$
(2.06
)
         
$
(21.51
)
       
                                                                 
Weighted average number of common shares outstanding - basic
   
1,825
             
1,819
             
1,823
             
1,817
         
                                                                 
Diluted income (loss) per common share:
                                                               
                                                                 
Diluted income (loss) per share
 
$
1.39
           
$
(12.73
)
         
$
(2.06
)
         
$
(21.51
)
       
                                                                 
Weighted average number of common shares outstanding - diluted
   
1,829
             
1,819
             
1,823
             
1,817
         

SELECTED BALANCE SHEET CAPTIONS:
(in thousands, except store data)
 
October 31,
2020
   
November 2,
2019
 
             
Cash, cash equivalents, and restricted cash
 
$
7,428
   
$
9,162
 
Merchandise inventory
   
27,204
     
22,522
 
Fixed assets (net)
   
2,343
     
2,102
 
Accounts payable
   
8,559
     
10,169
 
Borrowings under line of credit
   
8,483
     
27,771
 
Long-term debt
   
4,581
     
-
 

3
Notes:
 

1.
Reconciliation of net loss to adjusted EBITDA:
 
Adjusted EBITDA is defined as net income (loss), adjusted to exclude: (i) income tax expense (benefit); (ii) loss from fye business, net of tax: (iii) interest expense; (iv) Parent company 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
   
Thirty-nine Weeks Ended
 
(amounts in thousands)
 
October 31,
2020
   
November 2,
2019
   
October 31,
2020
   
November 2,
2019
 
                         
Net income (loss)
 
$
2,552
   
$
(23,155
)
 
$
(3,754
)
 
$
(39,085
)
Income tax expense (benefit)
   
(3,545
)
   
10
     
(3,545
)
   
26
 
Loss from fye business, net of tax
   
-
     
20,061
     
-
     
27,887
 
Interest expense
   
381
     
200
     
1,016
     
508
 
Loss from continuing operations
   
(612
)
   
(2,884
)
   
(6,283
)
   
(10,664
)
Parent company SG&A expenses
   
380
     
1,465
     
5,589
     
7,025
 
Depreciation expense
   
547
     
464
     
1,554
     
1,308
 
Adjusted EBITDA
 
$
315
   
$
(955
)
 
$
860
   
$
(2,331
)

Kaspien provides a platform of software and services to empower brands to grow their online distribution channels on digital marketplaces, such as Amazon, Walmart, 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
•
Results
•
Insights Drive
•
Ownership
•
Simplicity
•
Diversity and Teamwork
•
Innovation    
 Kaspien, formerly Trans World Entertainment, established itself as a public company in 1986, is traded on the Nasdaq National 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