UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~April 30, ~~2021~~2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 0-14818

~~Kaspien~~KASPIEN ~~Holdings~~HOLDINGS ~~Inc~~INC.

(Exact Name of Registrant as Specified in its Charter)

New York		14-1541629
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

2818 N. Sullivan Rd. Ste 130 Spokane Valley, WA		99216
Address of Principal Executive Offices		Zip Code

(855) 300-2710

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

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, $.01 par value per share	KSPN	NASDAQ ~~Capital~~Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value,

2,~~492~~501,568 shares outstanding as of ~~December~~June 110, ~~2021~~2022

Kaspien Holdings Inc.

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

	Form 10-Q Page No.
PART I. FINANCIAL INFORMATION
Item 1 – Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at October 30, 2021, January 30, 2021 and Octobert 31, 2020	4
Condensed Consolidated Statements of Operations – Thirteen and Thirty-nine Weeks Ended October 30, 2021 and October 31, 2020	5
Condensed Consolidated Statements of Comprehensive Loss – Thirteen and Thirty-nine Weeks Ended October 30, 2021 and October 31, 2020	6
Condensed Consolidated Statements of Shareholders’ Equity – Thirteen and Thirty-nine Weeks Ended October 30, 2021 and October 31, 2020	7
Condensed Consolidated Statements of Cash Flows – Thirteen and Thirty-nine Weeks Ended October 30, 2021 and October 31, 2020	8
Notes to Interim Condensed Consolidated Financial Statements	9
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	30
Item 4 – Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1 – Legal Proceedings	31
Item 1A- Risk Factors	32
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3 – Defaults Upon Senior Securities	32
Item 4 – Mine Safety Disclosures	32
Item 5 – Other Information	32
Item 6 – Exhibits	32
Signatures	33

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Form 10-Q Page No.
PART I. FINANCIAL INFORMATION

Item 1 – Interim Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets at April 30, 2022, January 29, 2022 and May 1, 2021	4

Condensed Consolidated Statements of Operations – Thirteen Weeks Ended April 30, 2022 and May 1, 2021	5

Condensed Consolidated Statements of Comprehensive Loss – Thirteen Weeks Ended April 30, 2022 and May 1, 2021	6

Condensed Consolidated Statements of Shareholders’ Equity – Thirteen Weeks Ended April 30, 2022 and May 1, 2021	7

Condensed Consolidated Statements of Cash Flows – Thirteen Weeks Ended April 30, 2022 and May 1, 2021	8

Notes to Interim Condensed Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3 – Quantitative and Qualitative Disclosures about Market Risk	28

Item 4 – Controls and Procedures	28

PART II. OTHER INFORMATION

Item 1 – Legal Proceedings	29

Item 1A – Risk Factors	29

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3 – Defaults Upon Senior Securities	29

Item 4 – Mine Safety Disclosures	29

Item 5 – Other Information	29

Item 6 – Exhibits	29

Signatures	31

Index

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, particularly in the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding ~~future~~our ~~business,~~ability ~~future~~to ~~results~~achieve ofprofitability ~~operations~~and ormeet ~~financial~~future ~~condition,~~liquidity ~~new~~needs orand ~~planned~~capital ~~features~~requirements, ~~products~~ orfuture ~~services~~business, ~~management~~future ~~strategies~~results of operations or financial condition, our ~~competitive~~business ~~position~~strategies and the COVID-19 pandemic. You can identify many forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “predict,” “project,” “seek,” “potential,” “opportunities” and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Such risks and uncertainties include, among others, changes in the competitive environment, availability of new products, changes in vendor policies or relationships, general economic factors in markets where the Company’s merchandise is sold, as well as those risks discussed under the caption “Risk Factors” in our most recently filed Annual Report on Form 10‑K, which was filed with the Securities and Exchange Commission (the “SEC”) on April 3029, ~~2021~~2022 (the “~~2021~~2022 Form 10-K”), and in our consolidated financial statements, related notes, and the other information appearing elsewhere in the ~~2021~~2022 Form 10‑K, this quarterly report on Form 10-Q and our other filings with the SEC. Given these risks and uncertainties, you should not place undue reliance on any forward-looking statements. The forward-looking statements contained in this quarterly report on Form 10-Q are made only as of the date hereof, and we do not intend, and, except as required by law, we undertake no obligation to update any forward-looking statements contained herein after the date of this report to reflect actual results or future events or circumstances.

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

PART 1. FINANCIAL INFORMATION

Item 1 - Interim Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share and share amounts)

	October 30,			January 30,			October 31,
	2021			2021			2020
ASSETS	Unaudited						Unaudited
CURRENT ASSETS
Cash and cash equivalents	$	1,754		$	1,809		$	2,396
Restricted cash		1,158			1,184			950
Accounts receivable		2,566			2,718			2,465
Merchandise inventory		30,248			24,515			27,204
Prepaid expenses and other current assets		760			564			836
Total current assets		36,486			30,790			33,851
Restricted cash		2,732			3,562			4,082
Fixed assets, net		2,251			2,268			2,343
Operating lease right-of-use assets		2,284			2,742			2,887
Intangible assets, net		-			732			989
Cash Surrender Value		4,413			3,856			3,438
Other assets		1,074			1,342			1,787
TOTAL ASSETS	$	49,240		$	45,292		$	49,377
LIABILITIES
CURRENT LIABILITIES
Accounts payable	$	6,743		$	8,894		$	8,559
Short-term borrowings		5,858			6,339			8,483
Accrued expenses and other current liabilities		2,685			2,512			4,745
Current portion of operating lease liabilites		636			596			583
Current portion of PPP Loan		-			1,687			1,356
Total current liabilities		15,922			20,028			23,726
Operating lease liabilities		1,764			2,258			2,412
PPP Loan		-			330			662
Long-term debt		4,161			5,000			4,581
Other long-term liabilities		15,515			16,187			15,857
TOTAL LIABILITIES		37,362			43,803			47,238
SHAREHOLDERS’ EQUITY
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued)		-			-			-
Common stock ($0.01 par value; 200,000,000 shares authorized; 3,902,985, 3,336,576 and 3,235,576 shares issued, respectively)		39			33			32
Additional paid-in capital		359,100			346,495			346,470
Treasury stock at cost (1,410,417, 1,410,378 and 1,410,378 shares, respectively)		(230,170	)		(230,169	)		(230,169	)
Accumulated other comprehensive loss		(2,007	)		(2,007	)		(1,470	)
Accumulated deficit		(115,084	)		(112,863	)		(112,724	)
TOTAL SHAREHOLDERS’ EQUITY		11,878			1,489			2,139
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	49,240		$	45,292		$	49,377

(unaudited)

	April 30,			January 29,			May 1,
	2022			2022			2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	828		$	1,218		$	5,030
Restricted cash		1,158			1,158			1,184
Accounts receivable		2,727			2,335			3,113
Merchandise inventory		32,254			29,277			22,567
Prepaid expenses and other current assets		558			649			592
Total current assets		37,525			34,637			32,486

Restricted cash		2,160			2,447			3,277
Fixed assets, net		2,441			2,335			2,366
Operating lease right-of-use assets		1,990			2,144			2,595
Intangible assets, net		-			-			475
Cash surrender value		3,800			4,154			4,168
Other assets		872			965			1,230
TOTAL ASSETS	$	48,788		$	46,682		$	46,597

LIABILITIES
CURRENT LIABILITIES
Accounts payable	$	7,664		$	6,271		$	5,682
Short-term borrowings		10,508			9,966			-
Accrued expenses and other current liabilities		2,208			2,362			2,640
Current portion of operating lease liabilities		663			649			609
Current portion of PPP loan		-			-			2,018
Total current liabilities		21,043			19,248			10,949

Operating lease liabilities		1,439			1,608			2,101
Long-term debt		7,944			4,356			5,261
Other long-term liabilities		13,987			14,185			15,954
TOTAL LIABILITIES		44,413			39,397			34,265

SHAREHOLDERS’ EQUITY
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued)		-			-			-
Common stock ($0.01 par value; 200,000,000 shares authorized; 3,902,985, 3,902,985 and 3,889,169 shares issued, respectively)		39			39			39
Additional paid-in capital		360,738			359,220			358,749
Treasury stock at cost (1,410,417, 1,410,417 and 1,410,417 shares, respectively)		(230,170	)		(230,170	)		(230,170	)
Accumulated other comprehensive loss		(910	)		(910	)		(2,007	)
Accumulated deficit		(125,322	)		(120,894	)		(114,279	)
TOTAL SHAREHOLDERS’ EQUITY		4,375			7,285			12,332
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	48,788		$	46,682		$	46,597

See Accompanying Notes to Interim Condensed Consolidated Financial Statements.

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands)

(unaudited)

	October 30, 2021			October 31, 2020			October 30, 2021			October 31, 2020
	Thirteen Weeks Ended
Net revenue	$	32,172		$	38,913		$	107,680		$	112,799
	April 30, 2022			May 1, 2021
Cost of sales		24,168			29,312			81,044			84,595
Net revenue	$	31,791		$	40,617
Gross profit		8,004			9,601			26,636			28,204
Cost of sales		24,940			30,821
Selling, general and administrative expenses		10,018			10,213			30,886			34,487
Gross profit		6,851			9,796
Loss from operations		(2,014	)		(612	)		(4,250	)		(6,283	)
Selling, general and administrative expenses		10,517			10,657
Interest expense		439			381			1,455			1,015
Loss from operations		(3,666	)		(861	)
Other income		(1,567	)		-			(3,530	)		-
Interest expense		762			555
Income (loss) before income tax expense		(886	)		(993	)		(2,175	)		(7,298	)
Loss from operations before income tax expense		(4,428	)		(1,416	)
Income tax expense (benefit)		-			(3,545	)		46			(3,545	)
Income tax expense		-			-
Net income (loss)	$	(886	)	$	2,552		$	(2,221	)	$	(3,753	)
Net loss	$	(4,428	)	$	(1,416	)
BASIC AND DILUTED INCOME PER SHARE:
Basic income (loss) per common share	$	(0.36	)	$	1.40		$	(0.92	)	$	(2.06	)
Basic and diluted loss per common share	$	(1.78	)	$	(0.61	)
Weighted average number of common shares outstanding – basic		2,491			1,825			2,404			1,823
Weighted average number of common shares outstanding – basic and diluted		2,493			2,317
Diluted income (loss) per common share	$	(0.36	)	$	1.39		$	(0.92	)	$	(2.06	)
Weighted average number of common shares outstanding – diluted		2,491			1,829			2,404			1,823

See Accompanying Notes to Interim Condensed Consolidated Financial Statements.

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~ (LOSS)

(amounts in thousands)

(unaudited)

	Thirteen Weeks Ended						~~Thirty-nine Weeks Ended~~
	October 30, 2021			October 31, 2020			October 30, 2021			October 31, 2020
	April 30, 2022			May 1, 2021
Net income (loss)	$	(886	)	$	2,552		$	(2,221	)	$	(3,753	)
Net loss	$	(4,428	)	$	(1,416	)
Amortization of pension gain		-			1-			-			3
Comprehensive income (loss)	$	(886	)	$	2,553		$	(2,221	)	$	(3,750	)
Comprehensive loss	$	(4,428	)	$	(1,416	)

See Accompanying Notes to Interim Condensed Consolidated Financial Statements.

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars and shares in thousands)

(unaudited)

	Thirteen Weeks Ended April 30, 2022
	Number of shares outstanding												Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Shareholders’ Equity
	Common Shares		Treasury Shares			Common Stock		Additional Paid-in Capital		Treasury Stock At Cost			Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Shareholders’ Equity
Balance as of January 29, 2022		3,903		(1,410	)	$	39	$	359,220	$	(230,170	)	$	(910	)	$	(120,894	)	$	7,285
Net Loss		-		-			-		-		-			-			(4,428	)		(4,428	)
Issuance of warrants		-		-			-		1,518		-			-			-			1,518
Balance as of April 30, 2022		3,903	$	(1,410	)	$	39	$	360,738	$	(230,170	)	$	(910	)	$	(125,322	)	$	4,375

	Thirteen Weeks Ended October 30, 2021
	Thirteen Weeks Ended May 1, 2021
	Number of shares outstanding												Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Shareholders’ Equity
	Common Shares		Treasury Shares			Common Stock		Additional Paid-in Capital		Treasury Stock At Cost
Balance as of July 31, 2021		3,903		(1,410	)	$	39	$	359,016	$	(230,170	)	$	(2,007	)	$	(114,198	)	$	12,680
Balance as of January 30, 2021		3,337		(1,410	)	$	33	$	346,495	$	(230,169	)	$	(2,007	)	$	(112,863	)	$	1,489
Net income		-		-			-		-		-			-			(886	)		(886	)
Net Loss		-		-			-		-		-			-			(1,416	)		(1,416	)
Issuance of warrants		-		-			-		-		-			-			-			-
Exercise of warrants		136		-			2		-		(1	)		-			-			1
Exercise of stock options		-		-			-		-		-			-			-			-
Sale of shares, net of expenses		416		-			4		12,227		-			-			-			12,231
Common stock issued- Director grants		-		-			-		-		-			-			-			-
Amortization of unearned compensation/restricted stock amortization		-		-			-		27		-			-			-			27
Amortization of unearned compensation/restricted stock amortization		-		-			-		84		-			-			-			84
Balance as of May 1, 2021		3,889	$	(1,410	)	$	39	$	358,749	$	(230,170	)	$	(2,007	)	$	(114,279	)	$	12,332
Balance as of October 30, 2021		3,903	$	(1,410	)	$	39	$	359,100	$	(230,170	)	$	(2,007	)	$	(115,084	)	$	11,878

	Thirty-nine Weeks Ended October 30, 2021
	Number of shares outstanding												Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Shareholders’ Equity
	Common Shares		Treasury Shares			Common Stock		Additional Paid-in Capital		Treasury Stock At Cost
Balance as of January 30, 2021		3,337		(1,410	)	$	33	$	346,495	$	(230,169	)	$	(2,007	)	$	(112,863	)	$	1,489
Net Loss		-		-			-		-		-			-			(2,221	)		(2,221	)
Issuance of warrants		138		-			2		-		(1	)		-			-			1
Sales of shares, net of expense		417		-			4		12,227		-			-			-			12,231
Exercise of stock options		2		-			-		51		-			-			-			51
Common stock issued- Director grants		9		-			-		184		-			-			-			184
Amortization of unearned compensation/restricted stock amortization		-		-			-		143		-			-			-			143
Balance as of October 30, 2021		3,903		(1,410	)	$	39	$	359,100	$	(230,170	)	$	(2,007	)	$	(115,084	)	$	11,878

See Accompanying Notes to Interim Condensed Consolidated Financial Statements.

	Thirteen Weeks Ended October 31, 2020
	Number of shares outstanding												Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Shareholders’ Equity
	Common Shares		Treasury Shares			Common Stock		Additional Paid-in Capital		Treasury Stock At Cost
Balance as of August 1, 2020		3,236		(1,410	)	$	32	$	346,457	$	(230,169	)	$	(1,473	)	$	(115,276	)	$	(429	)
Net Loss		-		-			-		-		-			-			2,552			2,552
Other comprehensive income		-		-			-		-		-			3			-			3
Amortization of unearned compensation/restricted stock amortization		-		-			-		13		-			-			-			13
Balance as of October 31, 2020		3,236	$	(1,410	)	$	32	$	346,470	$	(230,169	)	$	(1,470	)	$	(112,724	)	$	2,139

	Thirty-nine Weeks Ended October 31, 2020
	Number of shares outstanding													Accumulated Other Comprehensive Loss			Retained Earnings (Accumulated Deficit)			Shareholders’ Equity
	Common Shares		Treasury Shares			Common Stock		Additional Paid-in Capital			Treasury Stock At Cost
Balance as of February 1, 2020		3,226		(1,409	)	$	32	$	345,102		$	(230,169	)	$	(1,479	)	$	(108,971	)	$	4,515
Net Loss		-		-			-		-			-			-			(3,753	)		(3,753	)
Other comprehensive income		-		-			-		836			-			9			-			845
Vested restricted shares		4		(1	)		-		(9	)		-			-			-			(9	)
Common stock issued- Director grants		6		-			-		243			-			-			-			243
Amortization of unearned compensation/restricted stock amortization		-		-			-		298			-			-			-			298
Balance as of October 31, 2020		3,236	$	(1,410	)	$	32	$	346,470		$	(230,169	)	$	(1,470	)	$	(112,724	)	$	2,139

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

	Thirty-nine Weeks Ended
	Thirteen Weeks Ended
	October 30, 2021			October 31, 2020
	April 30, 2022			May 1, 2021
OPERATING ACTIVITIES:
Net loss	$	(2,221	)	$	(3,753	)
Net income loss	$	(4,428	)	$	(1,416	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of fixed assets		~~1,064~~293			~~783~~346
Amortization of intangible assets		~~732~~-			~~771~~257
Stock-based compensation		~~327~~-			~~296~~27
Amortization of ROU asset		458			424
Interest on long-term debt		106			242
Amortization of warrant interest		191			-
Amortization of ROU asset		154			147
Interest on long term debt		570			-
Change in cash surrender value		354			(312	)
Change in cash surrender value		(557	)		(84	)
Reversal of ASC 740 liability		-			(3,545	)
Forgiveness of PPP Loan		(1,963	)		-
Changes in operating assets and liabilities that provide (use) cash:
Accounts receivable		~~150~~(392	)		~~1,695~~(396	)
Merchandise inventory		(52,~~732~~977	)		(91,~~367~~949	)
Prepaid expenses and other current assets		~~(196~~92	)		~~2,531~~(28	)
Other long-term assets		~~268~~93			-113
Accounts payable		(21,~~150~~393	)		~~679~~(3,211	)
Accrued expenses and other current liabilities		~~236~~(140	)		~~(5,295~~147	)
Other long-term liabilities		(~~1,166~~368	)		(~~407~~378	)
Net cash used in operating activities		(95,~~990~~820	)		(152,~~272~~513	)
INVESTING ACTIVITIES:
Purchases of fixed assets		(~~1,046~~399	)		(~~935~~444	)
Proceeds from sale of fye business		-			11,779
Net cash provided by (used in) investing activities		(399	)		(444	)
Net cash provided by (used in) investing activities		(1,046	)		10,844
FINANCING ACTIVITIES:
Proceeds from short term borrowings		~~5,858~~542			~~8,483~~-
Proceeds from long term borrowings		-5,000			~~4,581~~-
Proceeds from issuance of warrants		-			836
Proceeds from stock offering		-			12,231
Proceeds from PPP loan		-			2,018
Exercise of warrants		-			1
Proceeds from stock offering		12,231			-
Payment of short term borrowings		-			(6,339	)
Proceeds from exercise of stock options		51			-
Net cash provided by financing activities		5,542			5,893
Payments of PPP loan		(76	)		-
Net decrease in cash, cash equivalents, and restricted cash		(677	)		2,936
Issuance of director deferred shares and RSUs		-			235
Cash, cash equivalents, and restricted cash, beginning of period		4,823			6,555
Payment of long term borrowings		(1,600	)		-
Cash, cash equivalents, and restricted cash, end of period	$	4,146		$	9,491
Payment of short term borrowings		(6,339	)		(13,149	)
Supplemental disclosures and non-cash investing and financing activities:
Net cash provided by financing activities		10,125			3,004
Interest paid	$	202		$	153
Net increase (decrease) in cash, cash equivalents, and restricted cash		(911	)		(1,424	)
Warrants issued with debt	$	1,633		$	-
Cash, cash equivalents, and restricted cash, beginning of period		6,555			8,852
Cash, cash equivalents, and restricted cash, end of period	$	5,644		$	7,428

See Accompanying Notes to Interim Condensed Consolidated Financial Statements.

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KASPIEN HOLDINGS INC. AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

~~October~~April 30, ~~2021~~2022 and ~~October~~May 311, ~~2020~~2021

Note 1. Nature of Operations

Kaspien Holdings Inc., which, together with its consolidated subsidiaries, is referred to herein as “Kaspien”, “the Company”, “we”, “us” and “our”, was incorporated in New York in 1972. We own 100% of the outstanding common stock of Kaspien Inc, through which our principal operations are conducted. Kaspien provides a platform of software and services to empower brands to grow their online distribution channels on digital marketplaces such as Amazon, Walmart, Target, eBay, among others. The Company helps brands achieve their online retail goals through its innovative and proprietary technology, tailored strategies, and mutually beneficial partnerships.

~~Our~~Kaspien ~~mission~~provides ~~is to optimize and grow brands on today’s leading online marketplaces. To deliver this mission, we provide~~ a platform of software and services to empower brands to grow their online distribution ~~channel~~channels on digital marketplaces. ~~Our~~such ~~proprietary~~as ~~software platform of marketplace solutions has been developed with a tech-first approach over the last decade. Through our platform~~Amazon, ~~more~~Walmart ~~than~~and ~~a decade of marketplace expertise~~Target, ~~and~~among ~~our~~others. ~~subject~~The ~~matter~~Company ~~expertise,~~helps ~~Kaspien empowers~~ brands to achieve their online retail goals. ~~Through~~through ~~our~~its ~~diversified~~innovative and ~~flexible~~proprietary ~~partnership approach~~technology, ~~Kaspien~~ ~~supports~~tailored ~~brands~~strategies ~~all across their brands’ life cycle~~ and mutually ~~maturity~~beneficial ~~online~~partnerships.

~~The Company has positioned itself to be a brand’s ultimate online growth partner.~~ We are guided by ~~seven~~5 core principles:

~~Partner~~• ~~Obsession~~We ~~Insights~~are ~~Driven~~partner ~~Simplicity~~obsessed. ~~Innovation~~Our ~~Results~~customers ~~Ownership~~are ~~Diversity~~our ~~and~~partners. ~~Teamwork~~Every decision is focused on building mutually beneficial relationships that deliver results.

•	We are insights driven. We make data actionable. Our curiosity drives us to discover opportunities early and often.

•	We create simplicity. We challenge the status quo. We take the complicated and simplify it.

•	We take ownership. We make things happen. We hold ourselves accountable and have a bias for action.

•	We empower each other. We welcome and learn from diverse experiences. Our empathy ignites innovation and empowers meaningful change.

Liquidity and Cash Flows:

The Company’s primary sources of liquidity are its borrowing capacity under its ~~revolving~~ ~~credit~~Credit ~~facility~~Facility, available cash and cash equivalents, ~~funds raised through equity offerings~~ and to a lesser extent, cash generated from operations. Our cash requirements relate primarily to working capital needed to operate ~~and grow our business~~Kaspien, including funding operating expenses, ~~and~~ the purchase of inventory and capital expenditures. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and amount of our ~~net~~ revenue; the timing and amount of our operating expenses; the timing and costs of working capital needs; successful implementation of our strategy and planned activities; and our ability to overcome the impact of the COVID-19 pandemic.

The Company incurred a net loss of $24.24 million and $31.84 million for the thirteen ~~thirty-nine~~ weeks ended ~~October~~ April 30, ~~2021~~2022 and ~~October~~May 311, ~~2020~~2021, respectively. The ~~decrease~~increase in the net loss was primarily attributable to ana ~~increase~~decrease in ~~net~~sales ~~revenue~~ and ~~lower~~gross ~~SG&A expenses, as well as the forgiveness of the PPP Loan discussed below~~margin. In addition, the Company has an accumulated deficit of $~~115~~125.13 million as of ~~October~~April 30, ~~2021~~2022 and net cash used in operating activities for the ~~thirty-nine~~ thirteen weeks ended ~~October~~April 30, ~~2021~~2022 was $105.08 million. Net cash used in operating activities for the ~~thirty-nine~~thirteen weeks ended ~~October~~ 31May 1, ~~2020~~2021 was $152.35 million.

As disclosed in the Company’s Annual Report on Form 10-K filed April 29, 2022, the Company experienced negative cash flows from operations during fiscal 2021 and 2020 and we expect to incur net losses in fiscal 2022.

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AsOur ~~disclosed~~ability into ~~the~~achieve ~~Company’s~~profitability ~~Annual~~and ~~Report~~meet onfuture ~~Form~~liquidity needs ~~10-K~~and ~~filed~~capital ~~April~~requirements ~~30,~~will ~~2021~~depend upon numerous factors, including the ~~Company~~timing ~~experienced~~and ~~negative~~amount ~~cash~~of ~~flows~~our ~~from~~revenue; ~~operations~~the ~~during~~timing ~~fiscal~~and ~~2020~~amount of our operating expenses; the timing and ~~2019~~costs of working capital needs; successful implementation of our strategy and weplanned ~~expect~~activities; and our ability to ~~incur~~overcome ~~net~~the ~~losses~~impact of the COVID-19 pandemic. There can be no assurance that we will be successful in ~~fiscal~~further ~~2021~~implementing our business strategy or that the strategy, including the completed initiatives, will be successful in sustaining acceptable levels of sales growth and profitability. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

~~Our~~The ~~ability~~unaudited condensed consolidated financial statements for the thirteen weeks ended April 30, 2022 were prepared pursuant to ~~achieve~~the ~~profitability~~rules and ~~meet~~regulations ~~future~~of ~~liquidity~~the ~~needs~~Securities and ~~capital~~Exchange Commission. The information furnished in these unaudited condensed consolidated financial statements reflects all normal, ~~requirements~~recurring ~~will~~adjustments ~~depend~~which, ~~upon~~in ~~numerous~~the ~~factors~~opinion of management, ~~including~~are necessary for the ~~timing~~fair presentation of such financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and ~~amount~~assumptions that affect the reported amounts of ~~our~~assets ~~revenue;~~and liabilities and disclosure of contingent assets and liabilities at the ~~timing~~date of the financial statements, and ~~amount~~the reported amounts of ~~our~~revenues ~~operating~~and expenses; during the ~~timing~~reporting period. Actual results could differ from those estimates. The ability of the Company to meet its liabilities and ~~costs~~to continue as a going concern is dependent on improved profitability, the strategic initiatives for Kaspien and the availability of ~~working~~future ~~capital~~funding. ~~needs;~~Based ~~successful~~on ~~implementation~~recurring losses from operations, negative cash flows from operations, the expectation of ~~our~~continuing ~~strategy~~operating losses for the foreseeable future, and ~~planned~~uncertainty ~~activities;~~with ~~and~~respect ~~our~~to any available future funding, the Company has concluded that there is substantial doubt about the Company’s ability to ~~overcome~~continue ~~the~~as ~~impact~~a ofgoing concern. The financial statements do not include any adjustments that might result from the outcome ~~COVID-19~~of ~~pandemic~~this uncertainty.

~~There~~As ~~can~~of beApril no30, ~~assurance~~2022, ~~that~~ we ~~will~~had becash ~~successful~~and incash ~~further~~equivalents ~~implementing~~of ~~our business~~$0.8 ~~strategy~~million, ornet ~~that~~working ~~the~~capital ~~strategy will be successful in sustaining acceptable levels~~ of ~~sales~~$16.5 million, ~~growth~~ and ~~profitability~~$10.5 ~~The~~in ~~unaudited~~borrowings ~~condensed~~on ~~consolidated~~our ~~financial~~revolving ~~statements~~credit dofacility, ~~not~~as ~~include~~further ~~any~~discussed ~~adjustments that might result from the outcome of these uncertainties~~below.

~~The~~As ~~unaudited condensed consolidated financial statements for the thirty-nine weeks ended October 30, 2021 were prepared pursuant to the rules and regulations~~ of ~~the~~January ~~Securities and Exchange Commission. The information furnished in these unaudited condensed consolidated financial statements reflects all normal~~29, ~~recurring adjustments which~~2022, in the ~~opinion~~Company ofhad ~~management,~~borrowings ~~are necessary for the fair presentation~~ of ~~such financial statements~~$10.0 ~~The~~million ~~preparation~~under ~~of financial statements in conformity with accounting principles generally accepted in~~ the ~~United~~Credit ~~States~~Facility. ~~of America~~As ~~requires management to make estimates and assumptions that affect the reported amounts~~ of ~~assets~~April ~~and~~30, ~~liabilities~~2022 and ~~disclosure~~May of1, ~~contingent~~2021, ~~assets and liabilities at~~ the ~~date~~Company ofhad ~~the~~no ~~financial~~outstanding ~~statements,~~letters ~~and the reported amounts~~ of ~~revenues~~ ~~and expenses during the reporting period~~credit. ~~Actual~~The ~~results could differ from those estimates. For the next 12 months, management believes that the~~ Company’s ~~existing~~had ~~liquidity will be adequate to fund its working capital needs~~$3. ~~The ability~~6 ofmillion ~~the Company to meet its liabilities is dependent on continued improved profitability~~ and ~~the other factors set forth in the preceding paragraph~~$10.9 ~~Management~~million ~~anticipates~~available ~~any~~for ~~cash~~borrowing ~~requirements~~under ~~due to a shortfall in cash from operations will be funded by~~ the ~~Company’s~~Credit ~~revolving~~Facility ~~credit facility,~~ as ~~discussed~~of inApril ~~note~~30, 72022 inand ~~the~~May ~~interim~~1, ~~condensed~~2021, ~~consolidated financial statements~~respectively.

AsOn ofMarch ~~October 30~~18, 2021, wethe ~~had~~Company ~~cash~~closed ~~and~~an ~~cash~~underwritten ~~equivalents~~offering of 416,600 shares of common stock of the Company, at a price to the public of $132.850 ~~million,~~per ~~net~~share. ~~working~~The ~~capital~~gross proceeds of the offering were approximately $2013.65 million, ~~and~~prior ~~outstanding~~to ~~borrowings~~deducting onunderwriting ~~our~~discounts ~~revolving~~and ~~credit~~commissions ~~facility~~and ofestimated $5offering expenses.9 ~~million~~The Company used the net proceeds from the offering for general corporate purposes, asincluding ~~further~~working ~~discussed~~capital ~~below~~to implement its strategic plans, investments in technology to enhance its scalable platform and its core retail business.

As of January 30, 2021, the Company had borrowings of $6.3 million under the Credit Facility. As of October 30, 2021 and October 31, 2020, the Company had no outstanding letters of credit. The Company had $6.8 million and $3.8 million available for borrowing under the Credit Facility as of October 30, 2021 and October 31, 2020, respectively.

On March 18, 2021, the Company closed an underwritten offering of 416,600 shares of common stock of the Company, at a price to the public of $32.50 per share. The gross proceeds of the offering were approximately $13.5 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. The Company intends to use the net proceeds from the offering for general corporate purposes, including working capital to implement its strategic plans focused on brand acquisition, investments in technology to enhance its scalable platform and its core retail business.

Credit Facility

On February 20, 2020, ~~the Company and~~ Kaspien Inc. entered into a Loan and Security Agreement (as subsequently amended, the “Loan Agreement”) with Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC) (“Eclipse”), as administrative agent, under which the lenders party thereto committed to provide up to $25 million in loans under a ~~three~~four-year, secured revolving credit facility (the “Credit Facility”). ~~The~~Concurrent with the FYE Transaction, the Company borrowed $3.3 million under the Credit Facility in order to satisfy the remaining obligations of the Company under ~~its~~the previous credit facility.

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The commitments by the lenders under the Credit Facility are subject to borrowing base and availability restrictions. Up to $5.0 million of the Credit Facility may be used for the making of swing line loans.

On March 30, 2020, the Company and Kaspien Inc. (the “Loan Parties”) entered into Amendment No. 1 to the Loan Agreement (the “Amendment”). Pursuant to the Amendment, among other things, (i) the Company was added as “Parent” under the Amended Loan Agreement, (ii) the Company granted a first priority security interest in substantially all of the assets of the Company, including inventory, accounts receivable, cash and cash equivalents and certain other collateral, and (iii) the Loan Agreement was amended to (a) permit the incurrence of certain subordinated indebtedness under the Subordinated Loan Agreement (as defined below) and (b) limit the Company’s ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets.

On ~~September~~April 177, 2021, the ~~Company~~Loan ~~and~~Parties ~~Kaspien Inc.~~ entered into Amendment No. 32 to the Loan ~~and Security~~ Agreement (the “~~Third~~Second Amendment”~~), pursuant to which the parties thereto amended the Loan Agreement~~. Pursuant to the ~~Third~~Second Amendment, ~~among other things, (i)~~ the ~~maturity~~In-Transit ofInventory ~~the~~Sublimit ~~credit~~(as ~~facility~~defined ~~has~~in ~~been extended to February 20, 2024, and~~ the ~~early~~Loan ~~termination fees have been accordingly reset; (ii~~Agreement) ~~the~~was ~~LIBOR~~increased ~~floor~~from ~~has been reduced to 1.00%; (iii) up to~~ $42,000,000 ~~of acquisitions are now allowed without Eclipse’s consent, subject~~ to satisfaction of various conditions, including the Company having a trailing twelve month fixed charge coverage ratio of 1.20x and Excess Availability greater than the greater of (x) 20% of the average Borrowing Base for each 30 day period immediately prior to, and pro forma for, the purchase and (y) $12,500,000.

AsOn ofSeptember ~~October 30~~17, 2021, the ~~Company~~Loan ~~had~~Parties ~~borrowings~~entered ofinto Amendment $5No.9 ~~million~~3 ~~under~~to the ~~Credit~~Loan ~~Facility~~Agreement (the “Third Amendment”). ~~The~~Pursuant ~~Company~~to ~~had~~the $6Third Amendment, among other things, (i) the maturity of the credit facility has been extended to February 20, 2024, and the early termination fees have been accordingly reset; (ii) the LIBOR floor has been reduced to 1.800%; (iii) up to $4,000,000 of acquisitions are now allowed without ~~million~~ Eclipse’s ~~available~~consent, ~~for~~subject ~~borrowing~~to assatisfaction of ~~October~~various conditions, including the Company having a trailing twelve month fixed charge coverage ratio of 1.20x and Excess Availability greater than the greater of (x) 20% of the average Borrowing Base for each 30 day period immediately prior to, ~~2021~~and pro forma for, the purchase and (y) $1,500,000.

On March 2, 2022, the Loan Parties entered into Amendment No. 4 to the Loan Agreement (the “Fourth Amendment”). Pursuant to the Fourth Amendment, among other things, the Credit Facility was amended to permit the incurrence of the Additional Subordinated Loan (as defined below) under the Subordinated Loan Agreement (as defined below).

As of April 30, 2022, the Company had borrowings of $10.5 under the Credit Facility. The Company had no borrowing as of May 1, 2021.

Subordinated Debt Agreement

On March 30, 2020, the ~~the~~ Loan Parties entered into a Subordinated Loan and Security Agreement (the “Subordinated Loan Agreement”) with the lenders party thereto from time to time (the “Lenders”) and TWEC Loan Collateral Agent, LLC (the “Collateral Agent”), as collateral agent for the Lenders, pursuant to which the Lenders made a $5.2 million secured term loan (the “Subordinated Loan”) to Kaspien ~~Inc.~~ with a scheduled maturity date of May 22, 2023. During the thirteen-weeks ended October 30, 2021, the Company received proceeds of $1.6 million related to the settlement of an insurance claim which was used to pay down the Subordinated Loan. On September 17, 2021, the Loan Parties entered into Amendment No. 1 to Subordinated Loan and Security Agreement which extended the maturity of the loan to March 31, 2024. As of ~~October~~April 30, ~~2021~~2022, unamortized debt issuance costs of $0.1 million are included in “Long Term Debt” on the unaudited condensed consolidated balance sheet.

Directors Jonathan Marcus, Thomas Simpson, and Michael Reickert are the chief executive officer of Alimco Re Ltd. (“Alimco”), the managing member of Kick-Start III, LLC and Kick-Start IV, LLC (“Kick-Start”), and a trustee of the Robert J. Higgins TWMC Trust (the “Trust”), an affiliate of RJHDC, LLC (“RJHDC” and together with Alimco and Kick-Start, “Related Party Entities”), respectively. The Related Party Entities are parties to the Subordinated Loan Agreement.

OnAmendment March 30, 2020, in conjunction with the Subordinated Loan Agreement, the Company issued warrants to purchase up to 244,532 shares of common stock with an aggregate grant date fair value of $0No.8 ~~million~~2 ~~recorded as a discount~~ to ~~the~~ Subordinated Loan ~~Agreement,~~and ~~$0.5~~Security ~~million of which was unamortized as of January 30, 2021. As of October 30, 2021, 5,126 warrants remain outstanding.~~Agreement

On March 2, 2022, the Loan Parties entered into that certain Amendment No. 2 to Subordinated Loan and Security Agreement (“Amendment No. 2”) with the “Lenders and the Collateral Agent. Pursuant to Amendment No. 2, among other things, Alimco Re Ltd. (the “Tranche B Lender”) made an additional $5,000,000 secured term loan (the “Additional Subordinated Loan”) with a scheduled maturity date of March 31, 2024, which is the same maturity date as the existing loans under the Subordinated Loan Agreement.

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Interest on the Additional Subordinated Loan accrues, subject to certain terms and conditions under the Subordinated Loan Agreement, at the rate of fifteen percent (15.0%) per annum, compounded on the last day of each calendar quarter by becoming a part of the principal amount of the Additional Subordinated Loan.

The Additional Subordinated Loan is also secured by a second priority security interest in substantially all of the assets of the Loan Parties, including inventory, accounts receivable, cash and cash equivalents and certain other collateral of the borrowers and guarantors under the Subordinated Loan Agreement. The Company will provide a limited guarantee of Kaspien’s obligations under the Additional Subordinated Loan.

Among other things, the Subordinated Loan Agreement limits the Loan Parties’ ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets.

The Subordinated Loan Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, customary ERISA defaults, certain events of bankruptcy and insolvency, judgment defaults, the invalidity of liens on collateral, change in control, cessation of business or the liquidation of material assets of the borrowers and guarantors thereunder taken as a whole and the occurrence of an uninsured loss to a material portion of collateral.

The Loan Parties paid certain customary fees and expenses in connection with the Additional Subordinated Loan and Amendment No. 2.

Paycheck Protection Program

On April 17, 2020, Kaspien received loan proceeds of $2.0 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). On June 1514, ~~2021~~2022, the Small Business Administration (“SBA”) approved the Company’s application for forgiveness of the PPP Loan. The amount of the forgiveness was $1.9 million in principal and interest, which was the amount requested in the forgiveness application and was less than the original principal balance due of $2.0 million. Following the grant of forgiveness, an outstanding balance of $76,452 was paid during ~~the~~fiscal ~~second quarter~~2021.

In addition to the aforementioned current sources of existing working capital, the Company may explore certain other strategic alternatives that may become available to the Company, as well continuing our efforts to generate additional ~~net~~sales ~~revenue~~ and increase margins. However, at this time the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all, should we require such additional funds. If the Company is unable to improve its operations, it may be required to obtain additional funding, and the Company’s financial condition and results of operations may be materially adversely affected.

Furthermore, broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional funds, should we require such additional funds.

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Impact of COVID-19

To date, as a direct result of COVID-19, most of our employees are working remotely. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, reserves and allowances, and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19, including the actions taken to contain or treat it, as well as the economic impact on local, regional, national and international customers and markets, which are highly uncertain and cannot be predicted at this time. Management is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the response to curb its spread, currently we are not able to estimate the effects of the COVID-19 outbreak to our results of operations, financial condition, or liquidity.

In response to the rapidly evolving COVID-19 pandemic, we activated our business continuity program, led by our Executive Team in conjunction with Human Resources, to help us manage the situation. In mid-March of 2020, we transitioned our corporate office staff to work 100% remotely. While our business is not dependent on physical office locations nor travel, having a 100% remote workforce does present increased operational risk. Our leadership team believes we have the necessary controls in place to mitigate these impacts and allow the team to continue to operate effectively remotely as long as required by State guidelines.

While e-commerce has largely benefited from the closure of brick-and-mortar locations as consumer spending has been pushed online to marketplaces such as Amazon and Walmart, neither the industry nor our organization has been immune to the impact to our supply chains. During the second quarter of 2021, the Company noticed changes in consumer buying habits that may have reduced demand for its products due to ~~recent~~ re-openings of physical retail outlets and lifting of many restrictions by governmental authorities.

12During the third quarter of 2021, the Company experienced increased inventory stock outs due to freight demands, lack of shipping containers and general international freight congestion due to the continued increased demand for goods being sold on ecommerce marketplaces. The COVID-19 pandemic continues to bring uncertainty to consumer demand as price increases related to raw materials, the importing of goods, including tariffs, and the cost of delivering goods to consumers has led to inflation across the United States.

Index

Also during the third quarter of 2021, the Company experienced increased inventory stock outs due to freight demands, lack of shipping containers and general international freight congestion due to the continued increased demand for goods being sold on ecommerce marketplaces. The COVID-19 pandemic continues to bring uncertainty to consumer demand as price increases related to raw materials, the importing of goods, including tariffs, and the cost of delivering goods to consumers has led to inflation across the United States.

It is not possible to determine the duration and scope of the pandemic, the scale and rate of economic recovery from the pandemic, any ongoing effects on consumer demand and spending patterns, or other impacts of the pandemic, and whether these or other currently unanticipated consequences of the pandemic are reasonably likely to materially affect our results of operations. The Company is actively monitoring the situation and potential impacts on its financial condition, liquidity, operations and workforce but the full extent of the impact is still highly uncertain.

Note 2. Basis of Presentation

The accompanying interim condensed consolidated financial statements consist of Kaspien Holdings Inc., its wholly owned subsidiaries, Kaspien NY, LLC (f/k/a Trans World NY Sub, Inc. (f/k/a Record Town, Inc.)) and its subsidiaries, and Kaspien, Inc. All intercompany accounts and transactions have been eliminated.

The interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished in these unaudited interim condensed consolidated financial statements reflects all normal, recurring adjustments which, in the opinion of management, are necessary for the fair presentation of such financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of net revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations applicable to interim financial statements.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended January 30, 2021 contained in the Company’s Annual Report on Form 10-K filed April 30, 2021. The results of operations for the thirty-nine weeks ended October 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 29, 2022.

The Company’s significant accounting policies are the same as those described in Note 1 to the Company’s Consolidated Financial Statements on Form 10-K for the fiscal year ended January 30, 2021. In order to conform with industry practice, effective with the first quarter of fiscal year 2021, commission fees from online marketplaces, which were previously reported as cost of goods sold on the consolidated statements of operations, are now included in SG&A expense. Prior periods have been reclassified to conform to the current period presentation. Commission fees for the thirteen-week periods ended October 30, 2021 and October 31, 2020 were $4.6 million and $5.7 million, respectively. Commission fees for the thirty-nine week periods ended October 30, 2021 and October 31, 2020 were $15.6 million and $16.6 million respectively.

Index

~~Note~~The 3interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. ~~Recently~~The ~~Announced~~information ~~Accounting~~furnished in these unaudited interim condensed consolidated financial statements reflects all normal, recurring ~~Pronouncements~~adjustments which, in the opinion of management, are necessary for the fair presentation of such financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of net revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations applicable to interim financial statements.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended January 29, 2022 contained in the Company’s Annual Report on Form 10-K filed April 29, 2022. The results of operations for the thirteen weeks ended April 30, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 28, 2023.

The Company’s significant accounting policies are the same as those described in Note 1 to the Company’s Consolidated Financial Statements on Form 10-K for the fiscal year ended January 29, 2022.

Note 3. Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost. The model replaces the probable, incurred loss model for those assets and instead, broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized cost. This standard will be effective for smaller reporting companies for fiscal years beginning after December 15, 2022, however early adoption is permitted. We are currently evaluating the impact of this new standard on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework— Changes to the Disclosure Requirements for Defined Benefit Plans”, which removes certain disclosures that are no longer cost beneficial and also includes additional disclosures to improve the overall usefulness of the disclosure requirements to financial statement users. This standard will be effective for public entities for fiscal years beginning after December 15, 2020, however early adoption is permitted. The new standard has an immaterial impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Topic 740), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the enacted changes in tax laws or rates. This standard will be effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, however early adoption is permitted. The new standard has an immaterial impact on the consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 provides, among other things, guidance that modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; modifications of contracts within the scope of Topic 840, Leases, should be accounted for as a continuation of the existing contract; and, changes in the critical terms of hedging relationships, caused by reference rate reform, should not result in the de-designation of the instrument, provided certain criteria are met. The Company’s exposure to LIBOR rates includes its credit facility. The amendments are effective as of March 12, 2020 through December 31, 2022. Adoption is permitted at any time. The Company is currently evaluating the impact this update will have on its Condensed Consolidated Financial Statements.

Recent accounting pronouncements pending adoption not discussed above are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.

Note 4. Intangible Assets

The determination of the fair value of intangible assets acquired in a business acquisition, including the Company’s acquisition of Kaspien ~~Inc.~~ in 2016, is subject to many estimates and assumptions. Our identifiable intangible assets that resulted from our acquisition of Kaspien ~~Inc.~~ consist of ~~vendor relationships,~~ technology and tradenames. WeAs ~~review~~of ~~amortizable~~October ~~intangible~~30, ~~asset~~2022, ~~groups~~the ~~for~~intangible ~~impairment~~assets ~~whenever~~were ~~events~~fully oramortized. ~~changes~~Amortization inexpense ~~circumstances~~of ~~indicate that~~intangible assets for the ~~related~~thirteen ~~carrying~~weeks ~~amounts~~ended ~~may~~April ~~not~~30, be2022 ~~recoverable.~~and May 1, 2021 consisted of the following:

Index

Identifiable intangible assets as of October 30, 2021 consisted of the following (amounts in thousands):

	Thirteen Weeks Ended
(amounts in thousands)	April 30, 2022		May 1, 2021

Amortized intangible assets:
Technology	$	-	$	97
Trade names and trademarks		-		160
Total amortization expense	$	-	$	257

	October 30, 2021
	Weighted Average Amortization Period (in months)		Original Gross Carrying Amount		Accumulated Impairment		Accumulated Amortization		Net Carrying Amount
Technology		60	$	6,700	$	2,587	$	4,113	$	-
Trade names and trademarks		60		3,200		-		3,200		-
			$	9,900	$	2,587	$	7,313	$	-

The changes in net intangibles and goodwill from January 30, 2021 to October 30, 2021 were as follows:

(amounts in thousands)	January 30, 2021		Impairment Expense		Amortization Expense		October 30, 2021
Amortized intangible assets:
Technology	$	259	$	-	$	259	$	-
Trade names and trademarks		473		-		473		-
Net amortized intangible assets	$	732	$	-	$	732	$	-

Amortization expense of intangible assets for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 consisted of the following:

	Thirteen Weeks Ended				Thirty-nine Weeks Ended
(amounts in thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Amortized intangible assets:
Technology	$	65	$	97	$	259	$	291
Trade names and trademarks		153		160		473		480
Total amortization expense	$	218	$	257	$	732	$	771

As of October 30, 2021, the intangible assets are fully amortized.

Note 5. Depreciation and Amortization

Depreciation and amortization included in selling, general and administrative expenses of the interim condensed consolidated statements of operations for the thirteen weeks ended ~~October~~April 30, ~~2021~~2022 and ~~October~~May 311, ~~2020~~2021 was $0.63 million and $0.56 million, respectively.

Depreciation and amortization included in selling, general and administrative expenses of the interim condensed consolidated statements of operations for the thirty-nine weeks ended October 30, 2021 and October 31, 2020 was $1.8 million and $1.5 million, respectively.

Index

Note 6. Restricted Cash

As a result of the death of its former Chairman, the Company holds $3.93 million in a rabbi trust, of which $1.2 million is classified as restricted cash in current assets and $2.7 2 million is classified as restricted cash in other assets on the accompanying interim condensed consolidated balance sheet as of ~~October~~April 30, ~~2021~~2022.

A summary of cash, cash equivalents and restricted cash is as follows (amounts in thousands):

October 30, 2021

January 30, 2021

October 31, 2020

April 30, 2022

January 29, 2022

May 1, 2021

Cash and cash equivalents

~~1,754~~828

1,~~809~~218

25,~~396~~030

Restricted cash

3,~~890~~318

43,~~746~~605

54,~~032~~461

Total cash, cash equivalents and restricted cash

54,~~644~~146

64,~~555~~823

79,~~428~~491

Note 7. Debt

Credit Facility

On February 20, 2020, ~~the Company and~~ Kaspien Inc. entered ~~into~~ into a Loan and Security Agreement (as subsequently amended, the “Loan Agreement”) with Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC) (“Eclipse”), as administrative agent, under which the lenders party thereto committed to provide up to $25 million in loans under a ~~three~~four-year, secured revolving credit facility (the “Credit Facility”). ~~Concurrent with the sale of the fye business, the Company borrowed $3.3 million under the Credit Facility to satisfy the remaining obligations of the Company under its previous credit facility.~~

Interest under the Credit Facility accrues, subject to certain terms and conditions under the Loan Agreement, at a LIBOR Rate or Base Rate, plus, in each case, an Applicable Margin, which is determined by reference to the level of Availability as defined in the Loan Agreement, with the Applicable Margin for LIBOR Rate loans ranging from 4.00% to 4.50% and the Applicable Margin for Base Rate loans ranging from 3.00% to 3.50%.

The Credit Facility is secured by a first priority security interest in substantially all of the assets of Kaspien ~~Inc.~~, including inventory, accounts receivable, cash and cash equivalents and certain other collateral of the borrowers and guarantors under the Credit Facility (collectively, the “Credit Facility Parties”) and by a first priority pledge by the Company of its equity interests in Kaspien ~~Inc~~. The Company will provide a limited guarantee of Kaspien ~~Inc.~~’s obligations under the Credit Facility.

Among other things, the Loan Agreement limits Kaspien Inc.’s ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets. The Loan Agreement also requires Kaspien Inc. to comply with a financial maintenance covenant.15

The Loan Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, customary ERISA defaults, certain events of bankruptcy and insolvency, judgment defaults, the invalidity of liens on collateral, change in control, cessation of business or the liquidation of material assets of the Credit Facility Parties taken as a whole, the occurrence of an uninsured loss to a material portion of collateral and failure of the obligations under the New Credit Facility to constitute senior indebtedness under any applicable subordination or intercreditor agreements.

Index

OnAmong ~~March 30, 2020, the Company and Kaspien Inc. (the “Loan Parties”) entered into Amendment No. 1 to the Loan Agreement (the “Amendment”). Pursuant to the Amendment, among~~ other things, ~~(i)~~ the ~~Company was added as “Parent” under the Amended~~ Loan Agreement, ~~(ii) the Company granted a first priority~~limits security interest in substantially all of the assets of the Company, including inventory, accounts receivable, cash and cash equivalents and certain other collateral, and (iii) the Loan Agreement was amended to (a) permit the incurrence of certain subordinated indebtedness under the Subordinated Loan Agreement (as defined below) and (b) limit the CompanyKaspien’s ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets. The Loan Agreement also requires Kaspien to comply with a financial maintenance covenant.

OnThe ~~September~~Loan ~~17,~~Agreement ~~2021,~~contains customary ~~the~~events ~~Company~~of ~~and~~default, ~~Kaspien~~including, ~~Inc.~~but ~~entered~~not ~~into~~limited ~~Amendment No. 3~~ to, ~~Loan~~payment ~~and~~defaults, ~~Security~~breaches ~~Agreement~~of ~~(the~~representations ~~“Third~~and ~~Amendment”)~~warranties, ~~pursuant~~ tocovenant ~~which~~defaults, ~~the~~cross-defaults ~~parties~~to ~~thereto~~other ~~amended~~obligations, ~~the~~customary ~~Loan~~ERISA ~~Agreement.~~defaults, ~~Pursuant~~certain toevents ~~the~~of ~~Third~~bankruptcy ~~Amendment~~and insolvency, ~~among~~judgment ~~other things~~defaults, ~~(i)~~ the ~~maturity~~invalidity of ~~the~~liens ~~credit~~on ~~facility~~collateral, ~~has~~change ~~been~~in ~~extended to February 20~~control, ~~2024,~~cessation ~~and~~of ~~the~~business ~~early~~or ~~termination fees have been accordingly reset; (ii)~~ the ~~LIBOR~~liquidation ~~floor~~of ~~has~~material ~~been~~assets ~~reduced to 1.00%; (iii) up to $4,000,000~~ of ~~acquisitions~~the ~~are~~Credit ~~now~~Facility ~~allowed without~~Parties ~~Eclipse’s~~taken ~~consent,~~as ~~subject~~a ~~to satisfaction of various conditions~~whole, ~~including~~ the ~~Company~~occurrence ~~having~~of aan ~~trailing~~uninsured ~~twelve~~loss ~~month~~to ~~fixed~~a ~~charge~~ material ~~coverage~~portion ~~ratio~~ of ~~1.20x~~collateral and ~~Excess~~failure ~~Availability~~of ~~greater than~~ the ~~greater~~obligations ofunder ~~(x) 20% of~~ the ~~average~~Credit ~~Borrowing~~Facility ~~Base for each 30 day period immediately prior~~ to, ~~and~~constitute ~~pro~~senior ~~forma~~indebtedness ~~for,~~under ~~the~~any ~~purchase~~applicable ~~and~~subordination ~~(y)~~or ~~$1,500,000~~intercreditor agreements.

AsOn ~~of October~~March 30, ~~2021~~2020, the Company and ~~had~~Kaspien ~~borrowings~~(the of“Loan $5Parties”) entered into Amendment No.9 ~~million~~1 ~~under~~to the ~~Credit~~Loan ~~Facility~~Agreement (the “Amendment”). ~~The~~Pursuant ~~Company~~to ~~had~~the ~~$6.8~~Amendment, ~~million~~among ~~available~~other ~~for~~things, ~~borrowing~~(i) the Company was added as of“Parent” ~~October~~under 30the Amended Loan Agreement, ~~2021.~~(ii) Asthe Company granted a first priority security interest in substantially all of ~~October~~the 30assets of the Company, ~~2021~~including inventory, ~~unamortized~~accounts ~~debt~~receivable, ~~issuance~~cash ~~costs~~and ofcash ~~$0.1~~equivalents ~~million~~and ~~related~~certain other collateral, and (iii) the Loan Agreement was amended to (a) permit the ~~Credit~~incurrence ~~Facility~~of ~~are~~certain ~~included~~subordinated inindebtedness ~~Other~~under ~~assets~~the onSubordinated Loan Agreement (as defined below) and (b) limit the ~~unaudited~~Company’s ~~condensed~~ability ~~consolidated~~to ~~balance~~incur ~~sheet~~additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets.

On April 7, 2021, Loan Parties entered into Amendment No. 2 to the Loan Agreement (the “Second Amendment”. Pursuant to the Second Amendment, the In-Transit Inventory Sublimit (as defined in the Loan Agreement) was increased from $2,000,000 to $2,500,000.

On September 17, 2021, the Loan Parties entered into Amendment No. 3 to the Loan Agreement (the “Third Amendment”). Pursuant to the Third Amendment, among other things, (i) the maturity of the credit facility has been extended to February 20, 2024, and the early termination fees have been accordingly reset; (ii) the LIBOR floor has been reduced to 1.00%; (iii) up to $4,000,000 of acquisitions are now allowed without Eclipse’s consent, subject to satisfaction of various conditions, including the Company having a trailing twelve month fixed charge coverage ratio of 1.20x and Excess Availability greater than the greater of (x) 20% of the average Borrowing Base for each 30 day period immediately prior to, and pro forma for, the purchase and (y) $1,500,000.

On March 2, 2022, the Loan Parties entered into Amendment No. 4 to the Loan Agreement (“Fourth Amendment”). Pursuant to the Fourth Amendment, among other things, the Credit Facility was amended to permit the incurrence of the Additional Subordinated Loan (as defined below) under the Subordinated Loan Agreement (as defined below).

As of April 30, 2022, the Company had borrowings of $10.5 under the Credit Facility. The Company had no borrowing as of May 1, 2021. As of April 30, 2022, unamortized debt issuance costs of $0.1 million related to the Credit Facility are included in Other assets on the unaudited condensed consolidated balance sheet.

The Company records short term borrowings at cost, in which the carrying value approximates fair value due to its short-term maturity.

Index

Subordinated Loan Agreement

On March 30, 2020, the Loan Parties entered into a Subordinated Loan and Security Agreement (the “Subordinated Loan Agreement”) with the lenders party thereto from time to time (the “Lenders”) and TWEC Loan Collateral Agent, LLC (the “Collateral Agent”), as collateral agent for the Lenders, pursuant to which the Lenders made a $5.2 million secured term loan (the “Subordinated Loan”) to Kaspien ~~Inc~~. ~~with a scheduled maturity date of May 22, 2023.~~ On September 17, 2021, the Loan Parties entered into Amendment No. 1 to the Subordinated Loan ~~and Security~~ Agreement which extended the maturity of the loan to March 31, 2024. As of ~~October~~April 30, ~~2021~~2022, unamortized debt issuance costs of $0.1 million are included in “Long -Term Debt” on the ~~unaudited condensed~~ consolidated ~~balance sheet. As of October 30, 2021, unamortized debt issuance costs of $0.1 million are included in “Long-term Debt” on the unaudited~~ ~~condensed consolidated~~ balance sheet.

Interest on the Subordinated Loan accrues, subject to certain terms and conditions under the Subordinated Loan Agreement, at the rate of twelve percent (12.0%) per annum, compounded on the last day of each calendar quarter by becoming a part of the principal amount of the Subordinated Loan.

The Subordinated Loan is secured by a second priority security interest in substantially all of the assets of the Loan Parties, including inventory, accounts receivable, cash and cash equivalents and certain other collateral of the borrowers and guarantors under the Subordinated Loan Agreement (collectively, the “Second Lien Credit Facility Parties”). The Company will provide a limited guarantee of Kaspien ’s obligations under the Subordinated Loan.

The Subordinated Loan Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, customary ERISA defaults, certain events of bankruptcy and insolvency, judgment defaults, the invalidity of liens on collateral, change in control, cessation of business or the liquidation of material assets of the Second Lien Credit Facility Parties taken as a whole and the occurrence of an uninsured loss to a material portion of collateral.

In conjunction with the Subordinated Debt Agreement, the Company issued warrants to purchase up to 244,532 shares of Common Stock to the Related Party Entities (127,208 shares for Alimco, 23,401 shares for Kick-Start, and 93,923 shares for RJHDC), subject to adjustment in accordance with the terms of the Warrants, at an exercise price of $0.01 per share. As of April 30, 2022, 7,539 warrants remain outstanding.

The value of the warrants of $0.8 million was allocated against the principal proceeds of the Subordinated Debt Agreement, $0.3 million of which was unamortized as of April 30, 2022.

On March 2, 2022, the Loan Parties entered into that certain Amendment No. 2 to Subordinated Loan and Security Agreement (“Amendment No. 2”) the “Lenders and Collateral Agent. Pursuant to Amendment No. 2, among other things, Alimco Re Ltd. (the “Tranche B Lender”) made an additional $5,000,000 secured term loan (the “Additional Subordinated Loan”) with a scheduled maturity date of March 31, 2024, which is the same maturity date as the existing loans under the Subordinated Loan Agreement.

Index

The Subordinated Loan Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, customary ERISA defaults, certain events of bankruptcy and insolvency, judgment defaults, the invalidity of liens on collateral, change in control, cessation of business or the liquidation of material assets of the ~~Second~~borrowers ~~Lien~~and ~~Credit~~guarantors ~~Facility~~thereunder ~~Parties~~ taken as a whole and the occurrence of an uninsured loss to a material portion of collateral.

In conjunction with the Subordinated Debt Agreement, the Company issued warrants to purchase up to ~~244,532~~warrants ~~shares~~to ofpurchase ~~common~~up ~~stock~~ to ~~the Related Party Entities (127~~320,~~208~~000 shares ~~for~~of ~~Alimco, 23,401~~common ~~shares~~ stock ~~for~~of ~~Kick-Start,~~the ~~and~~Company ~~93,923 shares for RJHDC),~~ (subject to adjustment in accordance with the terms of the Warrants, the “Warrant Shares”) at an exercise price of $0.01 per share. The ~~value~~Warrants ofare exercisable during the ~~warrants~~period commencing on March 2, 2022 and ending on the earlier of $0(a) 5:00 p.8m. ~~million~~Eastern ~~was~~Standard ~~allocated~~Time ~~against~~on the ~~principal~~five ~~proceeds~~(5)-year ofanniversary thereof, or if such day is not a business day on the ~~Subordinated~~next succeeding ~~Debt~~business ~~Agreement~~day, ~~$0.5~~or ~~million~~(b) the occurrence of ~~which~~certain ~~was~~consolidations, ~~unamortized~~mergers asor ofsimilar ~~October~~extraordinary ~~30,~~events ~~2021~~involving the Company. As of ~~October~~April 30, ~~2021~~2022, ~~5,126~~all of the warrants remain outstanding.

The value of the warrants of $1.6 million was allocated against the principal proceeds of the Subordinated Debt Agreement, of which $1.5 million was unamortized as of April 30, 2022. The value of the warrants was recognized as a discount based on the relative fair value of the consideration received, as an offset to APIC, which will be amortized over the life of the loan.

Paycheck Protection Program

Note 8. Stock Based Compensation

The Company has outstanding awards under three employee stock award plans, the 2005 Long Term Incentive and Share Award Plan, the Amended and Restated 2005 Long Term Incentive and Share Award Plan (the “Old Plans”); and the 2005 Long Term Incentive and Share Award Plan (as amended and restated April 5, 2017 (the “New Plan”). Collectively, these plans are referred to herein as the Stock Award Plans. The Company no longer issues stock options under the Old Plans.

~~Compensation~~Equity ~~expense~~awards ~~related~~authorized tofor issuance under the ~~grant~~New ofPlan ~~stock~~total ~~options~~250,000. ~~recognized~~As ~~in the~~of ~~thirty-nine~~April ~~weeks~~30, ~~ended~~2022, ~~October~~of ~~30,~~the ~~2021~~awards ~~was~~authorized ~~$0.1~~for ~~million.~~issuance Inunder ~~addition,~~the ~~compensation~~Stock ~~expense~~Award ofPlans, ~~$0.2~~111,279 ~~million~~options ~~related~~were togranted ~~the~~and ~~grant~~are outstanding, 28,163 of ~~restricted~~which ~~shares~~were ~~was~~vested ~~recognized~~and inexercisable. ~~the~~Shares ~~thirty-nine~~available ~~weeks~~for ~~ended~~future ~~October~~grants ~~30,~~of ~~2021.~~options ~~Total~~and ~~compensation~~other ~~expense~~share-based ~~recognized~~awards inunder the ~~thirty-nine~~New ~~weeks~~Plan ~~ended October~~at 31April 30, ~~2020~~2022 ~~was~~were $0144,346.~~3 million.~~

Equity awards authorized for issuance under the New Plan total 250,000. As of October 30, 2021, of the awards authorized for issuance under the Stock Award Plans, 141,713 share-based awards were granted and are outstanding, 34,152 of which were vested and exercisable. Shares available for future grants of options and other share-based awards under the New Plan at October 30, 2021 were 102,509.

Index

The following table summarizes stock award activity during the ~~thirty-nine~~thirteen weeks ended April ~~October~~ 30, ~~2021~~ 2022:

		Number of Shares Subject To Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Other Share Awards			Weighted Average Grant Fair Value
	Employee Stock Award Plans
Balance January 30, 2021			133,356		$	20.41		7.3		-		$	-
		Number of Shares Subject To Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Other Share Awards (1)			Weighted Average Grant Fair Value
Granted			6,637			25.69		9.8		43,000			19.24
Balance January 29, 2022			85,965		$	13.41		7.5		90,000		$	15.39
Forfeited			(6,977	)		10.04		9.0		-
Granted			15,000			6.55		9.9		-			-
Canceled			(28,900	)		53.29		-		-			-
Forfeited			(17,880	)		6.50		9.1		(55,000	)		13.63
Exercised			(2,403	)		7.12		9.0		(3,000	)		20.41
Canceled			(6,806	)		28.58		-		-			-
Balance October 30, 2021			101,713		$	12.44		8.4		40,000		$	18.98
Exercised			-			-		-		-			-
Exercisable October 30, 2021			34,152		$	18.88		7.5		-		$	-
Balance April 30, 2022			76,279		$	11.04		7.1		35,000		$	18.14
Exercisable April 30, 2022			28,163		$	17.07		4.4		-		$	-

As (1) ofOther ~~October~~Share ~~30, 2021,~~Awards ~~the~~include ~~intrinsic~~deferred ~~value~~shares ofgranted ~~stock~~to ~~awards~~executives ~~outstanding was $0.6 million~~ and ~~the intrinsic value of stock awards exercisable was $195,000~~directors.

As of April 30, 2022, the intrinsic value of stock awards outstanding was $16,970 and the intrinsic value of stock awards exercisable was $15,110.

Note 9. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss that the Company reports in the interim condensed consolidated balance sheets represents net loss, adjusted for the difference between the accrued pension liability and accrued benefit cost, net of taxes, associated with the Company’s defined benefit plan. ~~For~~ ~~the~~Comprehensive ~~thirteen and thirty-nine weeks ended October 30, 2021, comprehensive~~ loss consists of net loss. ~~For~~for ~~the~~all ~~thirteen~~periods ~~and thirty-nine weeks ended October 31, 2020, comprehensive Loss consists of net loss and the amortization of pension gains associated with Company’s defined benefit~~presented.

Note 10. Defined Benefit Plan

The Company maintains a non-qualified Supplemental Executive Retirement Plan (“SERP”) for certain executive officers of the Company. The SERP provides eligible executives defined pension benefits that supplement benefits under other retirement arrangements. As of February 28, 2020, no active employees were participants in the SERP. During the ~~thirty-nine~~thirteen weeks ended ~~October~~April 30, ~~2021~~2022, the Company did not make any cash contributions to the SERP and presently expects to pay approximately $1.2 million in benefits relating to the SERP during fiscal ~~2021~~2022.

The measurement date for the SERP is the fiscal year end, using actuarial techniques which reflect estimates for mortality, turnover and expected retirement. In addition, management makes assumptions concerning future salary increases. Discount rates are generally established as of the measurement date using theoretical bond models that select high-grade corporate bonds with maturities or coupons that correlate to the expected payouts of the applicable liabilities.

The following represents the components of the net periodic pension cost related to the Company’s SERP for the respective periods:

	Thirteen Weeks Ended					~~Thirty-nine Weeks Ended~~
(amounts in thousands)	~~October~~April 30, ~~2021~~2022		~~October~~May 311, ~~2020~~2021			~~October 30, 2021~~		~~October 31, 2020~~
Interest cost	$	6389	$	8963		$	~~189~~	$	~~266~~
Amortization of net gain(1)		-		(3	)		-		(9	)
Net periodic pension cost	$	89	$	63
Net periodic pension cost	$	63	$	86		$	189	$	257

(1) The amortization of net gain is related to a director retirement plan previously provided by the Company.

Index

Note 11. Basic and Diluted Loss Per Share

Basic loss per share is calculated by dividing net loss by the weighted average common shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock (net of any assumed repurchases) that then shared in the earnings of the Company, if any. It is computed by dividing net loss by the sum of the weighted average shares outstanding and additional common shares that would have been outstanding if the dilutive potential common shares had been issued for the Company’s common stock awards from the Company’s Stock Award Plans.

For the thirteen-week ~~period~~periods ended ~~October~~April 30, ~~2021~~2022 and ~~the~~May ~~thirty-nine week periods ended October 30~~1, 2021 ~~and October 31~~, ~~2020,~~ the impact of all outstanding stock awards was not considered because the Company reported net losses in ~~those~~both periods and such impact would be anti-dilutive. Accordingly, basic and diluted loss per share was the same. Total anti-dilutive stock awards for the ~~thirty-nine~~thirteen weeks ended ~~October~~April 30, ~~2021~~2022 and ~~thirteen~~May ~~and thirty-nine weeks ended October 31~~1, ~~2020~~2021 were ~~approximately 17,762~~ approximately 0.1 million shares for both periods.

For the thirteen-week period ended October 31, 2020, the dilutive effect of employee stock options was 4,000 shares.

Note 12. Income Taxes

In assessing the realizability of deferred ~~deferred~~ tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable ~~taxable~~ income. Management considers the scheduled reversal of taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based on available objective evidence, management concluded that a full valuation allowance should continue to be recorded against the Company’s deferred tax assets. Management will continue to assess the need for and amount of the valuation allowance against the deferred tax assets by ~~giving~~considering ~~consideration to~~ all available evidence to the Company’s ability to generate future taxable income in its conclusion of the need for a full valuation allowance. Any reversal of the Company’s valuation allowance will favorably impact its results of operations in the period of reversal. The Company is currently unable to determine whether or when that reversal might occur, but it will continue to assess the realizability of its deferred tax assets and will adjust the valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will become realizable in the future. The Company has significant net operating loss carry forwards and other tax attributes that are available to offset projected taxable income and current taxes payable, if any, for the year ending January 3029, ~~2021~~2022. The deferred tax impact resulting from the utilization of the net operating loss carry forwards and other tax attributes will be offset by a reduction in the valuation allowance. As of January 3029, ~~2021~~2022, the Company had a net operating loss carry forward of $~~346~~352.7 million for federal income tax purposes and ~~and~~ approximately $~~219~~214.54 million for state income tax purposes that expire at various times through 2040 and are subject to certain limitations and statutory expiration periods. The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net deferred tax assets, which remain fully reserved.

Note 13. Commitments and Contingencies

Legal Proceedings

The Company is subject to legal proceedings and claims that have arisen in the ordinary course of its business and have not been finally adjudicated. Although there can be no assurance as to the ultimate disposition of these matters, it is management’s opinion, based upon the information available at this time, that the expected outcome of these matters, individually and in the aggregate, will not have a material adverse effect on the results of operations and financial condition of the Company. As a result, the liability for the cases listed below is remote.

Index

Loyalty Memberships and Magazine Subscriptions Class Action

On November 14, 2018, three consumers filed a punitive class action complaint against the Company and Synapse Group, Inc. in the United States District Court for the District of Massachusetts, Boston Division (Case No.1:18-cv-12377-DPW) concerning enrollment in the Company’s Backstage Pass VIP loyalty program and associated magazine subscriptions. The complaint alleged, among other things, that the Company’s “negative option marketing” misled consumers into enrolling for membership and subscriptions without obtaining the consumers’ consent. The complaint sought to represent a nationwide class of “all persons in the United States” who were enrolled in and/or charged for Backstage Pass VIP memberships and/or magazine subscriptions, and to obtain statutory and actual damages on their behalf.

On April 11, 2019, the plaintiffs voluntarily dismissed their lawsuit. On May 8, 2019, two of the plaintiffs from the dismissed lawsuit filed a similar putative class action in Massachusetts state court (Civ. Act. No. 197CV00331, Mass. Super. Ct. Hampden Cty.), based on the same allegations, but this time seeking to represent only a class of “FYE customers in Massachusetts” who were charged for VIP Backstage Pass Memberships and/or magazine subscriptions. The Company removed that lawsuit back to federal court on June 12, 2019, and then filed a motion to dismiss and/or strike the plaintiff’s class action allegations on June 28, 2019. On February 2, 2021 the court granted the Company’s motion, struck the class action allegations, and dismissed the individual plaintiffs’ claims for lack of jurisdiction. Plaintiffs appealed the court’s decision on February 24, 2021. The parties participated in a mandatory court-annexed mediation session on April 8, 2021. The parties agreed on terms to resolve the matter fully and finally, and the appeal was dismissed without material impact on the financial results of the Company.

Store Manager Class Actions

There are two pending class actions. The first, Spack v. Trans World Entertainment Corp. was originally filed in the District of New Jersey, April 2017 (the “Spack Action”). The Spack Action alleges that the Company misclassified Store Managers (“SMs”) as exempt nationwide. It also alleges that Trans World improperly calculated overtime for Senior Assistant Managers (“SAMs”) nationwide, and that both SMs and SAMs worked “off-the-clock.” It also alleges violations of New Jersey and Pennsylvania State Law with respect to calculating overtime for SAMs. The second, Roper v. Trans World Entertainment Corp., was filed in the Northern District of New York, May 2017 (the “Roper Action”). The Roper Action also asserts a nationwide misclassification claim on behalf of SMs. Both actions were consolidated into the Northern District of New York, with the Spack Action being the lead case.

The Company has reached a settlement with the plaintiffs for both store manager class actions, which has received approval from the court. The Company reserved $0.4 million for the settlement as of January 30, 2021. During the second quarter of fiscal 2021, the Company paid the final settlement and the matter is fully resolved.

Retailer Agreement Dispute

On June 18, 2021, Vijuve Inc. filed a lawsuit against Kaspien Inc. in the United States District Court for the Eastern District of Washington (Case No. 2:21-cv-00192-SAB) concerning a Retailer Agreement that the parties entered into in September of 2020. Vijuve manufactures skin care products and face massagers. ~~The~~ The parties agreed that Kaspien would sell Vijuve’s products on Amazon. The complaint alleged that Kaspien breached the Retailer Agreement when it declined to acquiesce to Vijuve’s demand that Kaspien purchase over $700,000 of products. In total, Vijuve is seeking $774,000 in damages. Kaspien ~~believed,~~denies ~~and still believes,~~ that ~~Vijuve~~it ~~attempted~~breached tothe ~~artificially~~agreement. ~~inflate~~Moreover, ~~its sales~~ on ~~Amazon to support that demand. On~~ July 19, 2021, Kaspien filed counterclaims and alleged that Vijuve breached the contract, including by refusing to buy back inventory from Kaspien upon termination of the Retailer Agreement. Kaspien is seeking at least $229,000 from Vijuve for breach of contract and/or specific performance. A trial on all of the parties’ claims is scheduled for February 21, 2023. There is no determination of outcome, thus no contingencies are recognized as of the reporting date.

On ~~August~~Contingent 9,Value 2021, Vijuve filed a motion to dismiss Kaspien’s counterclaims. On September 3, 2021, Kaspien filed a motion for judgment on the pleadings that seeks to dismiss Vijuve’s complaint. On October 22, 2021, the Court denied the motion. It also denied Vijuve’s attempt to dismiss the Company’s counterclaims. A scheduling conference has been scheduled for December 16, 2021. With the resolution of the motions currently pending, the impact on Kaspien (if any) is not presently known.Rights

On March 30, 2020, the Company entered into the Contingent Value Rights Agreement (the “CVR Agreement”), pursuant to which the Related Party Entities received contingent value rights (“CVRs”) representing the contractual right to receive cash payments from the Company in an amount equal, in the aggregate, to 19.9% of the proceeds (10.35% for Alimco, 1.90% for Kick-Start, and 7.64% for RJHDC) received by the Company in respect of certain intercompany indebtedness owing to it by Kaspien and/or its equity interest in Kaspien. The Company does not anticipate these contingencies being met in Fiscal 2022.

On March 2, 2022, the Company entered into a Contingent Value Rights Agreement (the “Second CVR Agreement”) with the Tranche B Lender under the Subordinated Loan Agreement, pursuant to which the Tranche B Lender received contingent value rights (“Second CVRs”) representing the contractual right to receive cash payments from the Company in an amount equal, in the aggregate, to 9.0% of the proceeds received by the Company in respect of certain distributions by the Company or Kaspien; recapitalizations or financings of the Company or Kaspien (with appropriate carve out for trade financing in the ordinary course); repayment of intercompany indebtedness owing to the Company by Kaspien; or sale or transfer of any stock of the Company or Kaspien.

The CVRs terminate upon the earlier to occur of (i) certain consolidations, mergers or similar extraordinary events involving Kaspien (and, if applicable, the making of a cash payment by the Company to the Lenders pursuant to the CVR Agreement in connection therewith) and (ii) March 2, 2032.

Index

Contingent Value Rights

On March 30, 2020, the Company entered into the Contingent Value Rights Agreement (the “CVR Agreement”), pursuant to which the Related Party Entities received contingent value rights (“CVRs”) representing the contractual right to receive cash payments from the Company in an amount equal, in the aggregate, to 19.9% of the proceeds (10.35% for Alimco, 1.90% for Kick-Start, and 7.64% for RJHDC) received by the Company in respect of certain intercompany indebtedness owing to it by Kaspien Inc. and/or its equity interest in Kaspien Inc. The Company does not anticipate these contingencies being met in fiscal 2021.

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

PART 1. FINANCIAL INFORMATION

Item 2 - Management’s Discussion and Analysis of Financial Condition and

Results of Operations

~~October~~April 30, ~~2021~~2022 and ~~October~~May 311, ~~2020~~2021

Overview

Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information that the Company’s management believes necessary to achieve an understanding of its financial statements and results of operations. To the extent that such analysis contains statements which are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties. These risks include, but are not limited to, changes in the competitive environment, availability of new products, change in vendor policies or relationships, general economic factors in markets where the Company’s merchandise is sold; and other factors discussed in the Company’s filings with the Securities and Exchange Commission. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and related notes included elsewhere in this report and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the fiscal year ended January 3029, ~~2021~~2022.

~~The Company operates~~ Kaspien ~~Inc., which~~ provides a platform of software and services to ~~grow~~empower abrands ~~brand’s~~to grow their online distribution ~~channel~~channels on digital marketplaces such as Amazon, Walmart, and ~~eBay~~Target, among others. ~~Kaspien~~The ~~empowers~~Company ~~brands~~helps to brands achieve their online retail goals through its innovative, and proprietary technology, tailored strategies, and mutually beneficial partnerships.

~~Kaspien~~We isare ~~positioning itself to be a brand’s ultimate online growth partner and is~~ guided by ~~seven~~5 core principles:

~~principles:~~• We are partner obsessed. Our customers are our partners. Every decision is focused on building mutually beneficial relationships that deliver results.

• ~~Partner~~We ~~Obsession~~are •insights ~~Insights~~driven. ~~Driven~~We •make ~~Simplicity~~data •actionable. ~~Innovation~~Our •curiosity ~~Results~~drives •us ~~Ownership~~to •discover ~~Diversity~~opportunities early and ~~Teamwork~~often.

~~Previously,~~• ~~the~~We ~~Company~~create ~~also operated fye, a chain of retail entertainment stores and e-commerce sites, www~~simplicity.~~fye.com~~ ~~and~~We ~~www.secondspin.com. On~~challenge ~~February 20, 2020,~~ the ~~Company~~status ~~consummated the sale of substantially all of the assets and certain of the liabilities relating to fye to a subsidiary of 2428391 Ontario Inc~~quo. ~~o/a~~We ~~Sunrise~~take ~~Records (“Sunrise Records”) pursuant to an Asset Purchase Agreement (as amended,~~ the ~~“Asset~~complicated ~~Purchase Agreement”) dated January 23, 2020, by~~ and ~~among~~simplify ~~the Company, Record Town, Inc~~it.~~, Record Town USA LLC, Record Town Utah LLC, Trans World FL LLC, Trans World New York, LLC, 2428392 Inc., and Sunrise Records. (the “FYE Transaction”).~~

•

We take ownership. We make things happen. We hold ourselves accountable and have a bias for action.

•

We empower each other. We welcome and learn from diverse experiences. Our empathy ignites innovation and empowers meaningful change.

The Company’s results have been, and will continue to be, contingent upon management’s ability to understand industry trends and to manage the business in response to those trends and general economic trends. Management monitors several key performance indicators to evaluate its performance, including:

Net Revenue: The Company measures total year over year sales growth. The Company measures its ~~net~~sales ~~revenue~~ performance through several key performance indicators including number of partners, ~~and~~ active product listings and ~~net~~sales ~~revenue~~ per listing.

Cost of Sales and Gross Profit: Gross profit is calculated based on the cost of product in relation to its retail selling value. Changes in gross profit are impacted primarily by net ~~revenues~~sales levels, mix of products sold, obsolescence, distribution costs, and Amazon commissions and fulfillment fees.

2322

Index

Gross Merchandise Value (“GMV”): The total value of merchandise sold over a given time period through a customer-to-customer exchange site. It is the measurement of merchandise value sold across all channels and partners within our platform.

Selling, General and Administrative (“SG&A”) Expenses: Included in SG&A expenses are payroll and related costs, ~~third~~occupancy ~~party commissions~~charges, general operating and overhead expenses and depreciation charges.

Balance Sheet and Ratios: The Company views cash and working capital (current assets less current liabilities) as relevant indicators of its financial position. See Liquidity and Cash Flows section for further discussion of these items.

RESULTS OF OPERATIONS

Thirteen ~~and Thirty-nine~~ Weeks Ended ~~October~~April 30, ~~2021~~2022

Compared to the Thirteen ~~and Thirty-nine~~ Weeks Ended ~~October~~May 311, ~~2020~~2021

Net revenue ~~and Gross profit~~. The following table sets forth a year-over-year comparison of the Company’s Net revenue ~~and Gross profit~~:

	Thirteen Weeks Ended						Change						Thirty-nine Weeks Ended								Change
	Thirteen weeks ended													Change
(amounts in thousands)	October 30, 2021			October 31, 2020			$			%			October 30, 2021				October 31, 2020				$			%
	April 30, 2022						May 1, 2021							$					%
Net Revenue	$	32,172		$	38,913		$	(6,741	)	-17.3	%		$	107,680			$	112,799			$	(5,119	)	-4.5	%
Amazon US	$	29,620			93.2	%	$	37,516			92.4	%		$	(7,896	)			-21.0	%
Gross profit		8,004			9,601			(1,597	)	-16.6	%			26,636				28,204				(1,568	)	-5.6	%
Amazon International		1,287			4.0	%		2,268			5.6	%			(981	)			-43.3	%
% to sales		24.9	%		24.7	%								24.7	%			25.0	%
Walmart, Target & other marketplaces		430			1.4	%		378			0.9	%			52				13.8	%
Subtotal Retail as a Service		31,337			98.6	%		40,162			98.9	%			(8,825	)			-22.0	%
Subscriptions		454			1.4	%		455			1.1	%			(1	)			-0.2	%
Net revenue	$	31,791			100.0	%	$	40,617			100.0	%		$	(8,826	)			-21.7	%

Net ~~Revenue.~~revenue ~~Net~~decreased ~~revenue~~21.7% ~~was~~to $3231.28 million for the ~~thirteen~~three ~~weeks~~months ended ~~October~~April 30, ~~2021,~~2022 acompared 17to $40.3%6 ~~decrease~~million ~~from~~for the ~~comparable prior~~three ~~year~~months ~~period~~ended May 1, 2021. The ~~decrease~~primary insource of revenue is the Retail as a Service (“RaaS”) model, which represented 98.6% of net revenue. ~~was~~Subscriptions ~~primarily~~net ~~attributable~~revenue increased to ~~ongoing~~1.4% ~~supply~~of ~~chain~~net ~~challenges~~revenue from 1.1% of net revenue in the ~~FBA~~comparable USperiod ~~Segment.~~from ~~Total~~the ~~Active~~prior ~~Partner~~year. The ~~count~~increase aswas ofattributable ~~October~~to ~~30,~~an ~~2021~~increase ~~was~~in ~~781,~~the ~~including~~number ~~628 retail~~of partners and ~~153~~higher ~~subscription~~gross merchandise ~~partners~~value (“GMV”) of partner revenue flowing through the platform Amazon Marketplace.

~~Net~~The Company generates revenue ~~was~~across ~~$107.7~~a ~~million~~broad ~~for~~array of product lines primarily through the ~~thirty-nine~~Amazon ~~weeks~~Marketplace. ~~ended~~Categories ~~October~~include 30apparel, ~~2021~~baby, abeauty, ~~4.5%~~electronics, ~~decrease~~health ~~from~~& ~~the~~personal ~~comparable~~care, ~~prior~~home/kitchen/grocery, ~~year~~pets, ~~period~~sporting goods, toys & art.

~~The~~Total ~~primary~~active ~~source~~partner ofcount ~~revenue~~at is the Retail as a Service (“RaaS”) model, which represented 98.5% of net revenue in the thirteen weeks ended October 30, 2021. For the thirteen weeks ended October 30, 2021, Net revenue from non-Amazon marketplaces increased to 1.7% of net revenue from 0.6% of net revenue in the comparable period from the prior year. ~~The~~end ~~increase~~ was ~~attributable~~approximately ~~to Target~~522, ~~Walmart~~including ~~and~~408 ~~Other~~retail ~~Marketplaces.~~partners ~~Subscriptions & Other share of net revenue increased to 1.5% of net revenue during the thirteen weeks ended October 30, 2021.~~and ~~The~~114 ~~increase~~subscription ~~was~~(Agency ~~attributable~~and toSoftware a 14.9% increase in Subscription GMV flowing through the platform Amazon Marketplace. Subscription GMV represented 47.3% of total GMV during the thirteen weeks ended October 30, 2021. For the same period, total GMV decreased 5.0% compared to the thirteen weeks ending October 31, 2020 due to a 17.8% decline in Retail GMV. The following table sets forth net revenue by marketplace as a ~~percentage~~Service) ~~of total net revenue:~~partners.

24Platform GMV for the three months ended April 30, 2022 was $69.7 million as compared to $63.4 million for the three months ended May 1, 2021. Retail GMV decreased 20.9% to $33.7 million compared to $42.6 million in the comparable year-ago period. Subscription GMV increased 72.2% to $36 million, or 56.7% of total GMV, compared to $29.0 million, or 33.0% of total GMV, in the comparable year-ago period.

Index

	Thirteen weeks ended											Thirty-nine weeks ended
	October 30, 2021				October 31, 2020				Change			October 30,2021				October 31, 2020				Change
Amazon US	$	30,423	94.6	%	$	36,221	93.1	%		-16.0	%	$	100,581	93.4	%	$	106,369	94.3	%		-5.4	%
Amazon International		738	2.3	%		2,078	5.3	%		-65.5	%		4,295	4.0	%		5,076	4.5	%		-15.4	%
Other Marketplaces		543	1.7	%		240	0.6	%		126.5	%		1,428	1.3	%		564	0.5	%		153.2	%
Subtotal Retail as a Service		31,704	98.5	%		38,524	99.0	%		-17.7	%		106,304	98.7	%		112,009	99.3	%		-5.1	%
Subscriptions		468	1.5	%		389	1.0	%		20.4	%		1,375	1.3	%		790	0.7	%		74.1	%
Net revenue	$	32,172	100.0	%	$	38,913	100.0	%		-17.3	%	$	107,679	100.0	%	$	112,799	100.0	%		-4.5	%

Gross Profit. Gross profit decreased to $6.9 million, or 21.6% of net revenue for the thirteen weeks ended April 30, 2022, as compared to $9.8 million, or 24.1% of net revenue for the comparable prior year period. The decrease in the gross profit was primarily due to the decrease in net revenue and a decrease in merchandise margin to 44.2% for the thirteen weeks ended April 30, 2022 as compared to 46.7% for the 13 weeks ended May 1, 2021. The following table sets forth a year-over-year comparison of the Company’s gross profit:

Gross Profit. The following table sets forth a period over period comparison of the Company’s gross profit:

	Thirteen Weeks Ended						Change
(amounts in thousands)	April 30, 2022			May 1, 2021			$			%

Merchandise margin	$	14,046		$	18,982		$	(4,936	)	(26.0	)%
% of net revenue		44.2	%		46.7	%		(2.5	)%

Fulfillment fees		(4,568	)		(6,449	)		(1,881	)	(29.2	)%
Warehousing and freight		(2,627	)		(2,737	)		(110	)	(4.0	)%
Gross profit	$	6,851		$	9,796		$	(2,945	)	(30.1	)%

% of net revenue		21.6	%		24.1	%

	Thirteen Weeks Ended						Change					Thirty-nine Weeks Ended						Change
(amounts in thousands)	October 30, 2021			October 30, 2020			$			%		October 30, 2021			October 30, 2020			$			%
Merchandise margin	$	14,653		$	17,978		$	(3,325	)	-18.5	%	$	49,309		$	51,879		$	(2,570	)	-5.0	%
% of net revenue		45.5	%		46.2	%		-0.7	%				45.8	%		46.0	%		-0.2	%
Fulfillment fees		(4,375	)		(6,479	)		2,104		-32.5	%		(16,218	)		(18,343	)		2,125		-11.6	%
Warehousing and freight		(2,274	)		(1,898	)		(376	)	19.8	%		(6,455	)		(5,332	)		(1,123	)	21.1	%
Gross profit	$	8,004		$	9,601		$	(1,597	)	-16.6	%	$	26,636		$	28,204		$	(1,568	)	-5.6	%
% of net revenue		24.9	%		24.7	%							24.7	%		25.0	%

Gross profit was $8.0 million for the thirteen weeks ended October 30, 2021, as compared to $9.6 million for the comparable prior year period. The decrease in gross profit was primarily attributable to a reduction in net revenue on the Amazon US Platform. Gross profit as a percentage of net revenue was 24.9%, as compared to 24.7% for the thirteen weeks ended October 31, 2020. Merchandise margin for the thirteen- week period ending October 30, 2021 was 45.5% as compared to 46.2% for the comparable prior year period. The decline in merchandise margin rate was offset by the leveraging of Fulfillment fees and Warehousing and freight expenses.

Gross profit for the thirty-nine weeks ended October 30, 2021 was $26.6 million, or 24.7% of net revenue, as compared to $28.2 million, or 25.0% of net revenue for the comparable prior year period as increased net revenue was offset by higher warehousing and freight expenses.

SG&A Expenses. The following table sets forth a period over period comparison of the Company’s SG&A expenses:

	Thirteen Weeks Ended						Change						Thirty-Nine Weeks Ended						Change
	Thirteen weeks ended						Change
(amounts in thousands)	October 30, 2021			October 31, 2020			$			%			October 30, 2021			October 31, 2020			$			%
	April 30, 2022			May 1, 2021				$		%
Selling expenses	$	4,~~580~~601		$	56,~~710~~230		$	(1,~~130~~629	)	~~-19.8~~	%-26.1	%	$	~~15,571~~		$	~~16,578~~		$	~~(1,007~~	)	~~-6.1~~	%
General and administrative expenses		5,~~438~~916			4,~~503~~427			~~935~~1,489		~~20.8~~	%33.6	%		~~15,315~~			~~17,909~~			~~(2,594~~	)	~~-14.5~~	%
Total SG&A expenses	$	10,018		$	10,213		$	(195	)	-1.9	%		$	30,886		$	34,487		$	(3,601	)	-10.4	%
SG&A Expenses	$	10,517		$	10,657		$	(140	)		-1.3	%
As a % of total revenue		3133.1	%		26.2	%								~~28.7~~	%		~~30.6~~	%

~~For the thirteen weeks ended October 30, 2021,~~ SG&A expenses decreased $0.21 million or 1.93%. The decrease in SG&A expenses was due to a $1.6 million decline in selling expenses partially offset by a $1.5 million increase in general and administrative expenses. The decrease in selling expenses ~~related~~is attributable to the ~~decline~~sales decrease. The increase in general and administrative expenses is due to increased wages and marketing expenses and a one-time charge for severance expenses. Also included in ~~net~~general ~~revenue~~and administrative expenses is an expense of $0.3 million related to the reduction in cash surrender value compared to an increase of $0.3 million for the comparable prior year period.

25Consolidated depreciation and amortization expense for the thirteen weeks ended April 30, 2022 was $0.3 million as compared to $0.6 million for the comparable prior year period.

Interest Expense. Interest expense was $0.8 million for the thirteen weeks ended April 30, 2022 compared to $0.6 million for the thirteen weeks ended May 1, 2021. The increase in interest expense was due to increased short and long-term borrowings. See Note 7 to the Condensed Consolidated Financial Statements for further detail on the Company’s debt.

Income Tax Expense. Based on available objective evidence, management concluded that a full valuation allowance should be recorded against the Company's deferred tax assets As a result, there were insignificant tax expense amounts recorded during the thirteen weeks ended April 30, 2022 and May 1, 2021.

Index

~~Consolidated~~Net ~~depreciation~~Loss. ~~and~~The ~~amortization~~net ~~expense~~loss for the thirteen weeks ended ~~October~~April 30, ~~2021~~2022 was $04.63 million as compared to $01.54 million for the comparable prior year period.

For the thirty-nine weeks ended October 30, 2021, SG&A expenses decreased $3.6 million or 10.4%. The decrease in SG&A expenses was due to a $1.0 million decrease in selling expenses related to the decline in net revenue and a $2.6 million decline in General and administrative expenses.

Consolidated depreciation and amortization expense for the thirty-nine weeks ended October 30, 2021 was $1.8 million as compared to $1.6 million for the comparable prior year period.

Interest Expense. Interest expense was $0.4 million for the thirteen weeks ended October 30, 2021, the same level as the thirteen weeks ended October 31, 2020.

Interest expense was $1.5 million for the thirty-nine weeks ended October 30, 2021 compared to $1.0 million for the thirty-nine weeks ended October 31, 2020. The increase in interest expense was due to increased long-term borrowings. See Note 7 to the Condensed Consolidated Financial Statements for further detail on the Company’s debt.

Other Income. During the thirteen-weeks ended October 30, 2021, the Company recognized income of $1.6 million related to the settlement of an insurance claim.

On June 15, 2021, the Small Business Administration (“SBA”) approved the Company’s application for forgiveness of the PPP Loan. The amount of the forgiveness was $1.9 million in principal and interest, which was the amount requested in the forgiveness application and was less than the original principal balance due. Following the grant of forgiveness, an outstanding balance of $76,452 was paid during the thirty-nine week period ended October 31, 2021.

Income Tax Expense. Based on available objective evidence, management concluded that a full valuation allowance should be recorded against the Company’s deferred tax assets. As a result, there were insignificant tax expense amounts recorded during the thirteen and thirty-nine week periods ended October 30, 2021 and October 31, 2020.

Net income (loss). Net loss for the thirteen weeks ended October 30, 2021 was $0.9 million as compared to net income of $2.6 million for the comparable prior year period.

The net loss for the thirty-nine weeks ended October 30, 2021 was $2.2 million as compared to $3.8 million for the comparable prior year period.

LIQUIDITY

Liquidity and Cash Flows:

The Company’s primary sources of liquidity are its borrowing capacity under its ~~revolving~~Credit ~~credit facility~~Facility, available cash and cash equivalents, ~~funds raised through equity offerings~~ and to a lesser extent, cash generated from operations. Our cash requirements relate primarily to working capital needed to operate Kaspien, including funding operating expenses, the purchase of inventory and ~~grow~~capital ~~our~~expenditures. ~~business~~Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including ~~funding~~the timing and amount of our revenue; the timing and amount of our operating expenses; the timing and costs of working capital needs; successful implementation of our strategy and planned activities; and our ability to overcome the ~~purchase~~impact of ~~inventory~~the COVID-19 pandemic.

AsThe ~~disclosed~~Company inincurred ~~the~~a ~~Company’s~~net ~~Annual~~loss ~~Report~~of on$4.4 ~~Form~~million ~~10-K~~and ~~filed~~$1.4 million for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively. The increase in the ~~Company~~net ~~experienced~~loss ~~negative~~was ~~cash~~primarily ~~flows~~attributable ~~from~~to ~~operations~~a ~~during~~decrease ~~fiscal~~in ~~2020~~sales and ~~2019~~gross ~~and~~margin. weIn addition, ~~expect~~the toCompany ~~incur~~has an accumulated deficit of $125.3 million as of April 30, 2022 and net ~~losses~~cash used in ~~fiscal~~operating activities for the thirteen weeks ended April 30, 2022 was $5.8 million. Net cash used in operating activities for the thirteen weeks ended May 1, 2021 was $2.5 million.

26As disclosed in the Company's Annual Report on Form 10-K filed April 29, 2022, the Company experienced negative cash flows from operations during fiscal 2021 and 2020 and we expect to incur net losses in fiscal 2022.

Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and amount of our revenue; the timing and amount of our operating expenses; the timing and costs of working capital needs; successful implementation of our strategy and planned activities; and our ability to overcome the impact of the COVID-19 pandemic. There can be no assurance that we will be successful in further implementing our business strategy or that the strategy, including the completed initiatives, will be successful in sustaining acceptable levels of sales growth and profitability. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The unaudited condensed consolidated financial statements for the thirteen weeks ended April 30, 2022 were prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished in these unaudited condensed consolidated financial statements reflects all normal, recurring adjustments which, in the opinion of management, are necessary for the fair presentation of such financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The ability of the Company to meet its liabilities and to continue as a going concern is dependent on improved profitability, the strategic initiatives for Kaspien and the availability of future funding. Based on recurring losses from operations, negative cash flows from operations, the expectation of continuing operating losses for the foreseeable future, and uncertainty with respect to any available future funding, the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Index

~~Our~~As ~~ability~~of toApril ~~achieve~~30, ~~profitability and meet future liquidity needs and capital requirements will depend upon numerous factors~~2022, ~~including~~we ~~the~~had ~~timing~~cash and ~~amount~~cash ofequivalents ~~our revenue; the timing and amount~~ of ~~our~~$0.8 ~~operating~~million, ~~expenses;~~net ~~the timing and costs of~~ working capital ~~needs; successful implementation~~ of ~~our~~$16.5 ~~strategy~~million, and ~~planned~~$10.5 ~~activities;~~in ~~and~~borrowings on our ~~ability~~revolving tocredit ~~overcome~~facility, ~~the~~as ~~impact~~further ofdiscussed ~~the COVID-19 pandemic~~below.

~~There~~As ~~can~~of beJanuary no29, ~~assurance~~2022, ~~that~~the weCompany ~~will~~had beborrowings ~~successful~~of in$10.0 ~~further~~million ~~implementing~~under ~~our~~the ~~business~~Credit ~~strategy~~Facility. orAs ~~that~~of ~~the~~April ~~strategy~~30, ~~will~~2022 beand ~~successful~~May in1, ~~sustaining~~2021, ~~acceptable~~the ~~levels~~Company had no outstanding letters of ~~sales~~credit. ~~growth~~The Company had $3.6 million and ~~profitability~~$10. ~~The~~9 ~~unaudited~~million ~~condensed~~available ~~consolidated~~for ~~financial~~borrowing ~~statements~~under dothe ~~not~~Credit ~~include~~Facility ~~any~~as ~~adjustments~~of ~~that~~April ~~might~~30, ~~result~~2022 ~~from~~and ~~the~~May ~~outcome~~1, of2021, ~~these uncertainties~~respectively.

~~The~~On ~~unaudited~~March ~~condensed~~18, ~~consolidated~~2021, ~~financial~~the ~~statements~~Company ~~for~~closed ~~the~~an ~~thirty-nine~~underwritten ~~weeks~~offering ~~ended~~of ~~October 30~~416,600 ~~2021~~shares ~~were~~of ~~prepared~~common ~~pursuant~~stock ~~to the rules and regulations~~ of the ~~Securities and Exchange Commission. The information furnished in these unaudited condensed consolidated financial statements reflects all normal~~Company, ~~recurring~~at ~~adjustments~~a ~~which,~~price into the ~~opinion~~public of ~~management,~~$32.50 ~~are~~per ~~necessary for the fair presentation of such financial statements~~share. The ~~preparation~~gross ofproceeds ~~financial statements in conformity with accounting principles generally accepted in the United States~~ of ~~America requires management to make estimates and assumptions that affect~~ the ~~reported~~offering ~~amounts~~were ofapproximately ~~assets~~$13.5 ~~and~~million, ~~liabilities~~prior ~~and disclosure of contingent assets and~~to ~~liabilities~~deducting atunderwriting ~~the~~discounts ~~date of the financial statements,~~ and ~~the~~commissions ~~reported amounts of revenues~~ and ~~expenses~~estimated ~~during~~offering ~~the reporting period~~expenses. ~~Actual~~The ~~results~~Company ~~could~~used ~~differ from those estimates. For~~ the ~~next~~net 12proceeds ~~months,~~from ~~management believes that~~ the ~~Company’s existing~~offering ~~liquidity~~for ~~will~~general becorporate ~~adequate~~purposes, toincluding ~~fund its~~ working capital ~~needs. The ability of the Company~~ to ~~meet~~implement its ~~liabilities~~strategic isplans, ~~dependent~~investments ~~on continued improved profitability and the other factors set forth~~ in ~~the~~technology ~~preceding paragraph. Management anticipates any cash requirements due~~ to aenhance ~~shortfall~~its inscalable ~~cash~~platform ~~from~~and ~~operations~~its ~~will~~core beretail ~~funded by the Company’s revolving credit facility, as discussed in note 7 in the interim condensed consolidated financial statements~~business.

Index

The following table sets forth a summary of key components of cash flow and working capital:

			As of or for the Thirty-Nine Weeks Ended								Change
		As of or for the
	(amounts in thousands)		October 30, 2021				October 31, 2020				$
		Thirteen Weeks Ended								Change
	Operating Cash Flows		$	(9,990	)		$	(15,272	)		$	5,282
(amounts in thousands)		April 30,				May 1,
	Investing Cash Flows			(1,047	)			10,884				(11,931	)
		2022				2021				$
	Financing Cash Flows			10,125				3,004				7,121
Operating Cash Flows		$	(5,820	)		$	(2,513	)		$	(3,307	)
	Capital Expenditures(1)			(1,047	)			(935	)			(112	)
Investing Cash Flows			(399	)			(444	)			45
	Cash, Cash Equivalents, and Restricted Cash	(2)		5,644				7,428				(1,784	)
Financing Cash Flows			5,542				5,893				(351	)
	Merchandise Inventory (2)			30,248				27,204				3,044
Capital Expenditures(1)			(399	)			(444	)			45
(1)	Included in Investing Cash Flows
Cash, Cash Equivalents, and Restricted Cash (2)			4,146				9,491				(5,345	)
(2)	Cash and cash equivalents per condensed consolidated balance sheets		$	1,754			$	2,396
Merchandise Inventory			32,254				22,567				9,687
	Add: restricted cash			3,890				5,032
(1)Included in Investing Cash Flows
	Cash, cash equivalents, and restricted cash		$	5,644			$	7,428
(2)Cash and cash equivalents per condensed consolidated balance sheets		$	828			$	5,030
Add: restricted cash			3,318				4,461
Cash, cash equivalents, and restricted cash		$	4,146			$	9,491

Cash used in operations was $105.08 million ~~for the thirty-nine weeks ended October 30, 2021,~~ primarily due to net loss of $24.25 million, ~~net~~and ~~of the PPP forgiveness of $1.9 million,~~ a $23.20 million ~~decrease~~increase in ~~accounts~~inventory ~~payable~~partially ~~and~~offset by a $51.74 million increase in ~~inventory~~accounts payable.

Cash used inby investing activities was $1.0.4 million for the ~~thirty-nine~~thirteen weeks ended ~~October~~April 30, ~~2021~~2022, which consisted entirely of capital expenditures. Cash ~~provided~~used by investing activities was $100.94 million for the ~~thirty-nine~~thirteen weeks ended ~~October~~ 30May 1, 2021, which ~~primarily~~ consisted ofentirely ~~proceeds from the sale~~ of ~~the fye business, partially offset by~~ capital expenditures ~~of $0~~.~~9 million.~~

Cash provided by financing activities was $105.15 million for the ~~thirty-nine~~thirteen weeks ended ~~October~~April 30, ~~2021~~2022. The primary source of cash was ~~an underwritten offering of 416,600 shares of common stock of the Company, at a price to the public of~~ $325.50 per share. The net proceeds of the offering were approximately $12.2 million. The Company used $6.3 million of the proceeds to pay down its Credit Facility. Cash provided by financing activities was $3.0 million ~~for~~raised the thirty-nine weeks ended October 31, 2020. The primary source of cash was borrowings under the Credit Facility of $8.5 million, the Subordinated Loan Agreement of $5.2 million and borrowings from the ~~Payroll~~issuance ~~Protection Program~~ of ~~$2.0~~subordinated ~~million, partially offset by the payoff of the previous credit facility of $13~~debt.~~1 million.~~

Capital Expenditures. During the thirty-nine weeks ended October 30, 2021, the Company made capital expenditures of $1.0 million. The Company currently plans to spend approximately $1.5 million for capital expenditures during fiscal 2021.26

Index

~~CRITICAL~~Cash ~~ACCOUNTING~~provided ~~POLICIES~~by ~~AND~~financing ~~ESTIMATES~~activities was $5.9 million for the thirteen weeks ended May 1, 2021. The primary source of cash was an underwritten offering of 416,600 shares of common stock of the Company, at a price to the public of $32.50 per share. The net proceeds of the offering were approximately $12.2 million. The Company used $6.3 million of the proceeds to pay down its Credit Facility.

Capital Expenditures. During the thirteen weeks ended April 30, 2022, the Company made capital expenditures of $0.2 million. The Company currently plans to spend approximately $1.0 million for capital expenditures during fiscal 2022.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires that management apply accounting policies and make estimates and assumptions that affect results of operations and the reported amounts of assets and liabilities in the financial statements. Management continually evaluates its estimates and judgments including those related to merchandise inventory and return costs and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Form 10-K as of and for the year ended January 3029, ~~2021~~2022 includes a summary of the critical accounting policies and methods used by the Company in the preparation of its interim condensed consolidated financial statements. InThe ~~order~~Company’s tosignificant ~~conform~~accounting ~~with~~policies ~~industry~~are ~~practice, effective with~~ the ~~first~~same ~~quarter of fiscal year 2021, commission fees from online marketplaces, which were previously reported~~ as ~~cost~~those ofdescribed ~~goods sold on the consolidated statements of operations, are now included~~ in ~~SG&A~~Note ~~expense.~~1 ~~Prior periods have been reclassified~~ to ~~conform to~~ the ~~current~~Company’s ~~period~~Consolidated ~~presentation.~~Financial ~~Commission~~Statements ~~fees~~on ~~for~~Form ~~the 13~~10-~~week~~K ~~period ended October 30, 2021 were $5.1 million and commission fees of $6.3 million were reclassified~~ for the ~~13-weeks ended October 31, 2020. Commission fees for the 26-week period ended October 30, 2021 were $11.0 million and commission fees of $10.9~~ ~~million~~fiscal ~~were~~year ~~reclassified for the 26-weeks~~ ended ~~October~~January 3129, ~~2020~~2022.

Recent Accounting Pronouncements:

The information set forth under Note 2, Recently Adopted Accounting Pronouncements section contained in Item 1, “Notes to Interim Condensed Consolidated Financial Statements”, is incorporated herein by reference.

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Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

PART I – FINANCIAL INFORMATION

Item 3 –- Quantitative and Qualitative Disclosures about Market Risk

The Company does not hold any financial instruments that expose it to significant market risk and does not engage in hedging activities. To the extent the Company borrows under its revolving credit facility, the Company is subject to risk resulting from interest rate fluctuations since interest on the Company’s borrowings under its credit facility can be variable. If interest rates on the Company’s revolving credit facility were to increase by 25 basis points, and to the extent borrowings were outstanding, for every $1,000,000 outstanding on the facility, interest expense would be increased by $2,500 per year. For a discussion of the Company’s accounting policies for financial instruments and further disclosures relating to financial instruments, see “Nature of Operations and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended January 3029, ~~2021~~2022.

Item 4 – Controls and Procedures

(a) Evaluation of disclosure controls and procedures. The Company’s Principal Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of ~~October~~April 30, ~~2021~~2022, have concluded that as of such date the Company’s disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal controls. There have been no changes in the Company’s internal controls over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

3028

Index

KASPIEN HOLDINGS INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1 – Legal Proceedings

Loyalty Memberships and Magazine Subscriptions Class Action

On April 11, 2019, the plaintiffs voluntarily dismissed their lawsuit. On May 8, 2019, two of the plaintiffs from the dismissed lawsuit filed a similar putative class action in Massachusetts state court (Civ. Act. No. 197CV00331, Mass. Super. Ct. Hampden Cty.), based on the same allegations, but this time seeking to represent only a class of “FYE customers in Massachusetts” who were charged for VIP Backstage Pass Memberships and/or magazine subscriptions. The Company removed that lawsuit back to federal court on June 12, 2019, and then filed a motion to dismiss and/or strike the plaintiff’s class action allegations on June 28, 2019. On February 2, 2021 the court granted the Company’s motion, struck the class action allegations, and dismissed the individual plaintiffs’ claims for lack of jurisdiction. Plaintiffs appealed the court’s decision on February 24, 2021. The parties participated in a mandatory court-annexed mediation session on April 8, 2021. The parties agreed on terms to resolve the matter fully and finally, and the appeal was dismissed on May 3, 2021,without material impact on the financial results of the Company.

Store Manager Class Actions

Index

Retailer Agreement Dispute

On June 18, 2021, Vijuve Inc. filed a lawsuit against Kaspien Inc. in the United States District Court for the Eastern District of Washington (Case No. 2:21-cv-00192-SAB) concerning a Retailer Agreement that the parties entered into in September of 2020. Vijuve manufactures skin care products and face massagers. The parties agreed that Kaspien would sell Vijuve’s products on Amazon. The complaint alleged that Kaspien breached the Retailer Agreement when it declined to acquiesce to Vijuve’s demand that Kaspien purchase over $700,000 of products. In total, Vijuve is seeking $774,000 in damages. Kaspien ~~believed,~~denies ~~and still believes,~~ that ~~Vijuve~~it ~~attempted~~breached tothe ~~artificially~~agreement. ~~inflate~~Moreover, ~~its sales~~ on ~~Amazon to support that demand. On~~ July 19, 2021, Kaspien filed counterclaims and alleged that Vijuve breached the contract, including by refusing to buy back inventory from Kaspien upon termination of the Retailer Agreement. Kaspien is seeking at least $229,000 from Vijuve for breach of contract and/or specific performance. A trial on all of the parties’ claims is scheduled for February 21, 2023. There is no determination of outcome, thus no contingencies are recognized as of the reporting date.

On August 9, 2021, Vijuve filed a motion to dismiss Kaspien’s counterclaims. On September 3, 2021, Kaspien filed a motion for judgment on the pleadings that seeks to dismiss Vijuve’s complaint. On October 22, 2021, the Court denied the motion. It also denied Vijuve’s attempt to dismiss the Company’s counterclaims. A scheduling conference has been scheduled for December 16, 2021. With the resolution of the motions currently pending, the impact on Kaspien (if any) is not presently known.

Item 1A – Risk Factors

Risks relating to the Company’s business and ~~common~~Common ~~stock~~Stock are described in detail in Item 1A of the Company’s most recently filed Annual Report on Form 10-K for the fiscal year ended January 3029, ~~2021~~2022.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 – Defaults Upon Senior Securities

None.

Item 4 – Mine Safety Disclosure

Not Applicable.

Item 5 – Other Information

None.

Item 6 –- Exhibits

(A) Exhibits - Exhibit No.		Description
(A)Exhibits - Exhibit No.	Description
	10.1	Amendment No. 3 to Loan and Security Agreement dated September 17, 2021 - incorporated by reference to Exhibit 10.1 to the Company's Form 8-K. Filed on September 20, 2021. Commission File No. 0-14818.
3.1	Certificate of Amendment of Certificate of Incorporation of Kaspien Holdings Inc., dated March 8, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K dated March 8, 2022).
	10.2	Amendment No. 1 to Subordinated Loan and Security Agreement dated September 17, 2021 - incorporated by reference to Exhibit 10.2 to the Company's Form 8-K Filed on September 20, 2021. Commission File No. 0-14818.
3.2	Amendment No. 3 to Bylaws of Kaspien Holdings Inc., dated March 8, 2022 (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K dated March 8, 2022).
	31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
	101.SCH	Inline XBRL Taxonomy Extension Schema Document.
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
	104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

3229

Index

4.1	Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K dated March 8, 2022).

10.1	Amendment No. 4 to Loan and Security Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated March 8, 2022).

10.2	Amendment No. 2 to Subordinated Loan and Security Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K dated March 8, 2022).

10.3	Registration Rights Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K dated March 8, 2022).

10.4	Contingent Values Rights Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K dated March 8, 2022).

10.5	Kunal Chopra Separation Agreement dated as of March 30, 2022 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated April 1, 2022)

10.6	Brock Kowalchuk Offer Letter dated as of March 28, 2022 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K dated April 1, 2022)

10.7	Brock Kowalchuk Severance Agreement dated as of July 31, 2020 (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K dated April 1, 2022)

10.8	Amended and Restated Common Stock Purchase Warrant, dated as of April 4, 2022 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated April 5, 2022)

31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32	Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document (furnished herewith)

101.SCH	XBRL Taxonomy Extension Schema (furnished herewith)

101.CAL	XBRL Taxonomy Extension Calculation Linkbase (furnished herewith)

101.DEF	XBRL Taxonomy Extension Definition Linkbase (furnished herewith)

101.LAB	XBRL Taxonomy Extension Label Linkbase (furnished herewith)

101.PRE	XBRL Taxonomy Extension Presentation Linkbase (furnished herewith)

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

Index

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KASPIEN HOLDINGS INC.

December 14, 2021	By: /s/ Kunal Chopra
June 14, 2022	By: /s/ Brock Kowalchuk
	Kunal Chopra
	Brock Kowalchuk
	Chief Executive Officer
	Principal Executive Officer
	(Principal Executive Officer)
June 14, 2022	By: /s/ Edwin Sapienza
	Edwin Sapienza
	Chief Financial Officer
	(Principal and Chief Accounting Officer)

December 14, 2021	By: /s/ Edwin Sapienza
	Edwin Sapienza
	Chief Financial Officer
	(Principal and Chief Accounting Officer)

Filing Compare · Kaspien Holdings Inc.