v3.22.1

Related Parties | 12 Months Ended
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Jan. 29, 2022
Related Party Transactions [Abstract] |
Related Parties | NOTE 8—RELATED PARTIES Notes Payable to Related Parties: Notes payable to related parties consisted of the following at January 29, 2022 and January 30, 2021 (in thousands):
|  | January 29, 2022 |  |  | January 30, 2021 |
18% promissory note due April 21, 2021 |  | $ | — |  |  | $ | 400 |
9% unsecured convertible note due February 5, 2022 |  |  | 1,000 |  |  |  | — |
9% unsecured convertible note due April 14, 2022 |  |  | 750 |  |  |  | — |
9% unsecured convertible notes due April 21, 2022 |  |  | 750 |  |  |  | — |
9% unsecured convertible notes due May 7, 2022 |  |  | 500 |  |  |  | — |
Total face amount |  |  | 3,000 |  |  |  | 400 |
Unamortized discount |  |  | (811 | ) |  |  | — |
Total carrying value |  |  | 2,189 |  |  |  | 400 |
Amount classified as current |  |  | — |  |  |  | 400 |
Amount classified as long-term |  | $ | 2,189 |  |  | $ | — |
Subsequent to January 29, 2022, the maturity dates of all of the notes payable to related parties were extended into Fiscal 2024. Accordingly, these notes are classified as long-term at January 29, 2022. On January 21, 2021, the Company’s Simply Mac subsidiary issued a $400,000 unsecured short-term promissory note to Taylor Capital LLC that was outstanding at January 30, 2021. The note was scheduled to mature, and become due and payable in full, on April 21, 2021 together with a one-time fee of $20,000 plus accrued interest at the rate of 18% per annum compounded monthly. Taylor Capital is wholly owned by Kevin Taylor, the chairman of the Company’s Board of Directors. In March 2021, the note and all accrued interest and fees were repaid in advance of its maturity. Interest expense on the note for Fiscal 2022 and Fiscal 2021 was $9,000 and $22,000, respectively. On July 6, 2021, the Company issued a $1,000,000, six-month, 9% unsecured convertible note and warrant to SOL Global Investments Corp. (“SOL Global”). SOL Global is an affiliate of the Company and owns greater than 10% of its outstanding common stock. The principal and unpaid accrued interest was convertible at the option of the holder at any time into shares of common stock of the Company at $2.50 per share (the “Conversion Price”) and the warrant is exercisable for 400,000 shares of common stock of the Company at an exercise price of $2.75 per share (the “Exercise Price”). The warrant is exercisable beginning six months after issuance and expires 42 months from the date of issuance. The Company valued the warrants in accordance with ASC 470-20-25-2 using a binomial option pricing model. The valuation assumed a 108% volatility rate of the Company’s common stock, an estimated life of 3.5 years and a risk-free interest rate of 0.52%. The warrants were assigned a value of $743,000, which amount was recorded as a discount to the debt and a credit to additional paid in capital, resulting in an effective annual interest rate of approximately 324%. The debt discount was amortized to interest expense over the six-month life of the note on a straight-line basis, which approximated the effective interest method. Upon maturity on January 6, 2022, SOL Global converted the principal and accrued interest on the note into 418,000 shares of common stock. Interest expense on the note for Fiscal 2022 was $788,000, including accretion of $743,000. On August 5, 2021, the Company issued a $1,000,000, six-month, 9% unsecured convertible note and warrant to SOL Global. The principal and unpaid accrued interest is convertible at the option of the holder at any time into shares of common stock of the Company at the Conversion Price and the warrant is exercisable for 400,000 shares of common stock of the Company at the Exercise Price. The warrant is exercisable beginning six months after issuance and expires 42 months from the date of issuance. The Company valued the warrants in accordance with ASC 470-20-25-2 using a binomial option pricing model. The valuation assumed a 108% volatility rate of the Company’s common stock, an estimated life of 3.5 years and a risk-free interest rate of 0.46%. The warrants were assigned a value of $593,000, which amount was recorded as a discount to the debt and a credit to additional paid in capital, resulting in an effective annual interest rate of approximately 168%. The debt discount is being amortized to interest expense over the six-month life of the note on a straight-line basis, which approximates the effective interest method. The balance of unamortized discount at January 29, 2022 amounted to $19,000. Interest expense on the note for Fiscal 2022 was $618,000, including accretion of $573,000. Subsequent to January 29, 2022, the maturity of this note was extended by one year, without interest, to February 5, 2023. On October 14, 2021, the Company issued a $750,000, six-month, 9% unsecured convertible note and warrant to SOL Global. The principal and unpaid accrued interest is convertible at the option of the holder at any time into shares of common stock of the Company at the Conversion Price and the warrant is exercisable for 300,000 shares of common stock of the Company at the Exercise Price. The warrant is exercisable beginning six months after issuance and expires 42 months from the date of issuance. The Company valued the warrants in accordance with ASC 470-20-25-2 using a binomial option pricing model. The valuation assumed a 108% volatility rate of the Company’s common stock, an estimated life of 3.5 years and a risk-free interest rate of 0.73%. The warrants were assigned a value of $712,000, which amount was recorded as a discount to the debt and a credit to additional paid in capital, resulting in an effective annual interest rate of approximately 2052%. The debt discount is being amortized to interest expense over the six-month life of the note on a straight-line basis, which approximates the effective interest method. The balance of unamortized discount at January 29, 2022 amounted to $296,000. Interest expense on the note for Fiscal 2022 was $436,000, including accretion of $416,000. Subsequent to January 29, 2022, the maturity of this note was extended by one year, without interest, to April 14, 2023. On October 21, 2021, the Company issued a $750,000, six-month, 9% unsecured convertible note and warrant to SOL Global. The principal and unpaid accrued interest is convertible at the option of the holder at any time into shares of common stock of the Company at the Conversion Price and the warrant is exercisable for 300,000 shares of common stock of the Company at the Exercise Price. The warrant is exercisable beginning six months after issuance and expires 42 months from the date of issuance. The Company valued the warrants in accordance with ASC 470-20-25-2 using a binomial option pricing model. The valuation assumed a 108% volatility rate of the Company’s common stock, an estimated life of 3.5 years and a risk-free interest rate of 0.89%. The warrants were assigned a value of $700,000, which amount was recorded as a discount to the debt and a credit to additional paid in capital, resulting in an effective annual interest rate of approximately 1530%. The debt discount is being amortized to interest expense over the six-month life of the note on a straight-line basis, which approximates the effective interest method. The balance of unamortized discount at January 29, 2022 amounted to $317,000. Interest expense on the note for Fiscal 2022 was $401,000, including accretion of $383,000. Subsequent to January 29, 2022, the maturity of this note was extended by one year, without interest, to April 21, 2023. On November 5, 2021, the Company issued a $500,000, six-month, 9% unsecured convertible note and warrant to SOL Global. The principal and unpaid accrued interest is convertible at the option of the holder at any time into shares of common stock of the Company at the Conversion Price and the warrant is exercisable for 200,000 shares of common stock of the Company at the Exercise Price. The warrant is exercisable beginning six months after issuance and expires 42 months from the date of issuance. The Company valued the warrants in accordance with ASC 470-20-25-2 using a binomial option pricing model. The valuation assumed a 107% volatility rate of the Company’s common stock, an estimated life of 3.5 years and a risk-free interest rate of 0.76%. The warrants were assigned a value of $333,000, which amount was recorded as a discount to the debt and a credit to additional paid in capital, resulting in an effective annual interest rate of approximately 226%. The debt discount is being amortized to interest expense over the six-month life of the note on a straight-line basis, which approximates the effective interest method. The balance of unamortized discount at January 29, 2022 amounted to $178,000. Interest expense on the note for Fiscal 2022 was $166,000, including accretion of $155,000. Subsequent to January 29, 2022, the maturity of this note was extended by one year, without interest, to May 5, 2023. Interest expense for related party notes payable for Fiscal 2022 and Fiscal 2021 was $2,418,000 and $22,000, respectively, including accretion of $2,270,000 in Fiscal 2022. Accrued interest owed to SOL Global at January 29, 2022 amounted to $94,000. Other Related Party Transactions: In October 2021, the Company opened a store in Miami, Florida under the SimplyEV brand to sell scooters and other all-electric products and accessories. The Company licensed the Simply EV brand from its owner, EV Toys LLC (“EV Toys”), and purchases the products sold in the store from EV Toys. The Company also reimbursed EV Toys for the cost of tenant improvements at the store in the amount of $239,000. The store premises are leased from LIVWRK SOL Wynwood LLC (“LIVWRK”) under a 3-year lease that calls for monthly rent of $5,250 plus operating costs. In June 2021, the Company also began selling scooters purchased from EV Toys in its Simply Mac stores and on its eCommerce site. Purchases of products from EV Toys during Fiscal 2022 amounted to $1,257,000, and the outstanding balance of accounts payable owed by the Company to EV Toys at January 29, 2022 for product purchases was $1,000,000. The Company also purchases accessory products sold in its Simply Mac stores and on its eCommerce site from Smash Technologies LLC (“Smash”). Purchases of products from Smash during Fiscal 2022 amounted to $2,182,000, and the outstanding balance of accounts payable owed by the Company to Smash at January 29, 2022 was $508,000. EV Toys, LIVWRK and Smash are indirectly partially owned by SOL Global. Kevin Taylor, the Company’s Board Chairman, is also a member of the Board of Directors of SOL Global.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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