Note 4 - Carousel Designs

12 Months Ended

Apr. 03, 2022

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 4 – Carousel Designs

During fiscal 2021 and the first 54 days of fiscal 2022, Carousel manufactured and marketed infant and toddler bedding directly to consumers online from a facility in Douglasville, Georgia. During the Company’s review for impairment of its long-lived asset groups and certain identifiable intangible asset groups as of March 28, 2021, management evaluated Carousel’s history of operating and cash flow losses and concluded that such losses were likely to continue. The Company developed the fair value of each of Carousel’s long-lived asset groups by using a combination of income, cost and market approaches. The result of this evaluation was management’s determination that the carrying value of Carousel’s long-lived asset group exceeded its fair value, which required the Company to impair Carousel’s long-lived asset group to its fair value and to recognize a related loss from the impairment of Carousel’s long-lived asset group during the fiscal year ended March 28, 2021, as follows (in thousands):

									Impairment
	Amounts as of March 28, 2021								Loss
			Accumulated						Fiscal
	Gross		Depreciation		Carrying		Fair Value		Year
	Amount		or Amortization		Value		Amount		2021
Property, plant and equipment
Vehicle	$	21	$	16	$	5	$	-	$	5
Leasehold improvements		5		4		1		-		1
Machinery and equipment		1,173		577		596		24		572
Total property, plant and equipment		1,199		597		602		24		578
Amortizable intangible assets:
Tradename		1,100		269		831		-		831
Developed technology		1,100		403		697		-		697
Non-compete covenants		360		264		96		-		96
Total amortizable intangible assets		2,560		936		1,624		-		1,624
Operating lease liabilities, current		32		-		32		-		32
Total long-lived assets	$	3,791	$	1,533	$	2,258	$	24	$	2,234

On May 5, 2021, the Company’s Board of Directors (the “Board”) approved the closure of Carousel due to its high costs, declining sales and operating and cash flow losses, as well as management’s determination that, due to post-COVID-19 competitive pressures in the infant, toddler and juvenile products segment within the consumer products industry, such losses were likely to continue. Accordingly, the operations of Carousel ceased on May 21, 2021.

During the fiscal year ended April 3, 2022, Carousel experienced a gross loss of $689,000, which was the result of the sale of inventory below cost and the recognition of charges of $334,000 related to the settlement with a supplier of a commitment to purchase fabric and $265,000 associated with the liquidation of Carousel’s remaining inventory upon the closure of the business.