0001493152-24-014210.txt : 20240410 0001493152-24-014210.hdr.sgml : 20240410 20240410161516 ACCESSION NUMBER: 0001493152-24-014210 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20240410 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20240410 DATE AS OF CHANGE: 20240410 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIDPIK CORP. CENTRAL INDEX KEY: 0001861522 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] ORGANIZATION NAME: 07 Trade & Services IRS NUMBER: 813640708 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-41032 FILM NUMBER: 24835955 BUSINESS ADDRESS: STREET 1: 200 PARK AVENUE SOUTH, 3RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10003 BUSINESS PHONE: 212-399-2323 MAIL ADDRESS: STREET 1: 200 PARK AVENUE SOUTH, 3RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10003 8-K 1 form8-k.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): April 10, 2024

 

Kidpik Corp.

(Exact name of registrant as specified in its charter)

 

Delaware   001-41032   81-3640708

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

 

200 Park Avenue South, 3rd Floor

New York, New York

  10003
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (212) 399-2323

 

Not Applicable

(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 communications 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 communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 Stock, $0.001 par value per share   PIK   The NASDAQ Stock Market LLC

 

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

 

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.

 

 

 

 
 

 

Item 2.02 Results of Operations and Financial Condition.

 

On April 10, 2024, Kidpik Corp. (“Kidpik” or the “Company”) issued a press release regarding, among other things, its financial results for the quarter and year ended December 30, 2023. A copy of the press release, which includes a summary of such financial results is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

 

The information contained in this Current Report and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

The Company is making reference to non-GAAP financial information in the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

 

Item 9.01 Financial Statements and Exhibits.

 

Exhibit No.   Description
     
99.1*   Press Release of Kidpik Corp., dated April 10, 2024
104   Inline XBRL for the cover page of this Current Report on Form 8-K

 

* Furnished herewith.

 

Non-Active Hyperlinks

 

The inclusion of any website address in this Form 8-K, and any exhibit thereto, is intended to be an inactive textual reference only and not an active hyperlink. The information contained in, or that can be accessed through, such website is not part of or incorporated into this Form 8-K.

 

 
 

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain statements contained in this Current Report on Form 8-K and the press release attached, regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). These include, but are not limited to, statements regarding the anticipated completion and effects of the proposed merger (the “Merger”) contemplated by that certain Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) entered into between the Company, Nina Footwear Corp., a Delaware corporation (“Nina Footwear”), and Kidpik Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Kidpik (“Merger Sub”), projections and estimates of Kidpik’s corporate strategies, future operations and plans, including the costs thereof; and other statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Kidpik and Nina Footwear undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on our expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors, including, but not limited to, the outcome of any legal proceedings that may be instituted against Nina Footwear or Kidpik following the announcement of the Merger; the inability to complete the Merger, including due to the failure to obtain approval of the stockholders of Kidpik or Nina Footwear; delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regular reviews required to complete the Merger, if any; the inability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition, the ability of the combined company to grow and successfully execute on its business plan; costs related to the Merger; changes in the applicable laws or regulations; the possibility that the combined company may be adversely affected by other economic, business, and/or competitive factors; the combined company’s ability to manage future growth; the combined company’s ability to raise funding; the complexity of numerous regulatory and legal requirements that the combined company needs to comply with to operate its business; the reliance on the combined company’s management; the prior experience and successes of the combined company’s management team are not indicative of any future success; Kidpik’s and the combined company’s ability to meet Nasdaq’s continued listing requirements; Kidpik and the combined company’s ability to maintain the listing of their common stock on Nasdaq; the ability to obtain additional funding, the terms of such funding and potential dilution caused thereby; the continuing effect of rising interest rates and inflation on Kidpik’s and the combined company’s operations, sales, and market for their products; deterioration of the global economic environment; rising interest rates and inflation and Kidpik’s and the combined company’s ability to control costs, including employee wages and benefits and other operating expenses; Kidpik’s decision to cease manufacturing new products; Kidpik’s history of losses; Kidpik’s and the combined company’s ability to maintain current members and customers and grow members and customers; risks associated with the effect of global pandemics, and governmental responses thereto on Kidpik’s and the combined company’s operations, those of Kidpik’s and the combined company’s vendors, Kidpik’s and the combined company’s customers and members and the economy in general; risks associated with Kidpik’s and the combined company’s supply chain and third-party service providers, interruptions in the supply of raw materials and merchandise; increased costs of raw materials, products and shipping costs due to inflation; disruptions at Kidpik’s and the combined company’s warehouse facility and/or of their data or information services, Kidpik’s and the combined company’s ability to locate warehouse and distribution facilities and the lease terms of any such facilities; issues affecting our shipping providers; disruptions to the internet; risks that effect our ability to successfully market Kidpik’s and the combined company’s products to key demographics; the effect of data security breaches, malicious code and/or hackers; increased competition and our ability to maintain and strengthen Kidpik’s and the combined company’s brand name; changes in consumer tastes and preferences and changing fashion trends; material changes and/or terminations of Kidpik’s and the combined company’s relationships with key vendors; significant product returns from customers, excess inventory and Kidpik’s and the combined company’s ability to manage our inventory; the effect of trade restrictions and tariffs, increased costs associated therewith and/or decreased availability of products; Kidpik’s and the combined company’s ability to innovate, expand their offerings and compete against competitors which may have greater resources; the fact that Kidpik’s Chief Executive Officer has majority voting control over Kidpik and will have majority control over the combined company; if the use of “cookie” tracking technologies is further restricted, regulated, or blocked, or if changes in technology cause cookies to become less reliable or acceptable as a means of tracking consumer behavior; Kidpik’s and the combined company’s ability to comply with the covenants of future loan and lending agreements and covenants; Kidpik’s and the combined company’s ability to prevent credit card and payment fraud; the risk of unauthorized access to confidential information; Kidpik’s and the combined company’s ability to protect intellectual property and trade secrets, claims from third-parties that Kidpik and/or the combined company have violated their intellectual property or trade secrets and potential lawsuits in connection therewith; Kidpik’s and the combined company’s ability to comply with changing regulations and laws, penalties associated with any non-compliance (inadvertent or otherwise), the effect of new laws or regulations, and Kidpik’s and the combined company’s ability to comply with such new laws or regulations; changes in tax rates; Kidpik’s and the combined company’s reliance and retention of management; the outcome of future lawsuits, litigation, regulatory matters or claims; the fact that Kidpik and the combined company have a limited operating history; the effect of future acquisitions on Kidpik’s and the combined company’s operations and expenses; and others that are included from time to time in filings made by Kidpik with the Securities and Exchange Commission, many of which are beyond the control of Kidpik and the combined company, including, but not limited to, in the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections in Kidpik’s Form 10-Ks and Form 10-Qs and in its Form 8-Ks, which it has filed, and files from time to time, with the Securities and Exchange Commission, including, but not limited to its Annual Report on Form 10-K for the year ended December 30, 2023. These reports are available at www.sec.gov and on Kidpik’s website at https://investor.kidpik.com/sec-filings. Kidpik cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to Kidpik or any person acting on behalf of Kidpik are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Kidpik’s and the combined company’s future results and/or could cause their actual results and financial condition to differ materially from those indicated in the forward-looking statements. The forward-looking statements included in this Current Report on Form 8-K and the attached press release are made only as of the date hereof. Kidpik cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Except as required by law, neither Nina Footwear nor Kidpik undertakes any obligation to update publicly any forward-looking statements for any reason after the date of this Current Report on Form 8-K and the attached press release to conform these statements to actual results or to changes in their expectations. If they update one or more forward-looking statements, no inference should be drawn that they will make additional updates with respect to those or other forward-looking statements.

 

 
 

 

Additional Information and Where to Find It

 

In connection with the proposed Merger, Kidpik intends to file a proxy statement with the Securities and Exchange Commission (the “Proxy Statement”), that will be distributed to holders of Kidpik’s common stock in connection with its solicitation of proxies for the vote by Kidpik’s stockholders with respect to the proposed Merger and other matters as may be described in the Proxy Statement. The Proxy Statement, when it is filed and mailed to stockholders, will contain important information about the proposed Merger and the other matters to be voted upon at a meeting of Kidpik’s stockholders to be held to approve the proposed Merger and other matters (the “Merger Meeting”). Kidpik may also file other documents with the SEC regarding the proposed Merger. Kidpik stockholders and other interested persons are advised to read, when available, the Proxy Statement, as well as any amendments or supplements thereto, because they will contain important information about the proposed Merger. When available, the definitive Proxy Statement will be mailed to Kidpik stockholders as of a record date to be established for voting on the proposed Merger and the other matters to be voted upon at the Merger Meeting.

 

Kidpik’s stockholders may obtain copies of the aforementioned documents and other documents filed by Kidpik with the SEC, without charge, once available, at the SEC’s web site at www.sec.gov, on Kidpik’s website at https://investor.kidpik.com/sec-filings or, alternatively, by directing a request by mail, email or telephone to Kidpik at 200 Park Avenue South, 3rd Floor, New York, New York 10003; ir@kidpik.com; or (212) 399-2323, respectively.

 

Participants in the Solicitation

 

Kidpik, Nina Footwear, and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from Kidpik’s stockholders with respect to the proposed Merger. Information regarding the persons who may be deemed participants in the solicitation of proxies from Kidpik’s stockholders in connection with the proposed Merger will be contained in the Proxy Statement relating to the proposed Merger, when available, which will be filed with the SEC. Additionally, information about Kidpik’s directors and executive officers and their ownership of Kidpik is available in Kidpik’s Definitive Information Statement on Schedule 14A, as filed with the Securities and Exchange Commission on May 1, 2023 (the “Annual Meeting Proxy Statement”) and the Current Report on Form 8-K filed with the SEC on December 8, 2023. To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the Annual Meeting Proxy Statement, such information has been or will be reflected on Kidpik’s Statements of Change in Ownership on Forms 3 and 4 filed with the SEC. You may obtain free copies of these documents using the sources indicated above.

 

Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement and other relevant materials to be filed with the SEC regarding the Merger Agreement when they become available. Investors should read the Proxy Statement carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Kidpik using the sources indicated above.

 

Non-Solicitation

 

This communication is for informational purposes only and is not intended to and shall not constitute a proxy statement or the solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Merger Agreement and is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy or subscribe for any securities or a solicitation of any vote of approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

 
 

 

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: April 10, 2024

 

  Kidpik Corp.
     
  By: /s/ Ezra Dabah
  Name: Ezra Dabah
  Title: Chief Executive Officer

 

 

EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

KIDPIK Reports Fourth Quarter and Full Year 2023 Financial Results

 

NEW YORK - April 9, 2024--Kidpik Corp. (“KIDPIK” or the “Company”), an online clothing subscription-based e-commerce company, today reported its financial results for the fourth quarter and fiscal year 2023 ended December 30, 2023.

 

Fourth Quarter 2023 Highlights:

 

  Revenue, net: was $3.4 million, a year over year decrease of 28.9%
  Gross margin: was negative 16.2%, which was the result of a one-time inventory write-down of $2.9 million (without the adjustment gross margin was 69.5%) from 58.9% in the fourth quarter of 2022
  Shipped items: were 285,000 items, compared to 374,000 shipped items in the fourth quarter of 2022
  Average shipment keep rate: increased to 66.2%, compared to 65.3% in the fourth quarter of 2022
  Net Loss: was $4.0 million or $2.14 per share
  Adjusted EBITDA: was a loss of $3.9 million (see “Non-GAAP Financial Measures”, below)

 

Full Year 2023 Financial Highlights:

 

  Revenue, net: was $14.2 million, a year over year decrease of 13.6%
  Gross margin: was 42.2%, a year-over-year decrease of 17.7 basis points from 59.9% in 2022
  Shipped items: were 1.2 million items, compared to 1.5 million shipped items in 2022
  Average shipment keep rate: increased to 72.8%, compared to 68.3% last year
  Net Loss: was $9.9 million, or $6.04 per share
  Adjusted EBITDA: was a loss of $8.8 million (see “Non-GAAP Financial Measures”, below)

 

“During the 4th quarter of 2023, we continued to execute our plan to reduce inventory levels, and ceased purchasing new inventory,” commented Ezra Dabah, CEO of Kidpik, who continued, “As discussed in greater detail in the press release we released on April 1, 2024, on March 29, 2024, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Nina Footwear Corp., a Delaware corporation (“Nina Footwear”), and Kidpik Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Kidpik (“Merger Sub”), whereby Nina Footwear will merge with and into Merger Sub, with Nina Footwear continuing as the surviving entity (the “Merger”). Pursuant to the Merger, Nina Footwear will become a wholly-owned subsidiary of Kidpik. We are extremely excited about the prospects of the Merger which is expected to increase Kidpik’s revenue, cashflow and prospects, while also strengthening Kidpik’s balance sheet and significantly increasing stockholder value.”

 

 
 

 

The closing of the Merger is subject to customary closing conditions, including the preparation and mailing of a proxy statement by Kidpik, and the receipt of required stockholder approvals from Kidpik and Nina Footwear stockholders, and is expected to close in the third quarter of 2024.

 

Revenue by Subscription- For year ended 2023

 

Active Subscriptions (recurring boxes): decreased by 20.0% to $8.8 million

 

New Subscriptions (first boxes): decreased by 12.5% to $1.6 million

 

Total Subscriptions: decreased 18.9% to $10.4 million or 73.2% of total revenue

 

Balance Sheet and Cash Flow

 

  Cash at the end of the fourth quarter totaled $0.2 million compared to $0.6 million last year.
  Net cash used in operating activities decreased to $0.3 million in 2023, compared to $6.6 million of cash used in operating activities in 2022.
  As of December 30, 2023, we had $6.0 million in total current assets, $5.3 million in total current liabilities and a working capital of $0.7 million.

 

Kidpik will not be holding an earnings call to discuss fourth quarter 2023 or year-end 2023 results, as the Company moves forward with the Merger.

 

About Kidpik Corp.

 

Founded in 2016, KIDPIK (Nasdaq:PIK) is an online clothing subscription box for kids, offering mix & match, expertly styled outfits that are curated based on each member’s style preferences. KIDPIK delivers a surprise box monthly or seasonally, providing an effortless shopping experience for parents and a fun discovery for kids. Each seasonal collection is designed in-house by a team with decades of experience designing childrenswear. KIDPIK combines the expertise of fashion stylists with proprietary data and technology to translate kids’ unique style preferences into surprise boxes of curated outfits. We also sell our branded clothing and footwear through our e-commerce website, shop.kidpik.com. For more information, visit www.kidpik.com.

 

 
 

 

Non-GAAP Financial Measures

 

We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). However, management believes that certain non-GAAP financial measures provide users of our financial information with additional useful information in evaluating our performance. We believe that adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, and that this supplemental measure facilitates comparisons between companies. This non-GAAP financial measure may be different than similarly titled measures used by other companies.

 

Our non-GAAP financial measure should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

 

  Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
  Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
  Adjusted EBITDA does not reflect certain non-routine items that may represent a reduction in cash available to us; and
  Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

 

We compensate for these limitations by providing a reconciliation of this non-GAAP measure to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view this non-GAAP measure in conjunction with the most directly comparable GAAP financial measure. For more information on these non-GAAP financial measure, please see the section titled “Unaudited Reconciliation of Net Loss to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)”, included at the end of this release.

 

 
 

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain statements contained in this press release regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). These include, but are not limited to, statements regarding the anticipated completion and effects of the proposed Merger, projections and estimates of Kidpik’s corporate strategies, future operations and plans, including the costs thereof; and other statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Kidpik and Nina Footwear undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on our expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors, including, but not limited to, the outcome of any legal proceedings that may be instituted against Nina Footwear or Kidpik following the announcement of the Merger; the inability to complete the Merger, including due to the failure to obtain approval of the stockholders of Kidpik or Nina Footwear; delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regular reviews required to complete the Merger, if any; the inability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition, the ability of the combined company to grow and successfully execute on its business plan; costs related to the Merger; changes in the applicable laws or regulations; the possibility that the combined company may be adversely affected by other economic, business, and/or competitive factors; the combined company’s ability to manage future growth; the combined company’s ability to raise funding; the complexity of numerous regulatory and legal requirements that the combined company needs to comply with to operate its business; the reliance on the combined company’s management; the prior experience and successes of the combined company’s management team are not indicative of any future success; Kidpik’s and the combined company’s ability to meet Nasdaq’s continued listing requirements; Kidpik and the combined company’s ability to maintain the listing of their common stock on Nasdaq; the ability to obtain additional funding, the terms of such funding and potential dilution caused thereby; the continuing effect of rising interest rates and inflation on Kidpik’s and the combined company’s operations, sales, and market for their products; deterioration of the global economic environment; rising interest rates and inflation and Kidpik’s and the combined company’s ability to control costs, including employee wages and benefits and other operating expenses; Kidpik’s decision to cease manufacturing new products; Kidpik’s history of losses; Kidpik’s and the combined company’s ability to maintain current members and customers and grow members and customers; risks associated with the effect of global pandemics, and governmental responses thereto on Kidpik’s and the combined company’s operations, those of Kidpik’s and the combined company’s vendors, Kidpik’s and the combined company’s customers and members and the economy in general; risks associated with Kidpik’s and the combined company’s supply chain and third-party service providers, interruptions in the supply of raw materials and merchandise; increased costs of raw materials, products and shipping costs due to inflation; disruptions at Kidpik’s and the combined company’s warehouse facility and/or of their data or information services, Kidpik’s and the combined company’s ability to locate warehouse and distribution facilities and the lease terms of any such facilities; issues affecting our shipping providers; disruptions to the internet; risks that effect our ability to successfully market Kidpik’s and the combined company’s products to key demographics; the effect of data security breaches, malicious code and/or hackers; increased competition and our ability to maintain and strengthen Kidpik’s and the combined company’s brand name; changes in consumer tastes and preferences and changing fashion trends; material changes and/or terminations of Kidpik’s and the combined company’s relationships with key vendors; significant product returns from customers, excess inventory and Kidpik’s and the combined company’s ability to manage our inventory; the effect of trade restrictions and tariffs, increased costs associated therewith and/or decreased availability of products; Kidpik’s and the combined company’s ability to innovate, expand their offerings and compete against competitors which may have greater resources; the fact that Kidpik’s Chief Executive Officer has majority voting control over Kidpik and will have majority control over the combined company; if the use of “cookie” tracking technologies is further restricted, regulated, or blocked, or if changes in technology cause cookies to become less reliable or acceptable as a means of tracking consumer behavior; Kidpik’s and the combined company’s ability to comply with the covenants of future loan and lending agreements and covenants; Kidpik’s and the combined company’s ability to prevent credit card and payment fraud; the risk of unauthorized access to confidential information; Kidpik’s and the combined company’s ability to protect intellectual property and trade secrets, claims from third-parties that Kidpik and/or the combined company have violated their intellectual property or trade secrets and potential lawsuits in connection therewith; Kidpik’s and the combined company’s ability to comply with changing regulations and laws, penalties associated with any non-compliance (inadvertent or otherwise), the effect of new laws or regulations, and Kidpik’s and the combined company’s ability to comply with such new laws or regulations; changes in tax rates; Kidpik’s and the combined company’s reliance and retention of management; the outcome of future lawsuits, litigation, regulatory matters or claims; the fact that Kidpik and the combined company have a limited operating history; the effect of future acquisitions on Kidpik’s and the combined company’s operations and expenses; and others that are included from time to time in filings made by Kidpik with the Securities and Exchange Commission, many of which are beyond the control of Kidpik and the combined company, including, but not limited to, in the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections in Kidpik’s Form 10-Ks and Form 10-Qs and in its Form 8-Ks, which it has filed, and files from time to time, with the Securities and Exchange Commission, including, but not limited to its Annual Report on Form 10-K for the year ended December 30, 2023. These reports are available at www.sec.gov and on Kidpik’s website at https://investor.kidpik.com/sec-filings. Kidpik cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to Kidpik or any person acting on behalf of Kidpik are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Kidpik’s and the combined company’s future results and/or could cause their actual results and financial condition to differ materially from those indicated in the forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. Kidpik cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Except as required by law, neither Nina Footwear nor Kidpik undertakes any obligation to update publicly any forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in their expectations. If they update one or more forward-looking statements, no inference should be drawn that they will make additional updates with respect to those or other forward-looking statements.

 

 
 

 

Additional Information and Where to Find It

 

In connection with the proposed Merger, Kidpik intends to file a proxy statement with the Securities and Exchange Commission (the “Proxy Statement”), that will be distributed to holders of Kidpik’s common stock in connection with its solicitation of proxies for the vote by Kidpik’s stockholders with respect to the proposed Merger and other matters as may be described in the Proxy Statement. The Proxy Statement, when it is filed and mailed to stockholders, will contain important information about the proposed Merger and the other matters to be voted upon at a meeting of Kidpik’s stockholders to be held to approve the proposed Merger and other matters (the “Merger Meeting”). Kidpik may also file other documents with the SEC regarding the proposed Merger. Kidpik stockholders and other interested persons are advised to read, when available, the Proxy Statement, as well as any amendments or supplements thereto, because they will contain important information about the proposed Merger. When available, the definitive Proxy Statement will be mailed to Kidpik stockholders as of a record date to be established for voting on the proposed Merger and the other matters to be voted upon at the Merger Meeting.

 

Kidpik’s stockholders may obtain copies of the aforementioned documents and other documents filed by Kidpik with the SEC, without charge, once available, at the SEC’s web site at www.sec.gov, on Kidpik’s website at https://investor.kidpik.com/sec-filings or, alternatively, by directing a request by mail, email or telephone to Kidpik at 200 Park Avenue South, 3rd Floor, New York, New York 10003; ir@kidpik.com; or (212) 399-2323, respectively.

 

Participants in the Solicitation

 

Kidpik, Nina Footwear, and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from Kidpik’s stockholders with respect to the proposed Merger. Information regarding the persons who may be deemed participants in the solicitation of proxies from Kidpik’s stockholders in connection with the proposed Merger will be contained in the Proxy Statement relating to the proposed Merger, when available, which will be filed with the SEC. Additionally, information about Kidpik’s directors and executive officers and their ownership of Kidpik is available in Kidpik’s Definitive Information Statement on Schedule 14A, as filed with the Securities and Exchange Commission on May 1, 2023 (the “Annual Meeting Proxy Statement”) and the Current Report on Form 8-K filed with the SEC on December 8, 2023. To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the Annual Meeting Proxy Statement, such information has been or will be reflected on Kidpik’s Statements of Change in Ownership on Forms 3 and 4 filed with the SEC. You may obtain free copies of these documents using the sources indicated above.

 

Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement and other relevant materials to be filed with the SEC regarding the Merger Agreement when they become available. Investors should read the Proxy Statement carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Kidpik using the sources indicated above.

 

Non-Solicitation

 

This communication is for informational purposes only and is not intended to and shall not constitute a proxy statement or the solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Merger Agreement and is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy or subscribe for any securities or a solicitation of any vote of approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

 
 

 

Kidpik Corp.

Statements of Operations

Years Ended December 30, 2023 and December 31, 2022

 

   For the 13 weeks ended   For the 52 weeks ended 
  

December 30,

2023

  

December 31,

2022

  

December 30,

2023

  

December 31,

2022

 
Revenues, net  $3,373,144   $4,743,852   $14,240,724   $16,477,984 
                     
Cost of goods sold   3,918,985    1,950,455    8,228,458    6,600,007 
                     
Gross profit   (545,841)   2,793,397    6,012,266    9,877,977 
                     
Operating expenses                    
Shipping and handling   1,136,631    1,201,517    4,308,265    4,334,928 
Payroll, related costs   778,158    1,139,224    3,974,438    5,276,719 
General and administrative   1,597,997    2,211,759    7,586,540    8,061,825 
Depreciation and amortization   12,503    7,925    48,119    27,914 
Total operating expenses   3,525,289    4,560,425    15,917,362    17,701,386 
Operating loss   (4,071,130)   (1,767,028)   (9,905,096)   (7,823,409)
Other (income) expenses                    
Interest expense   (71,036)   27,162    686    78,646 
Other income   -    -    -    (286,794)
Total other (income) expenses   (71,036)   27,162    686    (208,148)
                     
Loss before provision for income taxes   (4,000,094)   (1,794,190)   (9,905,782)   (7,615,261)
                     
Provision for income taxes   -    -    -    - 
                     
Net loss  $(4,000,094)  $(1,794,190)  $(9,905,782)  $(7,615,261)
                     
Net loss per share attributable to common stockholders:                    
Basic  $(2.14)  $(1.17)  $(6.04)  $(4.97)
Diluted  $(2.14)  $(1.17)  $(6.04)  $(4.97)
                     
Weighted average common shares outstanding:                    
Basic   1,872,433    1,537,639    1,640,191    1,532,498 
Diluted   1,872,433    1,537,639    1,640,191    1,532,498 

 

 
 

 

Kidpik Corp.

Balance Sheets

December 30, 2023 and December 31, 2022

 

   2023   2022 
Assets          
Current assets          
Cash  $194,515   $600,595 
Restricted cash   4,618    4,618 
Accounts receivable   211,739    336,468 
Inventory   4,854,641    12,625,948 
Prepaid expenses and other current assets   761,969    1,043,095 
Total current assets   6,027,482    14,610,724 
           
Leasehold improvements and equipment, net   97,136    67,957 
Operating lease right-of-use assets   992,396    1,469,665 
Total assets  $7,117,014   $16,148,346 
           
Liabilities and Stockholders’ Equity          
Current liabilities          
Accounts payable  $1,862,266   $2,153,389 
Accounts payable, related party   1,868,411    1,107,665 
Accrued expenses and other current liabilities   438,034    587,112 
Operating lease liabilities   281,225    438,957 
Short-term debt, related party   850,000    2,050,000 
Total current liabilities   5,299,936    6,337,123 
           
Operating lease liabilities, net of current portion   780,244    1,061,469 
Total liabilities   6,080,180    7,398,592 
           
Commitments and contingencies          
Stockholders’ equity          
Preferred stock, par value $0.001, 25,000,000 shares authorized, of which no shares are issued and outstanding as of December 30, 2023 and December 31, 2022, respectively   -    - 
Common stock, par value $0.001, 75,000,000 shares authorized, of which 1,872,433 and 1,537,639 shares are issued and outstanding as of December 30, 2023 and December 31, 2022, respectively   1,872    1,537 
Additional paid-in capital   52,475,189    50,282,662 
Accumulated deficit   (51,440,227)   (41,534,445)
Total stockholders’ equity   1,036,834    8,749,754 
Total liabilities and stockholders’ equity  $7,117,014   $16,148,346 

 

 
 

 

Kidpik Corp.

Statements of Cash Flows

Years Ended December 30, 2023 and December 31, 2022

 

   2023   2022 
Cash flows from operating activities          
Net loss  $(9,905,782)  $(7,615,261)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   48,119    27,914 
Equity-based compensation   999,309    1,651,048 
Inventory write-down   2,891,120    - 
Bad debt expense   301,102    742,037 
Changes in operating assets and liabilities:          
Accounts receivable   (176,373)   (736,231)
Inventory   4,880,187    (1,007,351)
Prepaid expenses and other current assets   281,126    683,421 
Operating lease right-of-use assets and liabilities   38,312    30,761 
Accounts payable   (291,126)   (406,972)
Accounts payable, related parties   760,747    193,957 
Accrued expenses and other current liabilities   (149,075)   (213,860)
Net cash flows used in operating activities   (332,334)   (6,650,537)
           
Cash flows from investing activities          
Purchases of leasehold improvements and equipment   (77,299)   (48,903)
Net cash used in investing activities   (77,299)   (48,903)
           
Cash flows from financing activities          
Net repayments from loan related party   -    (150,000)
Net repayments from advance payable   -    (932,155)
Cash used to settle net share equity awards   (6,447)   (33,692)
Net cash (used in) provided by financing activities   (6,447)   (1,115,847)
Net (decrease) increase in cash   (406,080)   (7,815,287)
           
Cash and restricted cash, beginning of year   605,213    8,420,500 
Cash and restricted cash, end of year  $199,133   $605,213 
           
Supplemental disclosure of cash flow data:          
Interest paid  $-   $38,607 
Taxes paid  $-   $- 
           
Supplemental disclosure of noncash investing and financing activities:          
Record right-of use asset and operating lease liabilities   -    1,857,925 
Conversion of shareholder debt  $1,200,000   $- 

 

 
 

 

RESULTS OF OPERATIONS

 

The Company’s revenue, net is disaggregated based on the following categories:

 

   For the 13 weeks ended   For the 52 weeks ended 
  

December 30,

2023

  

December 31,

2022

  

December 30,

2023

  

December 31,

2022

 
Subscription boxes  $2,421,594   $3,534,962   $10,428,319   $12,861,293 
3rd party websites sales   416,545    593,446    1,771,608    2,170,858 
Online website sales   535,005    615,444    2,040,797    1,445,833 
Total revenue  $3,373,144   $4,743,852   $14,240,724   $16,477,984 

 

Gross Margin

 

Gross profit is equal to our net sales (revenues, net) less cost of goods sold. Gross profit as a percentage of our net sales is referred to as gross margin. Cost of sales consists of the purchase price of merchandise sold to customers and includes import duties and other taxes, freight in, defective merchandise returned from customers, receiving costs, inventory write-offs, and other miscellaneous shrinkage.

 

   For the 13 weeks ended   For the 52 weeks ended 
  

December 30,

2023

  

December 31,

2022

  

December 30,

2023

  

December 31,

2022

 
                     
Gross Margin   (16.2)%   58.9%   42.2%   59.9%

 

Shipped Items

 

We define shipped items as the total number of items shipped in a given period to our customers through our active subscription, Amazon and online website sales.

 

   For the 13 weeks ended   For the 52 weeks ended 
   (In thousands)   (In thousands) 
    

December 30,

2023

    

December 31,

2022

    

December 30,

2023

    

December 31,

2022

 
                     
Shipped Items   285    374    1,208    1,457 

 

Average Shipment Keep Rate

 

Average shipment keep rate is calculated as the total number of items kept by our customers divided by total number of shipped items in a given period.

 

   For the 13 weeks ended   For the 52 weeks ended 
  

December 30,

2023

  

December 31,

2022

  

December 30,

2023

  

December 31,

2022

 
                     
Average Shipment Keep Rate   66.2%   65.3%   72.8%   68.3%

 

 
 

 

Revenue by Channel

 

  

13 weeks

ended

December 30,

2023

  

13 weeks

ended

December 31,

2022

   Change ($)   Change (%) 
Revenue by channel                    
Subscription boxes  $2,421,594   $3,534,962    (1,113,368)   (31.5)%
3rd party websites sales   416,545    593,446    (176,901)   (29.8)%
Online website sales   535,005    615,444    (80,439)   (13.1)%
Total revenue  $3,373,144   $4,743,852   $(1,370,708)   (28.9)%

 

  

52 weeks

ended

December 30,

2023

  

52 weeks

ended

December 31,

2022

   Change ($)   Change (%) 
Revenue by channel                    
Subscription boxes  $10,428,319   $12,861,293   $(2,432,974)   (18.9)%
3rd party websites sales   1,771,608    2,170,858    (399,250)   (18.4)%
Online website sales   2,040,797    1,445,833    594,964    41.2%
Total revenue  $14,240,724   $16,477,984   $(2,237,260)   (13.6)%

 

Subscription Boxes Revenue

 

  

13 weeks

ended

December 30,

2023

  

13 weeks

ended

December 31,

2022

   Change ($)   Change (%) 
Subscription boxes revenue from                    
Active subscriptions – recurring boxes  $2,256,926   $2,923,413   $(666,487)   (22.8)%
New subscriptions - first box   164,668    611,549    (446,881)   (73.1)%
Total Subscription boxes revenue  $2,421,594   $3,534,962   $(1,113,368)   (31.5)%

 

  

52 weeks

ended

December 30,

2023

  

52 weeks

ended

December 31,

2022

   Change ($)   Change (%) 
Subscription boxes revenue from                    
Active subscriptions – recurring boxes  $8,806,473   $11,007,517   $(2,201,044)   (20.0)%
New subscriptions - first box   1,621,846    1,853,776    (231,930)   (12.5)%
Total Subscription boxes revenue  $10,428,319   $12,861,293   $(2,432,974)   (18.9)%

 

 
 

 

Revenue by Product Line

 

  

13 weeks

ended

December 30,

2023

  

13 weeks

ended

December 31,

2022

   Change ($)   Change (%) 
Revenue by product line                    
Girls’ apparel  $2,559,807   $3,499,888   $(940,081)   (26.9)%
Boys’ apparel   690,717    988,939    (298,222)   (30.2)%
Toddlers’ apparel   122,620    255,025    (132,405)   (51.9)%
Total revenue  $3,373,144   $4,743,852   $(1,370,708)   (28.9)%

 

  

52 weeks

ended

December 30,

2023

  

52 weeks

ended

December 31,

2022

   Change ($)   Change (%) 
Revenue by product line                    
Girls’ apparel  $10,844,289   $12,211,914   $(1,367,625)   (11.2)%
Boys’ apparel   2,760,864    3,437,117    (676,253)   (19.7)%
Toddlers’ apparel   635,571    828,953    (193,382)   (23.3)%
Total revenue  $14,240,724   $16,477,984   $(2,237,260)   (13.6)%

 

Unaudited Reconciliation of Net Loss to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)

 

We define adjusted EBITDA as net loss excluding interest income/expense, other (income) expense, net, provision for income taxes, depreciation and amortization, and equity-based compensation expense, and certain non-routine items. The following table presents a reconciliation of net loss, the most comparable GAAP financial measure, to adjusted EBITDA for each of the periods presented:

 

   For the 13 weeks ended   For the 52 weeks ended 
  

December 30,

2023

  

December 31,

2022

  

December 30,

2023

  

December 31,

2022

 
Net loss  $(4,000,094)  $(1,794,190)  $(9,905,782)  $(7,615,261)
Add (deduct)                    
Interest expense   (71,036)   27,161    686    78,646 
Other income   -    -    -    (286,794)
Provision for income taxes   -    -    -    - 
Depreciation and amortization   12,503    7,925    48,119    27,914 
Equity based compensation   160,337    295,980    999,309    1,651,048 
                     
Adjusted EBITDA  $(3,898,290)  $(1,463,124)  $(8,857,668)  $(6,144,447)

 

See also “Non-GAAP Financial Measures”, above.

 

Contacts

 

Investor Relations Contact:

ir@kidpik.com

Media:

press@kidpik.com

 

 

 

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