v3.22.1

Stockholders' Deficit | 12 Months Ended
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Jan. 29, 2022
Equity [Abstract] |
Stockholders' Deficit | NOTE 11—STOCKHOLDERS’ DEFICIT Preferred Stock The Company has authorized the issuance of 10,000,000 shares of 0% Series A Convertible Preferred Stock. As of January 29, 2022, a total of 2,000 shares were outstanding. The preferred shares rank senior to the common stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, and are entitled to vote on all shareholder matters. The preferred shares are essentially convertible into common stock of the Company on a one-for-one basis at the election of the holder. Common Stock and Warrants The Company has authorized the issuance of 150,000,000 shares of common stock. As of January 29, 2022, a total of 12,886,000 shares were outstanding. During March 2020, the Company completed the exchange of two outstanding convertible notes with a principal amount of $434,000 and related accrued interest of $8,000 into 86,800 shares of common stock at $5.10 per share in accordance with exchange agreements entered into in October 2019. The value of the stock issued in the exchange was $35,000, and the Company recorded a gain on extinguishment of debt of $204,000. Also during March 2020, the Company entered into an additional debt restructuring that resulted in the conversion of debt with an aggregate principal amount of $7,492,000 and accrued interest of $691,000 into common stock of the Company. The carrying value of the debt and related derivative liability at the time of extinguishment amounted to $8,341,000. The aggregate total of $8,183,000 was converted into 4,814,000 shares of common stock at $1.70 per share. The combined value of the stock issued in the conversion was $1,869,000, and the Company recorded a gain on extinguishment of debt of $6,472,000. The restructuring also included the settlement of other outstanding claims, that resulted in the issuance of an additional 1,068,000 common shares, of which 1,040,000 shares were attributable to a royalty claim in connection with the September 2019 acquisition of Simply Mac. The $415,000 value of the 1,040,000 shares was recorded in other expenses in the Company’s statement of operations for the year ended December 31, 2019 and as an accrued liability at December 31, 2019. The aggregate number of common shares issued in these transactions was 5,882,000. However, pursuant to a 4.99% blocker request from the holders, only 270,000 shares have been delivered, and 5,612,000 shares remain to be delivered. During June 2020, the Company issued 80,000 shares of common stock valued at $106,000 to its two outside directors in lieu of payment of accrued director fees, and in June, September and December 2020, issued an aggregate of 54,000 shares of common stock valued at $57,000 to three former executives in lieu of payment of accrued severance. During August 2020, the Company repurchased and retired 70,000 shares of common stock, valued at $28,000, previously issued to one of its employees. On October 14, 2020, the Company executed a 1-for-10 reverse stock split and issued 2,000 shares of common stock in lieu of fractional shares. All references to shares and per-share amounts have been restated to give effect to this reverse split. During March and April 2021, holders of common stock warrants exercised their warrants at the exercise price of $0.50 per share. The Company issued an aggregate of 247,000 shares of common stock and received cash proceeds of $123,000. In March, June, September and December 2021, the Company issued an aggregate of 28,000 shares of common stock valued at $89,000 to three former executives in lieu of payment of accrued severance. During August, September and October, the Company issued an aggregate of 576,000 shares of common stock valued at $2,000,000 in four private placements to a subsidiary of SOL Global. In September 2021, the Company issued 63,000 shares of common stock valued at $250,000 to an auto racing team in consideration of a sponsorship agreement. One of the team’s drivers is related to a principal of SOL Global. On January 6, 2022, as discussed in Note 8, SOL Global converted the principal and accrued interest of its convertible note dated July 6, 2021 totaling $1,045,000 into 418,000 shares of common stock at the conversion price of $2.50 per share. Stock Options and Stock-based Compensation The Company’s 2015 Equity Incentive Plan (the “Plan”) was approved by stockholders in June 2015 with 5,000 shares authorized for issuance thereunder. In December 2018, stockholders approved an amendment to the Plan to increase the number of shares authorized for issuance thereunder by 79,000 shares. In November 2019, stockholders approved an amendment to the Plan to increase the number of shares authorized for issuance thereunder by 1,500,000 shares. In December 2020, stockholders approved an amendment to the Plan to increase the number of shares authorized for issuance thereunder by 1,500,000 shares. The Plan is intended to provide incentives to key employees, officers, directors and consultants who provide significant services to the Company. The exercise price is determined by the Compensation Committee, but must be at least equal to the fair market value of the common stock on the date of grant of such option. The Compensation Committee also establishes the vesting schedule for each option granted and the term of each option, which cannot exceed 10 years from the date of grant. In the event of termination, vested options generally must be exercised within three months. In a change of control, if outstanding awards under the Plan are assumed or substituted by a successor company, such awards do not automatically fully vest but may become fully vested in the event of a qualifying termination following such change of control. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally the vesting term. Income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under existing tax law. Under current U.S. federal tax law, we would receive a compensation expense deduction related to non-qualified stock options only when those options are exercised and vested shares are received. Accordingly, the financial statement recognition of compensation expense for non-qualified stock options creates a deductible temporary difference which results in a deferred tax asset. A summary of stock option activity for Fiscal 2022 is as follows (shares and aggregate intrinsic value in thousands):
|  | Shares |  |  | Wtd. Avg. Exercise Price |  |  | Wtd. Avg. Remaining Contractual Life |  | Aggregate Intrinsic Value (a) |
Outstanding at January 30, 2021 |  |  | 855 |  |  | $ | 1.74 |  |  |  |  |  |  |
Granted |  |  | 286 |  |  | $ | 2.53 |  |  |  |  |  |  |
Expired |  |  | — |  |  | $ | — |  |  |  |  |  |  |
Forfeited |  |  | — |  |  | $ | — |  |  |  |  |  |  |
Outstanding at January 29, 2022 |  |  | 1,141 |  |  | $ | 1.88 |  |  | 4.00 years |  | $ | 565 |
Vested and expected to vest |  |  | 1,141 |  |  | $ | 1.88 |  |  | 4.00 years |  | $ | 565 |
Exercisable at January 29, 2022 |  |  | 854 |  |  | $ | 1.75 |  |  | 3.84 years |  | $ | 512 |
Non-vested at January 29, 2022 (b) |  |  | 287 |  |  | $ | 2.29 |  |  | 4.48 years |  | $ | 53 |
| (a) | The aggregate intrinsic value is based on our closing stock price of $2.32 as of January 29, 2022.
| (b) | The weighted-average grant date fair value of non-vested options at January 29, 2022 was $1.45 per share.
During Fiscal 2021, the Company granted stock options under the Plan to purchase an aggregate of 855,000 shares to employees and directors. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: stated life of 5 years; risk-free interest rate of 0.2% to 0.3% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yield of 0% as the Company has not, and does not intend to, declare dividends; and an expected life of 2.5 years for options having immediate vesting and 3.3 years for graded vested options. The expected annualized volatility of the Company’s common stock used in the calculation ranged from 95% to 108%. Determination of the volatility rate began with the fully-observed historical volatility of the Company’s common stock dating back to March 2018, immediately following the announcement of completion of the Cooltech merger and related stock split. It was noted that the Company did not have any exchange-traded options since the Cooltech merger from which to obtain an implied volatility. Certain adjustments were then applied to the fully‑observed historical volatility through June 2020 by excluding the effects of the Company’s extraordinarily-significant announcements and events during the period. Stock option expense for the year amounted to $722,000. During Fiscal 2022, the Company granted stock options under the Plan to purchase an aggregate of 286,000 shares to employees. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: stated life of 5 years; risk-free interest rate of 0.70% to 0.72% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yield of 0% as the Company has not, and does not intend to, declare dividends; and an expected life of 2.69 to 2.75 years. The expected annualized volatility of the Company’s common stock used in the calculation was 107%. Determination of the volatility rate utilized the same methodology as described above during Fiscal 2021. Stock option expense for the year amounted to $305,000. In April 2020, the Company made grants of unregistered shares to two of the advisors in the aggregate amount of 300,000 shares, and a corresponding reduction of warrants on 300,000 shares previously issued to the advisors. On a combined basis, the shares issued were valued at $216,000, and the warrant reductions were valued at $89,000, resulting in a net compensation expense of $127,000. In December 2020, the advisors exercised warrants on an aggregate of 453,000 shares for an exercise price of $227,000, leaving warrants on 247,000 shares unexercised. The unexercised warrants were set to expire on January 6, 2021. The Company agreed to extend the expiration date of the warrants by four months to May 6, 2021. The warrant modifications were valued in accordance with ASC 718 using the same assumptions in the original valuation, but no additional compensation expense was valued or recorded in Fiscal 2021. In June 2020, the Company made stock grants under the Plan in an aggregate amount of 295,000 shares to its board of directors. The stock was valued at $390,000 based on the closing market price on the date of grant, which amount was also recorded as compensation expense. In November 2021, the Company made restricted stock grants under the Plan in an aggregate amount of 750,000 shares to its board of directors and an employee. The stock was valued at $1,898,000 based on the closing market price on the date of grant, which amount is being recorded as compensation expense based on the vesting schedule. Compensation expense related to the restricted stock grants recorded in Fiscal 2022 amounted to $780,000. Additional compensation expense for vesting of previously issued restricted shares during Fiscal 2022 and Fiscal 2021 amounted to $17,000 and $93,000, respectively, bringing total stock-based compensation expense for Fiscal 2022 and Fiscal 2021 to $1,103,000 and $1,332,000, respectively. Future stock-based compensation related to unvested restricted stock and stock options at January 29, 2022 amounts to $1,416,000.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 16 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496180-112644 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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