Subsequent Events

9 Months Ended

Oct. 28, 2023

Note 14. Subsequent Events

After an assessment of its current cash and liquidity position and near-term debt maturities, the Company has initiated a plan to wind down the Company’s operations in an orderly fashion (the “Plan”), which is expected to be substantially complete by May 1, 2024. The Plan includes the following:

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The sell through of current on hand inventory through the current channels;

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the collection of outstanding receivables due to the Company;

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a reduction in force of substantially all of our employees other than a core group of employees. We expect to substantially complete the workforce reduction prior to the end of January 2024;

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marketing for sale of unrecognized assets including private label brands, trademarks and other intangible assets; and

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the settlement of all liabilities of the Company.

During the duration of the Plan, the Board may authorize the Company to pay all costs and expenses, including without limitation, retention and severance expenses, professional and other fees and expenses of persons rendering services, including legal counsel, accountants and tax advisors, to the Company in connection with the collection, sale, exchange or other disposition of the Company's property and assets and the implementation of the plan. The Company intends to wind down its operations in an orderly manner without the need for a bankruptcy filing. Additional information is set forth in Note 1, Nature of Operations--Liquidity and Cash Flows, in this Form 10-Q.

In order to effect an orderly wind down of the Company and support the efforts to maximize the value of the Company’s business and assets, on December 14, 2023, Kaspien entered into a Senior Executive Retention Bonus & Severance Letter Agreement with Brock Kowalchuk, its Chief Executive Officer and the Principal Executive Officer of the Company. Pursuant to the terms of the agreement, Mr. Kowalchuk will continue to serve as Chief Executive Officer until May 1, 2024. In addition, on December 17, 2023, Kaspien entered into a Senior Executive Retention Bonus & Severance Letter Agreement with Edwin Sapienza, its Chief Financial Officer and the Chief Financial Officer of the Company. Pursuant to the terms of the agreement, Mr. Sapienza will continue to serve as Chief Financial Officer until May 1, 2024. Further details regarding these agreements are as disclosed in the Current Report on Form 8-K of the Company filed on December 18, 2023.

Additionally, the Company intends to file a Form 25 with the U.S. Securities and Exchange Commission on or about December 28, 2023. As a result, the Company expects the delisting of its common stock from the OTCQB to become effective on or about January 8, 2024. The Company also will be taking steps to deregister as a public company under the Securities Exchange Act of 1934.

In addition, on December 12, 2023, the Company filed Form 12b-25 due to the Company’s inability to file timely, without unreasonable effort and expense, its Quarterly Report on Form 10-Q for the quarter ended October 28, 2023, because it was still in the process of compiling information required to complete the Quarterly Report and, accordingly, Fruci & Associates II, PLLC, the Company’s independent registered public accounting firm, required additional time to complete its review of the financial statements for the period ended October 28, 2023 to be incorporated in the Quarterly Report.