CHRISTOPHER & BANKS CORPORATION
Our Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") should be read in conjunction with our Consolidated
Financial Statements and related Notes included in Item 8, Financial Statements
and Supplementary Data, of this Annual Report. Unless otherwise noted,
transactions and other factors significantly impacting our financial condition,
results of operations and liquidity are discussed in order of magnitude. We
refer to the 52 weeks ended February 1, 2020 and the 52 weeks ended February 2,
2019 in this MD&A as "Fiscal 2019" and "Fiscal 2018", respectively.
Executive Overview
We are a national specialty retailer featuring exclusively designed, privately-branded women's apparel and accessories. We offer our customers an assortment of classic and versatile clothing for her everyday needs at a good value. We operate an integrated, omni-channel business platform that is designed to provide our customers a seamless retail experience with the ability to shop when and where they want, including our retail stores, outlet stores, and website. This allows our customers to browse, purchase, return, or exchange our merchandise through the channel that is optimal for her. As ofFebruary 1, 2020 , we operated 447 stores in 44 states, including 309 Missy, Petite, Women ("MPW") stores, 77 outlet stores, 32 Christopher & Banks ("CB") stores, and 29 C.J. Banks ("CJ") stores. Our CB brand offers unique fashions and accessories featuring exclusively designed assortments of women's apparel in sizes 4 to 16 and in petite sizes 4P to 16P. Our C.J. Banks brand offers similar assortments of women's apparel in sizes 14W to 26W. Our MPW concept and outlet stores offer an assortment of both Christopher & Banks and C.J. Banks apparel servicing the Missy, Petite and Women-sized customer in one location. 26
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Other Developments
During fiscal year 2019, the Company had the following addition to its executive leadership team:Rachel Endrizzi (Senior Vice President, Chief Marketing Officer inJune 2019 ). Strategic Priorities
Our overall business strategy is to build sustainable, long-term revenue growth and consistent profitability through the following strategic initiatives:
• Enhancing the customer shopping experience;
• Improving marketing and promotional effectiveness;
• Expanding omni-channel capabilities;
• Building loyalty and grow our customer file; and
• Reducing operating expenses.
Enhancing the Customer Shopping Experience
We are committed to enhancing our customer's shopping experience by providing a well curated, relevant and inspiring product assortment that is presented in a way that is easy for her to shop. This begins with offering the right product, but also means delivering a consistent flow of newness; maintaining an in-stock position on key items to meet demand; creating compelling visual displays; merchandising the store in a way that is easy and appealing to shop; and of course, delivering an amazing customer experience.
Improving Marketing and Promotional Effectiveness
Our goals include executing disciplined markdown management, leveraging improved analytics to inform what types and depth of promotions and targeted offers are used, to increase our return on our marketing investments and to elevate our marketing message. We have improved our marketing collateral with higher quality photography, including emotive video advertising and our collections in a more modern, fresh and aspirational way, while maintaining our approachability. We are also taking a holistic approach to our marketing and advertising with more consistent messaging across all channels and media. We believe that this increased consistency combined with the enhancements described above will raise her perception and will attract more customers to our brand
Expanding Omni-Channel Capabilities
Our integrated, omni-channel strategy is designed to provide customers with a seamless retail experience, allowing her to shop whenever, however and wherever she chooses. In January of 2018, we launched "Buy online ship to store," and in November of 2018, we launched "Buy online ship from store." As ofNovember 2019 , we are fulfilling eCommerce orders from all of our CB, CJ, and MPW stores. We launched "Buy online pick up in store" at the order level during the second quarter of Fiscal 2019. These flexible fulfillment options not only serve a customer need, they allow us to better leverage our inventory across our entire chain.
Building Loyalty and Grow our Customer File
We have a very loyal customer base that is highly engaged. Our uniquely designed
product, our value positioning and our customer service are key differentiators
for us and contribute to the loyalty of our customers with approximately 90% of
our active customers participating in our loyalty rewards program.
We continue to focus on maximizing the benefits of our customer relationship
management ("CRM") database, Friendship Rewards Loyalty Program ("Friendship
Rewards"), and private-label credit card program to strengthen engagement with
our customers. Our Friendship Rewards program, in conjunction with our CRM
system, allows us to personalize communications and customize our offers. We
continue to leverage our direct and digital marketing channels to encourage
additional customer visits and increased spending per visit.
To grow our existing customer file, we intend to reallocate our marketing spend
in an effort to drive acquisition of new customers, reactivate lapsed customers,
and also capitalize on market disruptions. Finally, we plan to capitalize on our
unique positioning in the market to drive engagement with customers on a grass
roots level.
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Table of Contents Reducing Operating Expense We intend to take a holistic approach in reducing operating expenses. In Fiscal 2019, we engaged a leading national third-party real estate consulting firm to assist us in lease restructuring and to accelerate and increase occupancy cost savings. As a result of these lease restructuring efforts, we realized approximately$2.0 million in additional occupancy cost savings in Fiscal 2019 and expect to realize an incremental$4.6 million in Fiscal 2020 for a total of$6.6 million for both Fiscal 2019 and Fiscal 2020.
We have also hired a third-party, non-merchandise procurement specialist to assist us in analyzing relationships and negotiating cost reductions. In addition, we intend to continue to aggressively negotiate rent reductions, optimize our marketing spend, review and reduce our corporate overhead and reduce our shipping and fulfillment expense.
Performance Measures
Management evaluates our financial results based on the following key performance measures.
Comparable sales
Comparable sales is a measure that highlights the performance of our store channel and eCommerce channel sales by measuring the changes in sales over the comparable, prior-year period of equivalent length.
Our comparable sales calculation includes merchandise sales for:
• Stores operating for at least 13 full months;
• Stores relocated within the same center; and
• eCommerce sales.
Our comparable sales calculation excludes:
• Stores converted to the MPW format for 13 full months post conversion.
We believe our eCommerce operations are interdependent with our brick-and-mortar store sales and, as such, we believe that reporting combined store and eCommerce comparable sales is a more appropriate presentation. Our customers are able to browse merchandise in one channel and consummate a transaction in a different channel. At the same time, our customers have the option to return merchandise to a store or our third-party distribution center, regardless of the original channel used for purchase.
Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies.
Other performance measures
To supplement our comparable sales performance measure, we also monitor changes in net sales, net sales per store, net sales per gross square foot, gross profit, gross margin rate, operating income, cash, inventory and liquidity.
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Results of Operations
The following table presents selected consolidated financial data for each of the past two fiscal years:
Net Change Percent of Net Sales
52 Weeks Ended 52 Weeks Ended
(dollars in thousands)
Percent February 1, 2020 February 2, 2019
Net sales $ 348,850 $ 348,900 $ (50 ) - % 100.0 % 100.0 %
Merchandise, buying
and occupancy costs 240,023 246,269 (6,246 ) (2.5 )% 68.8 % 70.6 %
Gross profit 108,827 102,631 6,196 6.0 % 31.2 % 29.4 %
Other operating
expenses:
Selling, general and
administrative 116,143 120,371 (4,228 ) (3.5 )% 33.3 % 34.5 %
Depreciation and
amortization 8,565 10,158 (1,593 ) (15.7 )% 2.5 % 2.9 %
Impairment of
long-lived assets 311 4,384 (4,073 ) (92.9 )% 0.1 % 1.3 %
Total other operating
expenses 125,019 134,913 (9,894 ) (7.3 )% 35.8 % 38.7 %
Operating loss (16,192 ) (32,282 ) 16,090 (49.8 )% (4.6 )% (9.3 )%
Interest expense, net (475 ) (183 ) (292 ) 159.6 % (0.1 )% (0.1 )%
Loss before income
taxes (16,667 ) (32,465 ) 15,798 (48.7 )% (4.8 )% (9.3 )%
Income tax provision 27 374 (347 ) (92.8 )% - % 0.1 %
Net loss $ (16,694 ) $ (32,839 ) $ 16,145 (49.2 )% (4.8 )% (9.4 )%
Rate trends as a percentage of net sales Fiscal 2019 Fiscal 2018 Gross margin
31.2 % 29.4 %
Selling, general, and administrative 33.3 % 34.5 %
Depreciation and amortization 2.5 % 2.9 %
Operating loss (4.6 )% (9.3 )%
Fiscal 2019 Summary • Net sales were flat compared to the same period last year. A decline in
average unit retail was partially offset by increases in the number of
transactions and units sold per transaction.
• Comparable sales in Fiscal 2019 increased 0.2%, compared to a 2.6% decrease
in Fiscal 2018.
• eCommerce comparable sales increased 6.0% in Fiscal 2019 compared to a 15.3%
increase in Fiscal 2018.
• Gross margin percentage improved 178 basis points compared to the same period
last year as improvements in merchandise margin and occupancy expenses were
partially offset by higher shipping costs relating to our ship from store
initiative.
• Selling, general, and administrative expense was
than the same period last year due to lower expenses for compensation,
medical benefits, professional services and eCommerce, and the sale of a
claim regarding credit card interchange fees in the second quarter. These
expense decreases were partially offset by an increase in insurance and
recruiting and training expenses.
• Net loss totaled
compared to a net loss of
2018.
• As of
compared to
borrowings under our Credit Facility as of
2019.
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The components of the flat net sales in Fiscal 2019 compared to Fiscal 2018 were as follows: Sales driver change components Fiscal 2019 Number of transactions 1.5 % Average unit retail (2.2 )% Units per transaction 0.5 % Other sales 0.2 %
Total sales driver change decrease - %
Comparable sales Fiscal 2019 Comparable sales 0.2 %
Sales were flat primarily as a 2.2% decrease in average unit retail was partially offset by an increase of 1.5% in the number of transactions and a 0.5% increase in units per transaction.
To supplement our comparable sales measure, we also monitor changes in other store sales metrics as illustrated in the table below: Store metrics
Fiscal 2019
Net sales per store % change (0.6 )%
Net sales per square foot % change (1.0 )%
Net sales per store and net sales per square foot for Fiscal 2019 each declined
from the 2.2% decrease in average unit retail, partially offset by an increase
of 1.5% in the number of transactions and a 0.5% increase in units per
transaction.
Store count, openings, closings, and square footage for our stores were as
follows:
Store Count Square Footage (1)
Stores by February MPW Avg Store February 1, February
Format 2, 2019 Open Close Conversions February 1, 2020 Count 2020 2, 2019
MPW 312 6 (8 ) (1 ) 309 311 1,228 1,227
Outlet 80 1 (4 ) - 77 80 310 321
Christopher
and Banks 33 1 - (2 ) 32 33 105 109
C.J. Banks 30 1 (1 ) (1 ) 29 30 104 109
Total Stores 455 9 (13 ) (4 ) 447 454 1,747 1,766
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(1) Square footage presented in thousands.
Average store count for Fiscal 2019 was 454 stores compared to an average store count of 461 stores in Fiscal 2018, a decrease of 1.4%. Average square footage in Fiscal 2019 decreased 1.1% compared to Fiscal 2018.
Gross Profit
Gross margin percentage improved 178 basis points compared to the same period last year as improvements in occupancy expenses and merchandise margin were partially offset by higher shipping costs relating to our ship from store omni-channel initiative.
Selling, General, and Administrative ("SG&A") Expenses
SG&A decreased by$4.2 million due to lower expenses for compensation, medical benefits, professional services and eCommerce, and the sale of a claim regarding credit card interchange fees in the second quarter. These expense decreases were partially offset by an increase in insurance and recruiting and training expenses. As a percent of net sales, SG&A decreased by approximately 1.2%. 30
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Depreciation and Amortization
Depreciation and amortization expense decreased primarily due to the
sale-leaseback of the corporate facility in
Operating Loss
Our operating loss decreased 49.8% in Fiscal 2019 compared to Fiscal 2018 due to the$6.2 million increase in gross profit, the$4.2 million decline in SG&A expense, the$1.6 million decline in depreciation expense and the$4.1 million decline in asset impairment charges.
Interest expense, net
The increase in net interest expense was due to a higher level of average borrowings from our Credit Facility during Fiscal 2019 compared to Fiscal 2018.
Net earnings
Our net loss decrease in Fiscal 2019 compared to our net loss in Fiscal 2018 was primarily due to gross margin increases, decreases in SG&A expense, depreciation expenses, and store impairment charges. These improvements were partially offset by higher interest expense. Fiscal 2020 Outlook
For the full year of Fiscal 2020, the Company expects:
• Comparable sales to increase in the low-single digits;
• Gross margin expansion of 200 to 350 basis points;
• EBITDA to be between breakeven and a positive
• To end the fiscal year with positive cash and no outstanding borrowings under
its asset-based Credit Facility.
In regards to the COVID-19 Coronavirus, the situation remains very fluid and we are monitoring it closely to assess the potential implications to our business. Accordingly, the guidance above does not reflect the potential impact of the COVID-19 Coronavirus outbreak.
Liquidity and Capital Resources
Summary
We expect to operate our business and execute our strategic initiatives principally with funds generated from operations and from our Credit Facility and Term Loan, subject to compliance with the financial covenant and the other terms of the Company's Credit Facility with Wells Fargo and Term Loan withALCC, LLC .
Our cash and cash equivalents balance as of the end of Fiscal 2019 and 2018 was
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for each of the past three fiscal years: (in thousands)
Fiscal 2019 Fiscal 2018
Net cash used in operating activities $ (4,924 ) $ (21,508 )
Net cash (used in) provided by investing activities (2,006 ) 9,035
Net cash used in financing activities (111 ) (365 ) Net decrease in cash and cash equivalents$ (7,041 ) $ (12,838 ) 31
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Operating Activities
The$16.6 million change in cash used in operating activities for Fiscal 2019 compared to Fiscal 2018 was primarily due to the improvement in the net loss and changes in working capital. The positive effect of these items were partially offset by changes in non-cash expense and lease-related items. Working capital fluctuations are a reflection of seasonal patterns of sales and inventory purchasing. The year-over-year change is due to the timing of accounts payable and payroll accruals. Investing Activities Cash used in investing activities for the current period was$2.0 million as compared to an increase of cash of$9.0 million last year. The$11.0 million change is primarily attributable to proceeds of$13.3 million from the sale of the corporate facility as part of a sale-leaseback transaction inApril 2018 . Capital expenditures for Fiscal 2019 were approximately$2.0 million , which primarily reflected investments in technology associated with our eCommerce initiatives and merchandising capabilities, and expenditures supporting new stores.
Financing Activities
During Fiscal 2019, the Company repurchased 324,053 shares at a cost of
approximately
We have not paid any dividends since 2010.
Sources of Liquidity
Funds generated by operating activities, available cash and cash equivalents, our Credit Facility and, as ofFebruary 27, 2020 , our Term Loan Facility are our most significant sources of liquidity. We believe that our sources of liquidity will be sufficient to sustain operations and to finance anticipated capital investments and strategic initiatives over the next twelve months. However, in the event our liquidity is not sufficient to meet our operating needs, we may be required to limit our spending. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our existing facilities or obtain additional financing, if necessary, on favorable terms. The Credit Facility with Wells Fargo was amended and extended onAugust 3, 2018 with an expiration date ofAugust 3, 2023 . The Credit Facility amendment in 2018 supplemented the Company's existing$50.0 million revolving Credit Facility by adding a new$5.0 million revolving "first-in, last out" ("FILO Facility") tranche, subject to the borrowing base restrictions applicable to the FILO facility. OnFebruary 27, 2020 , the Company and Wells Fargo again amended the Credit Facility, which eliminated the$5.0 million FILO loan tranche simultaneously with the Company entering into a Term Loan Credit Facility withALCC, LLC , a related entity of Angelo Gordon. There were no outstanding borrowings under the Credit Facility as ofFebruary 1, 2020 andFebruary 2, 2019 . The total borrowing base atFebruary 1, 2020 was approximately$31.6 million . As ofFebruary 1, 2020 , the Company had open on-demand letters of credit of approximately$11.9 million . Accordingly, after reducing the capped borrowing base, no current borrowings, open letters of credit and the required minimum availability of the greater of$3.0 million , or 10.0% of the revolving loan cap, the net availability of revolving credit loans under the Credit Facility was approximately$16.7 million atFebruary 1, 2020 .
See Note 5 - Credit Facility and Note 14 - Subsequent Events for additional details regarding our Credit Facility and Term Loan Credit Facility.
Off-Balance Sheet Obligations
We do not have relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or
special purposes entities, which would have been established for the purpose of
facilitating off-balance sheet financial arrangements or other contractually
narrow or limited purposes. As such, we are not materially exposed to any
financing, liquidity, market or credit risk that could arise if we had engaged
in such relationships.
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Sourcing
We directly imported approximately 64% and 52% of our merchandise purchases during Fiscal 2019 and Fiscal 2018, respectively. A significant amount of our merchandise was manufactured overseas during each of these fiscal periods, primarily inChina ,Cambodia ,Indonesia andVietnam . Our reliance on sourcing from foreign countries may cause us to be exposed to certain risks as indicated below and in Part I, "Item 1A. Risk Factors" in this Annual Report. We do not have long-term purchase commitments or arrangements with any of our suppliers or buying agents. Our ten largest vendors represented approximately 66% and 67% of our total merchandise purchases in Fiscal 2019, and Fiscal 2018, respectively. One of our suppliers accounted for approximately 14% and 16% of our purchases during Fiscal 2019, and Fiscal 2018, respectively. Another supplier accounted for approximately 9% and 10% of our purchases during Fiscal 2019, and Fiscal 2018, respectively. No other vendor supplied greater than 10% of the Company's merchandise purchases during the last two fiscal years. Import restrictions, including tariffs and quotas, and changes in such restrictions, could affect the importation of apparel and might result in increased costs, delays in merchandise receipts or reduced supplies of apparel available to us, and could have an adverse effect on our financial condition, results of operations and liquidity. Our merchandise flow could also be adversely affected by political instability in any of the countries where our merchandise is manufactured or by changes inthe United States government's policies toward such foreign countries. In addition, merchandise receipts could be delayed due to interruptions in air, ocean, and ground shipments. Although we expect the cost of cotton and synthetics to remain relatively stable in Fiscal 2020, our average unit cost may change based on other factors, including overall mix of fashion versus core merchandise, fluctuations in transportation costs and potential changes in tariffs. To the extent that we cannot offset increases in the cost of goods with other cost reductions or efficiencies, we may be forced to sell the product at higher prices, which our customers may be less prone to accept.
Seasonality
Our quarterly results may fluctuate significantly depending on a number of factors, including general economic conditions, consumer confidence, customer response to our seasonal merchandise mix, timing of new store openings, adverse weather conditions, and shifts in the timing of certain holidays and shifts in the timing of promotional events.
Inflation
We do not believe that inflation had a material effect on our results of operations in the last two fiscal years.
Critical Accounting Policies and Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements and related notes, which have been prepared in accordance with generally accepted accounting principles used inthe United States . The preparation of these financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during a reporting period. Management bases its estimates on historical experience and various other assumptions that we believe to be reasonable. As a result, actual results could differ because of the use of these estimates and assumptions. Our significant accounting policies can be found in Note 1 - Nature of Business and Significant Accounting Policies, in the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most challenging and complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
Inventory valuation
Merchandise inventories are stated at the lower of cost or market utilizing the
retail inventory method. The retail inventory method inherently requires
management judgments and estimates, such as the amount and timing of permanent
markdowns to clear unproductive or slow-moving inventory, which may impact the
ending inventory valuation as well as gross margins.
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Permanent markdowns designated for clearance activity are recorded when the utility of the inventory has diminished. Factors considered in the determination of permanent markdowns include current and anticipated demand, customer preferences, age of the merchandise and fashion trends. When a decision is made to permanently mark down merchandise, the resulting gross profit reduction is recognized. Physical inventories are taken annually, and inventory records are adjusted accordingly, resulting in the recording of actual shrinkage. Physical inventories are taken at all store locations approximately three weeks before the end of the fiscal year. Shrinkage is estimated as a percentage of net sales at interim periods and for this approximate three-week period, based on historical shrinkage rates. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate our inventory markdowns or shrinkage rates. However, if estimates regarding consumer demand are inaccurate or actual physical inventory shrink differs significantly from our estimate, our operating results could be materially affected.
Long-lived assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset's estimated future cash flows (undiscounted and without interest charges). If the sum of the estimated future cash flows is less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset's estimated fair value, which is typically based on estimated discounted future cash flows. We recognize an impairment loss if the amount of the asset's carrying value exceeds the asset's estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis is depreciated over the remaining useful life of that asset. When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For long-lived assets deployed at store locations, we review for impairment at the individual store level. These reviews involve comparing the carrying value of all leasehold improvements, store furniture and fixtures and right-of-use assets located at each store to the net cash flow projections for each store. In addition, we conduct separate impairment reviews at other levels as appropriate. For example, shared assets such as our corporate office and distribution center would be evaluated by reference to the aggregate assets, liabilities and projected residual cash flows of all areas of the businesses utilizing those shared assets. Our impairment loss calculations involve uncertainty because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including estimating useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows. If actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. However, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses.
We recorded long-lived asset impairment charges of approximately
Customer loyalty program
The Company's Friendship Rewards loyalty program grants customers the ability to accumulate points based on purchase activity. Once a Friendship Rewards member achieves a certain point level, the member earns award certificates that may be redeemed towards future merchandise purchases. Points are accrued as unearned revenue and recorded as a reduction of net sales and a current liability as they are accumulated by members and certificates are earned. The liability is recorded net of estimated breakage based on historical redemption patterns and trends. Revenue and the related cost of sales are recognized upon redemption of the reward certificates, which expire approximately six weeks after issuance.
A customer loyalty liability of
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Income taxes
Our income tax returns are subject to or are in the process of being audited by various taxing authorities. To the extent our estimates of settlements change or the final tax outcome is different from the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made. Our income tax expense includes changes in our estimated liability for exposures associated with our various tax filing positions. Although we believe that our judgments are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. We record a valuation allowance against our deferred tax assets when it is more likely than not that some portion or all of our deferred tax assets will not be realized. In determining the need for a valuation allowance, management is required to make judgments regarding future income, taxable income, and the potential effects of the mix of income or losses in the jurisdictions in which we operate. Forming a conclusion that a valuation allowance is not needed is difficult when negative evidence such as cumulative losses exists. Based on available objective evidence and cumulative losses, management believes it is more likely than not that the deferred tax assets are not recognizable and will not be recognized until the Company has sufficient taxable income. Accordingly, the net deferred tax assets with the exception of certain deferred state benefits, have been offset by a valuation allowance. The valuation allowance increased by$3.0 million and$5.5 million during the years endedFebruary 1, 2020 andFebruary 2, 2019 , respectively. The increase in the valuation allowance in the current year is a result of the increase in deferred taxes. The valuation allowance does not have any impact on cash and does not prevent the Company from using the deferred tax assets in future periods when profits are realized. The Company has not completed an IRC Section 382 review for Fiscal 2019. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations of the Company.
Forward-Looking Statements
We may make forward-looking statements reflecting our current views with respect
to future events and financial performance. These forward-looking statements,
which may be included in reports filed under the Exchange Act, in press releases
and in other documents and materials as well as in written or oral statements
made by or on behalf of the Company, are subject to certain risks and
uncertainties, including those discussed in Item 1A - Risk Factors of this
Annual Report, which could cause actual results to differ materially from
historical results or anticipated future results.
The words or phrases "will likely result," "are expected to," "estimate,"
"project," "believe," "expect," "should," "anticipate," "forecast," "intend" and
similar expressions are intended to identify forward-looking statements within
the meaning of Section 21e of the Exchange Act and Section 27A of the Securities
Act of 1933, as amended, as enacted by the Private Securities Litigation Reform
Act of 1995 ("PSLRA"). In particular, we desire to take advantage of the
protections of the PSLRA in connection with the forward-looking statements made
in this Annual Report.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date such statements are made. In
addition, we wish to advise readers that the factors listed in Item 1A of this
Annual Report, as well as other factors, could affect our performance and could
cause our actual results for future periods to differ materially from any
opinions or statements expressed. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
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