Item 15. Exhibits, Financial Statement
Schedules.
(a)
|
(1)
|
Financial Statements:
|
|
|
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
|
|
|
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010
|
|
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010
|
|
Notes to Consolidated Financial Statements
|
|
|
(2)
|
Financial Statement Schedule:
|
SCHEDULE II —
Valuation and Qualifying Accounts For the Three Years Ended
December 31,
2012
|
Exhibit No.
|
Description
|
|
|
|
|
3.1
|
Certificate of Incorporation of
the Company (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000).
|
|
|
|
|
3.2
|
Certificate of Amendment to Certificate
of Incorporation of the Company, dated April 3, 2008 (incorporated by reference to the Company’s Current Report on Form
8-K, dated April 4, 2008).
|
|
|
|
|
3.3
|
Amended and Restated Certificate
of Incorporation of the Company, dated February 25, 2010 (incorporated by reference to the Company’s Current Report on Form
8-K, dated March 3, 2010).
|
|
|
|
|
3.4
|
By-Laws of the Company (incorporated
by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).
|
|
|
|
|
3.5
|
Amendment to Bylaws of the Company
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).
|
|
|
|
|
10.1
|
Bluefly, Inc. 2000 Stock Option
Plan (incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000).
|
|
|
|
|
10.2
|
Investment Agreement, dated November
13, 2000, by and among the Company, Bluefly Merger Sub, Inc., Quantum Industrial Partners LDC and SFM Domestic Investments LLC
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2000).
|
|
|
|
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10.3
|
Common Stock and Warrant Purchase
Agreement, dated May 24, 2002, by and between the Registrant and the investors listed on Schedule 1 thereto
(incorporated
by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002)
.
|
|
|
|
|
10.4
|
Note and Warrant Purchase Agreement,
dated January 28, 2003, by and
|
|
|
between the Registrant and the investors listed on Schedule 1 thereto
(incorporated
by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)
.
|
|
10.5
|
Common Stock and Warrant Purchase
Agreement dated January 9, 2004 by and among the Company and the Investors listed on Schedule 1 thereto (incorporated by reference
to the Company’s Current Report on Form 8-K, dated January 13, 2004).
|
|
|
|
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10.6
|
Amended and Restated 1997 Stock
Option Plan (incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Commission
on June 29, 2004).
|
|
|
|
|
*10.7
|
Master Service Agreement, dated
as of February 28, 2005, by and between the Company and Level 3 Communications, LLC (incorporated by reference to the Company’s
Current Report on Form 8-K, dated March 4, 2005).
|
|
|
|
|
*10.8
|
Customer Order Addendum, dated
as of February 28, 2005, by and between the Company and Level 3 Communications, LLC (incorporated by reference to the Company’s
Current Report on Form 8-K, dated March 4, 2005).
|
|
|
|
|
10.9
|
Preferred Stock and Warrant Purchase
Agreement, dated as of June 24, 2005, by and among the Company and the Investors listed on the signature page thereto (incorporated
by reference to the Company’s Current Report on Form 8-K, dated June 28, 2005).
|
|
|
|
|
10.10
|
Stock Purchase Agreement, dated
as of June 5, 2006, by and among Bluefly, Inc., Quantum Industrial Partners LDC, SFM Domestic Investments, LLC and the investors
listed on the signature pages attached thereto (incorporated by reference to the Company’s Current Report on Form 8-K, dated
June 7, 2006).
|
|
|
|
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10.11
|
Master License Agreement, dated
as of September 28, 2006, by and between the Company and Art Technology Group, Inc. (incorporated by reference to the Company’s
Current Report on Form 8-K, dated October 3, 2006).
|
|
|
|
|
10.12
|
Bluefly, Inc. Amended and Restated
2005 Stock Incentive Plan (incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A, filed
with the Commission on April 16, 2007).
|
|
|
|
|
*10.13
|
Fulfillment Services Agreement,
dated as of April 11, 2007, by and between the Company and Fulfillment Technologies, LLC (incorporated by reference to the Company’s
Current Report on Form 8-K, dated April 17, 2006).
|
|
|
|
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10.14
|
Service Agreement, dated as of
May 9, 2007, by and between the Company and VIP desk Connect, Inc. (incorporated by reference to the Company’s Current Report
on Form 8-K, dated May 10, 2007).
|
|
|
|
|
*10.15
|
Letter Agreement, dated as of
December 21, 2007, by and between the Company and Fulfillment Technologies, LLC (incorporated by reference to the Company’s
Current Report on Form 8-K, dated December 27, 2007).
|
|
|
|
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10.16
|
Standby Commitment Agreement,
dated as of March 26, 2008, by
Quantum Industrial Partners LDC, SFM Domestic Investments LLC and private
funds associated with Maverick Capital, Ltd. in favor of the Company
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007)
.
|
|
10.17
|
Amended and Restated Warrant No.
1, dated April 8, 2008 and effective as of March 26, 2008, issued to Q
uantum Industrial Partners LDC
(incorporated by reference to the Company’s Quarterly Report
on Form 10-Q for the quarter ended March 31, 2008)
.
|
|
|
|
|
10.18
|
Amended and Restated Warrant No.
2 dated April 8, 2008 and effective as of March 26, 2008, issued to
SFM Domestic Investments LLC
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
|
|
|
|
|
10.19
|
Amended and Restated Warrant No.
3 dated April 8, 2008 and effective as of March 26, 2008, issued to
Maverick Fund USA, Ltd.
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
|
|
|
|
|
10.20
|
Amended and Restated Warrant No.
4 dated April 8, 2008 and effective as of March 26, 2008, issued to
Maverick Fund LDC
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
|
|
|
|
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10.21
|
Amended and Restated Warrant No.
5 dated April 8, 2008 and effective as of March 26, 2008, issued to
Maverick Fund II, Ltd.
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
|
|
|
|
|
*10.22
|
Letter Agreement, dated as of
November 19, 2008, by and between the Company and Fulfillment Technologies, LLC (incorporated by reference to the Company’s
Current Report on Form 8-K, dated November 24, 2008).
|
|
|
|
|
10.23
|
Securities Purchase Agreement,
dated as of December 21, 2009, between Bluefly, Inc. and Rho Ventures VI, LP (incorporated by reference to the Company’s
Current Report on Form 8-K, dated December 24, 2009).
|
|
|
|
|
10.24
|
Amended and Restated Voting Agreement,
dated as of December 21, 2009, among Bluefly, Inc., Quantum Industrial Partners LDC, SFM Domestic Investments, LLC, Maverick Fund
USA, Ltd., Maverick Fund, L.D.C., Maverick Fund II, Ltd., Prentice Capital Partners, LP, Prentice Capital Partners QP, LP, Prentice
Capital Offshore, Ltd., S.A.C. Capital Associates, LLC, GPC XLIII, LLC, PEC I, LLC and Rho Ventures VI, LP (incorporated by reference
to the Company’s Current Report on Form 8-K, dated December 24, 2009).
|
|
|
|
|
10.25
|
Amendment No. 1 to the Amended
and Restated Bluefly, Inc. 2005 Stock Incentive Plan (incorporated by reference to the Company’s Current Report on Form
8-K, dated March 3, 2010).
|
|
|
|
|
10.26
|
Lease Agreement by and between
the Company and 42-52 West 39 Street LLC, dated March 17, 2010 (incorporated by reference to the Company’s Current Report
on Form 8-K, dated March 22, 2010).
|
|
|
|
|
10.27
|
Third Amended and Restated Employment
Agreement, dated as of May 3, 2011, by and between the Company and Kara Jenny (incorporated by reference to the Company’s
Quarterly Report on Form 10-Q, dated August 12, 2011).
|
|
|
|
|
10.28
|
Employment Agreement, dated May
3, 2011 and effective as of May 31, 2011, by and between Bluefly, Inc. and Joseph Park (incorporated by reference to the Company’s
Current Report on Form 8-K, dated June 1, 2011).
|
|
10.29
|
Securities Purchase Agreement,
dated as of September 7, 2011, by and among Bluefly, Inc., Rho Ventures VI, LP, Quantum Industrial Partners LDC and Prentice Consumer
Partners, LP., with form of officer and director lock-up, and shareholder lock-up and support agreements attached thereto (incorporated
by reference to the Company’s Current Report on Form 8-K, dated September 9, 2011).
|
|
|
|
|
10.30
|
Amended and Restated Registration
Rights Agreement, dated as of September 7, 2011, among Bluefly, Inc., Quantum Industrial Partners LDC, SFM Domestic Investments,
LLC, Maverick Fund USA, Ltd., Maverick Fund, L.D.C., Maverick Fund II, Ltd., Prentice Consumer Partners, LP, and Rho Ventures
VI, LP. (incorporated by reference to the Company’s Current Report on Form 8-K, dated September 9, 2011).
|
|
|
|
|
10.31
|
Separation Agreement, dated as
of September 8, 2011, by and between Bluefly, Inc. and Bradford Matson with attached mutual release (incorporated by reference
to the Company’s Quarterly Report on Form 10-Q, dated November 10, 2011).
|
|
|
|
|
10.32
|
Separation Agreement, dated February
2, 2012, by and between Bluefly, Inc. and Melissa Payner-Gregor (incorporated by reference to the Company’s Current Report
on Form 8-K, dated February 3, 2012).
|
|
|
|
|
10.33
|
Note and Warrant Purchase Agreement,
dated August 13, 2012, by and among the Company, Prentice Consumer Partners, LP and Rho Ventures VI, L.P. (incorporated by reference
to the Company’s Quarterly Report on Form 10-Q, dated August 14, 2012).
|
|
|
|
|
10.34
|
Secured Subordinated Promissory
Note, dated August 13, 2012, by and between the Company and Prentice Consumer Partners, LP. (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q, dated August 14, 2012).
|
|
|
|
|
10.35
|
Secured Subordinated Convertible
Promissory Note, dated August 13, 2012, by and between the Company and Rho Ventures VI, L.P. (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q, dated August 14, 2012).
|
|
|
|
|
10.36
|
Warrant No. 1, dated August 13,
2012, issued to Prentice Consumer Partners LP. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q,
dated August 14, 2012).
|
|
|
|
|
10.37
|
Warrant No. 2, dated August 13,
2012, issued to Rho Ventures VI, L.P. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q, dated August
14, 2012).
|
|
|
|
|
10.38
|
Employment Agreement, dated June
12, 2012, by and between the Company and Scott Erdman. (incorporated by reference to the Company’s Quarterly Report on Form
10-Q, dated August 14, 2012).
|
|
|
|
|
10.39
|
Credit Agreement and related Security
Agreement, each dated November 13, 2012, by and among the Company, its subsidiary EVT Acquisition Co., LLC and Salus Capital Partners,
LLC (incorporated by reference to the Company’s Current Report on Form 8-K, dated November 19, 2012).
|
|
|
|
|
10.40
|
Amendment No. 1 to Secured Subordinated
Promissory Note, dated November 13, 2012, by and between the Company and Prentice Consumer Partners LP (incorporated by reference
to the Company’s Current Report on Form 8-K,
|
|
|
dated November 19, 2012).
|
|
10.41
|
Amendment No. 1 to Secured Subordinated
Convertible Promissory Note, dated November 13, 2012, by and between the Company and Rho Ventures VI, L.P. (incorporated by reference
to the Company’s Current Report on Form 8-K, dated November 19, 2012).
|
|
|
|
|
10.42
|
Separation Agreement and Release
of Claims, dated November 20, 2012, by and between the Company and Kara Jenny (incorporated by reference to the Company’s
Quarterly Report on Form 10-Q, dated November 21, 2012).
|
|
|
|
|
10.43
|
Amended and Restated Employment
Agreement, dated February 2, 2012, by and between the Company and Joseph C. Park (incorporated by reference to the Company’s
Quarterly Report on Form 10-Q, dated November 21, 2012).
|
|
|
|
|
10.44
|
Employment Agreement, dated November
28, 2012, by and between the Company and James Gallagher (incorporated by reference to the Company’s Current Report on Form
8-K, dated November 29, 2012).
|
|
|
|
|
10.45
|
Limited consent dated April 4, 2013 from
Salus Capital Partners, LLC with respect to late delivery of 2012 financial statements.
|
|
|
|
|
10.46
|
Limited consent dated April 11,
2013 from Salus Capital Partners, LLC with respect to going concern qualification.
|
|
|
|
|
10.47
|
Amendment No. 1 to the Credit
Facility between Salus Capitals Partners, LLC and the Company, dated April 11, 2013.
|
|
|
|
|
23.1
|
Consent of WeiserMazars LLP.
|
|
|
|
|
31.1
|
Certification Pursuant to Rule
13a-14(a)/15d-14(a).
|
|
|
|
|
31.2
|
Certification Pursuant to Rule
13a-14(a)/15d-14(a).
|
|
|
|
|
32.1
|
Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.2
|
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.
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema.
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition
Linkbase.
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label
Linkbase.
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation
Linkbase.
|
|
*
|
Confidential treatment has been granted as to certain
portions of this Exhibit. Such portions have been redacted and were filed separately with the Securities and Exchange Commission.
|
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
BLUEFLY, INC.
|
|
|
|
By
|
/s/ Joseph C. Park
|
|
|
Joseph C. Park
Chief Executive Officer
|
April 15, 2013
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ HabibKairouz
|
|
|
|
|
Habib Kairouz
|
|
Chairman of the Board
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Joseph C. Park
|
|
|
|
|
Joseph C. Park
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
April 15, 2013
|
|
|
Director
|
|
|
/s/ James Gallagher
|
|
|
|
|
James Gallagher
|
|
Chief Financial Officer (Principal Accounting Officer)
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Mario Ciampi
|
|
|
|
|
Mario Ciampi
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Michael Helfand
|
|
|
|
|
Michael Helfand
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Martin Miller
|
|
|
|
|
Martin Miller
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Anthony Plesner
|
|
|
|
|
Anthony Plesner
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Andrew Russell
|
|
|
|
|
Andrew Russell
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
/s/ Denise Seegal
|
|
|
|
|
Denise Seegal
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
/s/ David Wassong
|
|
|
|
|
David Wassong
|
|
Director
|
|
April 15, 2013
|
|
|
|
|
|
BLUEFLY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULE
Report
of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
Bluefly, Inc.
We have audited the accompanying consolidated
balance sheets of Bluefly, Inc. and subsidiary (the “Company”) as of December 31, 2012 and 2011, and the related consolidated
statements of operations, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended
December 31, 2012. Our audits also included the consolidated financial statement schedule listed at Item 15(a)(2). These
consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these consolidated financial statements and schedule based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of Bluefly, Inc. and
subsidiary as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 – Basis
of Presentation, Liquidity, and Management’s Plan to the consolidated financial statements, the Company has incurred significant
recurring operating losses, decreasing liquidity, and negative cash flows from operations. These factors raise substantial doubt
about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also
described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ WeiserMazars LLP
WeiserMazars LLP
New York, New York
April 16, 2013
Bluefly, Inc.
Consolidated Balance Sheets
December
31, 2012 and 2011
|
|
2012
|
|
|
2011
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,283,000
|
|
|
$
|
4,413,000
|
|
Restricted cash securing letters of credit
|
|
|
4,635,000
|
|
|
|
--
|
|
Accounts receivable, net
|
|
|
2,433,000
|
|
|
|
2,597,000
|
|
Inventories, net
|
|
|
20,521,000
|
|
|
|
32,083,000
|
|
Prepaid expenses and other current assets
|
|
|
1,412,000
|
|
|
|
3,643,000
|
|
Total current assets
|
|
|
30,284,000
|
|
|
|
42,736,000
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
5,714,000
|
|
|
|
5,705,000
|
|
Other assets, net
|
|
|
545,000
|
|
|
|
185,000
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
36,543,000
|
|
|
$
|
48,626,000
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Revolving credit facility, expiring November 2015
|
|
$
|
5,311,000
|
|
|
$
|
--
|
|
Accounts payable
|
|
|
13,722,000
|
|
|
|
10,192,000
|
|
Allowance for sales returns
|
|
|
2,081,000
|
|
|
|
3,124,000
|
|
Accrued expenses and other current liabilities
|
|
|
2,720,000
|
|
|
|
4,446,000
|
|
Deferred revenue
|
|
|
4,381,000
|
|
|
|
4,235,000
|
|
Embedded derivative financial liability to related-party stockholders
|
|
|
379,000
|
|
|
|
--
|
|
Notes and interest payables to related-party stockholders, net
|
|
|
2,599,000
|
|
|
|
--
|
|
Total current liabilities
|
|
|
31,193,000
|
|
|
|
21,997,000
|
|
|
|
|
|
|
|
|
|
|
Deferred rent liability
|
|
|
413,000
|
|
|
|
373,000
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
31,606,000
|
|
|
|
22,370,000
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
Bluefly, Inc. stockholders’ equity:
|
|
|
|
|
|
|
|
|
Preferred stock – $0.01 par value; 1,000,000 shares authorized and none issued or outstanding
|
|
|
--
|
|
|
|
--
|
|
Common stock – $0.01 par value; 50,000,000 shares authorized as of December 31, 2012 and 2011, respectively; 28,937,331 and 28,629,296 shares issued as of December 31, 2012 and 2011, respectively, 28,598,933 and 28,290,898 shares outstanding as of December 31, 2012 and 2011, respectively
|
|
|
286,000
|
|
|
|
283,000
|
|
Treasury stock
|
|
|
(1,824,000
|
)
|
|
|
(1,824,000
|
)
|
Additional paid-in capital
|
|
|
193,574,000
|
|
|
|
190,296,000
|
|
Accumulated deficit
|
|
|
(187,099,000
|
)
|
|
|
(162,485,000
|
)
|
Total Bluefly, Inc. stockholders’ equity
|
|
|
4,937,000
|
|
|
|
26,270,000
|
|
Non-controlling interest in Eyefly LLC
|
|
|
--
|
|
|
|
(14,000
|
)
|
Total stockholders’ equity
|
|
|
4,937,000
|
|
|
|
26,256,000
|
|
Total liabilities and stockholders’ equity
|
|
$
|
36,543,000
|
|
|
$
|
48,626,000
|
|
The accompanying notes are an integral
part of these consolidated financial statements.
Bluefly, Inc.
Consolidated Statements of
Operations
Years
Ended December 31, 2012, 2011 and 2010
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
93,444,000
|
|
|
$
|
96,282,000
|
|
|
$
|
88,563,000
|
|
Cost of sales
|
|
|
77,325,000
|
|
|
|
67,997,000
|
|
|
|
55,360,000
|
|
Gross profit
|
|
|
16,119,000
|
|
|
|
28,285,000
|
|
|
|
33,203,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and fulfillment expenses
|
|
|
21,634,000
|
|
|
|
19,132,000
|
|
|
|
16,881,000
|
|
Marketing expenses
|
|
|
7,984,000
|
|
|
|
10,877,000
|
|
|
|
12,576,000
|
|
General and administrative expenses
|
|
|
10,230,000
|
|
|
|
9,361,000
|
|
|
|
7,592,000
|
|
Total operating expenses
|
|
|
39,848,000
|
|
|
|
39,370,000
|
|
|
|
37,049,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(23,729,000
|
)
|
|
|
(11,085,000
|
)
|
|
|
(3,846,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense to related-party stockholders
|
|
|
(631,000
|
)
|
|
|
--
|
|
|
|
--
|
|
Other interest expense and other income, net
|
|
|
(551,000
|
)
|
|
|
(345,000
|
)
|
|
|
(187,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(24,911,000
|
)
|
|
|
(11,430,000
|
)
|
|
|
(4,033,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net loss
attributable to non-controlling interest in subsidiary
|
|
|
(135,000
|
)
|
|
|
(446,000
|
)
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Bluefly, Inc. stockholders
|
|
$
|
(24,776,000
|
)
|
|
$
|
(10,984,000
|
)
|
|
$
|
(4,033,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share attributable to Bluefly, Inc. stockholders
|
|
$
|
(0.87
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (basic and diluted)
|
|
|
28,563,341
|
|
|
|
25,767,483
|
|
|
|
23,685,338
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
Bluefly, Inc.
Consolidated Statements of
Changes in Stockholders’ Equity
Years
Ended December 31, 2012, 2011 and 2010
|
|
Bluefly,
Inc. Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$.01
Par Value
|
|
|
Treasury
Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Number
of
|
|
|
|
|
|
Number
of
|
|
|
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Non-controlling
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Interest
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
January 1, 2010
|
|
|
18,552,737
|
|
|
$
|
185,000
|
|
|
|
332,502
|
|
|
$
|
(1,809,000
|
)
|
|
$
|
172,127,000
|
|
|
$
|
(147,468,000
|
)
|
|
$
|
-
|
|
|
$
|
23,035,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
634,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
634,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of restricted stock awards
|
|
|
8,062
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
of unvested restricted stock awards
|
|
|
(1,500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivery
of deferred stock unit awards
|
|
|
10,097
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
5,896
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of
common stock in connection with second
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
closing
of 2009 private placement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(net
of $244,000 issuance costs)
|
|
|
6,037,192
|
|
|
|
61,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,959,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,020,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,033,000
|
)
|
|
|
-
|
|
|
|
(4,033,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2010
|
|
|
24,606,588
|
|
|
|
246,000
|
|
|
|
338,398
|
|
|
|
(1,824,000
|
)
|
|
|
182,720,000
|
|
|
|
(151,501,000
|
)
|
|
|
-
|
|
|
|
29,641,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of
common stock from Private Placement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(net
of $182,000 issuance costs)
|
|
|
3,666,665
|
|
|
|
37,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,381,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,418,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,062,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,062,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of non-controlling interest in subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
432,000
|
|
|
|
432,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued to third-party
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock option awards
|
|
|
17,645
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,984,000
|
)
|
|
|
(446,000
|
)
|
|
|
(11,430,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2011
|
|
|
28,290,898
|
|
|
|
283,000
|
|
|
|
338,398
|
|
|
|
(1,824,000
|
)
|
|
|
190,296,000
|
|
|
|
(162,485,000
|
)
|
|
|
(14,000
|
)
|
|
|
26,256,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,907,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,907,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset acquisition
purchase
|
|
|
285,714
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
597,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued to related-party stockholders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
574,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
574,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deconsolidation of majority-controlled subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
162,000
|
|
|
|
149,000
|
|
|
|
311,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued to third-party
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of restricted stock awards
|
|
|
22,321
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,776,000
|
)
|
|
|
(135,000
|
)
|
|
|
(24,911,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2012
|
|
|
28,598,933
|
|
|
$
|
286,000
|
|
|
|
338,398
|
|
|
$
|
(1,824,000
|
)
|
|
$
|
193,574,000
|
|
|
$
|
(187,099,000
|
)
|
|
$
|
-
|
|
|
$
|
4,937,000
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
Bluefly, Inc.
Consolidated Statements of
Cash Flows
Years
Ended December 31, 2012, 2011 and 2010
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(24,911,000
|
)
|
|
$
|
(11,430,000
|
)
|
|
$
|
(4,033,000
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expenses
|
|
|
3,461,000
|
|
|
|
2,296,000
|
|
|
|
2,507,000
|
|
Impairment of intangible assets
|
|
|
383,000
|
|
|
|
--
|
|
|
|
--
|
|
Provisions for returns
|
|
|
(1,043,000
|
)
|
|
|
(18,000
|
)
|
|
|
515,000
|
|
Bad debt expense
|
|
|
370,000
|
|
|
|
1,574,000
|
|
|
|
324,000
|
|
Reserve for inventory obsolescence
|
|
|
(471,000
|
)
|
|
|
3,121,000
|
|
|
|
359,000
|
|
Stock-based compensation expense
|
|
|
1,907,000
|
|
|
|
1,062,000
|
|
|
|
634,000
|
|
Deferred rent expense
|
|
|
40,000
|
|
|
|
190,000
|
|
|
|
183,000
|
|
Amortization expense related to warrants issued to third-party
|
|
|
200,000
|
|
|
|
100,000
|
|
|
|
--
|
|
Amortization of discount on notes payable to related-party stockholders
|
|
|
318,000
|
|
|
|
--
|
|
|
|
--
|
|
Change in fair value of embedded derivative financial liability to related-
|
|
|
|
|
|
|
|
|
|
|
|
|
party stockholders
|
|
|
105,000
|
|
|
|
--
|
|
|
|
--
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
16,000
|
|
|
|
(308,000
|
)
|
|
|
441,000
|
|
Inventories
|
|
|
11,903,000
|
|
|
|
(9,063,000
|
)
|
|
|
(7,819,000
|
)
|
Prepaid expenses and other current assets
|
|
|
2,095,000
|
|
|
|
(3,061,000
|
)
|
|
|
(651,000
|
)
|
Other assets
|
|
|
(18,000
|
)
|
|
|
(71,000
|
)
|
|
|
--
|
|
Increase (decrease) in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
3,850,000
|
|
|
|
5,677,000
|
|
|
|
152,000
|
|
Accrued expenses and other current liabilities
|
|
|
(1,725,000
|
)
|
|
|
1,174,000
|
|
|
|
(127,000
|
)
|
Interest payable to related-party stockholders
|
|
|
130,000
|
|
|
|
--
|
|
|
|
--
|
|
Deferred revenue
|
|
|
376,000
|
|
|
|
690,000
|
|
|
|
29,000
|
|
Net cash used in operating activities
|
|
|
(3,014,000
|
)
|
|
|
(8,067,000
|
)
|
|
|
(7,486,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(3,233,000
|
)
|
|
|
(4,832,000
|
)
|
|
|
(2,139,000
|
)
|
Net cash used in investing activities
|
|
|
(3,233,000
|
)
|
|
|
(4,832,000
|
)
|
|
|
(2,139,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under
revolving credit facility
|
|
|
15,778,000
|
|
|
|
--
|
|
|
|
--
|
|
Repayments under revolving credit facility
|
|
|
(10,467,000
|
)
|
|
|
|
|
|
|
|
|
Proceeds from notes issued to related-party stockholders
|
|
|
3,000,000
|
|
|
|
--
|
|
|
|
--
|
|
Deferred financing costs
|
|
|
(559,000
|
)
|
|
|
--
|
|
|
|
--
|
|
Cash securing letters of credit
|
|
|
(4,635,000
|
)
|
|
|
--
|
|
|
|
--
|
|
Net proceeds from common stock issuance to related-party stockholders
|
|
|
--
|
|
|
|
6,418,000
|
|
|
|
10,020,000
|
|
Proceeds from exercise of stock options
|
|
|
--
|
|
|
|
33,000
|
|
|
|
--
|
|
Proceeds from capital contribution of non-controlling interest in subsidiary
|
|
|
--
|
|
|
|
432,000
|
|
|
|
--
|
|
Purchase of treasury stock
|
|
|
--
|
|
|
|
--
|
|
|
|
(15,000
|
)
|
Net cash provided by financing activities
|
|
|
3,117,000
|
|
|
|
6,883,000
|
|
|
|
10,005,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(3,130,000
|
)
|
|
|
(6,016,000
|
)
|
|
|
380,000
|
|
Cash and cash equivalents – beginning of year
|
|
|
4,413,000
|
|
|
|
10,429,000
|
|
|
|
10,049,000
|
|
Cash and cash equivalents – end of year
|
|
$
|
1,283,000
|
|
|
$
|
4,413,000
|
|
|
$
|
10,429,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for interest expense
|
|
$
|
374,000
|
|
|
$
|
291,000
|
|
|
$
|
219,000
|
|
Cash paid during the year for interest expense to related-party stockholders
|
|
$
|
30,000
|
|
|
$
|
--
|
|
|
$
|
--
|
|
Supplemental non-cash financing disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for asset acquisition
|
|
$
|
600,000
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants with the related party notes issuance
|
|
$
|
574,000
|
|
|
$
|
--
|
|
|
$
|
--
|
|
The accompanying
notes are an integral part of these consolidated financial statements.
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
NOTE 1 – THE COMPANY
Bluefly, Inc., a Delaware corporation,
(the “Company”), is a leading off-price Internet retailer of designer, contemporary and private-label apparel and accessories,
providing its customers with unique access to in-season products at superior values. The Company’s e-commerce website, www.bluefly.com
(“Bluefly.com”), was launched in September 1998. In December 2011, the Company expanded its website portfolio
by launching its www.belleandclive.com website (“Belleandclive.com” and, collectively with Bluefly.com, the “Websites”),
a members-only shopping destination that presents highly-curated selections of important brands via limited-time flash sale events.
On January 3, 2012, the Company formed
a new wholly-owned subsidiary EVT Acquisition Co., LLC, a New York limited liability company (“EVT”), in connection
with the Company’s acquisition of assets discussed further in Note 6 – Acquisition.
In 2011, the Company and A + D Labs LLC
(“A + D Labs”) entered into a limited liability company operating agreement in connection with the formation of Eyefly
LLC (“Eyefly”), a Delaware limited liability company, which was initially owned 52% by the Company and 48% by A + D
Labs. Eyefly was formed for the purposes of developing and operating an e-commerce website and related online and mobile applications
focused on selling fashionable prescription eyewear directly to consumers. Eyefly launched its e-commerce website, www.eyefly.com
(“Eyefly.com”), in June 2011. On October 25, 2012, the Company sold its entire 52% controlling membership interest
in Eyefly to A + D Labs as discussed further in Note 3 – Summary of Significant Accounting Policies.
The Company operates in one business segment
and has no operations outside the United States. International net sales for the period December 31, 2012 and December 31, 2011
represented 6.4% and 6.9% of total net sales, respectively.
NOTE 2 - BASIS OF PRESENTATION, LIQUIDITY,
AND MANAGEMENT’S PLAN
The Consolidated Financial Statements contemplate
continuation of the Company as a going concern. However, the auditor's report with respect to the Consolidated Financial Statements
contains an explanatory paragraph regarding a going concern uncertainty. The Company has sustained cumulative net losses and negative
cash flows from operations since inception. As of December 31, 2012, the Company had an accumulated deficit of $187,099,000 and
incurred a net loss attributable to Bluefly, Inc. stockholders of $24,776,000 for the year ended December 31, 2012.
The Company is currently in active
discussions regarding a strategic transaction under the direction of a special committee consisting of independent members of
the Board of Directors, together with the assistance of an independent financial advisor (“Proposed Strategic
Transaction”). The Company expects that such transaction will be at a price substantially below the currently
prevailing market prices of the Company’s Common Stock. We currently have sufficient funds to support our operations
until the anticipated signing date of a definitive agreement regarding the Proposed Strategic Transaction, at which time we
believe bridge financing will be available until the transaction can be consummated. Management believes that the Proposed
Strategic Transaction, if and when consummated, will provide the necessary liquidity to eliminate the factors that resulted
in the going concern uncertainty. There can be no assurance that the Proposed Strategic Transaction can be consummated.
If the Company is unable to complete the
Proposed Strategic Transaction or an alternative strategic transaction, we will require additional financing from existing or third
party investors to fund our operations. The Company has already implemented certain cost containment measures. In conjunction with
seeking such financing, we would reduce our workforce, reduce overhead and otherwise streamline our operations, of which certain
initiatives have already been implemented. The inability to raise additional financing would have a material adverse effect on
our operations.
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Use of estimates
The preparation of the consolidated 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 the disclosures of contingent assets and
liabilities at the dates of the financial statements and the reported
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
amounts of revenues and expenses during the reporting periods.
Significant estimates and assumptions include the adequacy of the allowances for doubtful accounts and sales returns, recoverability
of inventories, useful lives of property and equipment (including website development costs) and intangible assets, realization
of deferred tax assets, and the calculations related to stock-based compensation expense. Actual results could differ from those
estimates. The Company’s success is largely dependent on its ability to anticipate, identify and respond to unexpected changes
in fashion trends and to provide merchandise that satisfies consumer preferences and demand. The Company’s failure to anticipate,
identify or respond to unexpected changes in fashion trends and consumer preferences could adversely affect its financial condition
and results of operations.
Deferred financing costs
Costs incurred in connection with the Company's
financing activities are deferred and amortized over the terms of the related agreements using the straight-line method. During
2012, we deferred approximately $127,000 and $432,000 relating to the August 2012 financing (see Note 9 – 2012 Financing),
and the new revolving credit facility with Wells Fargo Capital Finance, and Salus Capital Partners, LLC (see Note 10 – Revolving
Credit Facility Financing Agreement), respectively. Amortization of these costs, which is recognized in other interest expense
and other income, net, in the accompanying consolidated statements of operations, totaled approximately $82,000, $18,100, and $11,700
for the years ended December 31, 2012, 2011 and 2010, respectively. Deferred financing costs, net of accumulated amortization,
included in other assets, net, amounted to approximately $468,000 and $35,000 as of December 31, 2012 and 2011, respectively.
Principles of consolidation
The consolidated financial statements include
the financial position, results of operations and cash flows of the Company and its wholly-owned subsidiary, EVT. All material
intercompany transactions between the Company and EVT have been eliminated in consolidation.
On October 25,
2012 (the “Sale Date”), the Company, A + D Labs and TwoRoger Associates, Ltd. (“Modo”) entered into a Unit
Purchase Agreement (“Purchase Agreement”) pursuant to which the Company sold its entire 52% controlling membership
interest in Eyefly to A + D Labs for a total cash consideration of $100,000 ($50,000 payable on the Sale Date with the remaining
$50,000 paid in ten equal monthly installments). The Company, in connection with the Purchase Agreement, also agreed to write off
75% of the intercompany receivable due from Eyefly, or $185,000 (
as bad debt expense included within General and administrative
expenses in the Consolidated Statements of Operations for the year ended December 31, 2012)
with the
remaining 25% of the balance owed to the Company, or $62,000, payable at a future date on which Eyefly has cash flows available
to pay such debt.
The Company established an allowance for doubtful accounts for the entire remaining balance of $62,000
(with a corresponding charge to General and administrative expenses in the Consolidated Statements of Operations for the year ended
December 31, 2012). This allowance for doubtful accounts was necessary as the intercompany receivable was unsecured and the amount
that the Company may ultimately recover is not presently determinable.
Prior to the Sale Date, Eyefly was a majority-owned
subsidiary of the Company and was deconsolidated on such Sale Date as the Company no longer had a controlling membership interest
in Eyefly. Upon deconsolidation, the Company did not retain any remaining membership interest in Eyefly.
The Company
recognized a gain of $100,000 on the deconsolidation and sale of Eyefly for the year ended December 31, 2012, which is included
within
Other interest expense and other income, net in the Consolidated Statements of Operations.
Concentration
For the years ended December 31, 2012 and
2011, the Company acquired approximately 49% and 52%, respectively, of its inventory from its three largest suppliers.
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Related-party transactions
As of December 31, 2012, the Company, in
connection with the sale of its controlling membership interest in Eyefly, had a related-party amount due from A + D Labs of $40,000,
which is presented as part of Accounts receivable, net within the Consolidated Balance Sheets.
On August 13, 2012, the Company entered
into a Note and Warrant Purchase Agreement with certain related-party stockholders as further described below in Note 9 –
2012 Financing.
As of December 31, 2011, Eyefly had related-party
amounts of $105,000 due to A + D Labs, which is presented as part of Accounts payable within the Consolidated Balance Sheets.
Revenue recognition
The Company recognizes revenue when the
earnings process is completed and revenue is measurable. Gross sales consist primarily of revenue from product sales and shipping
and handling charges and are net of promotional discounts and sales-based taxes assessed by governmental authorities that are imposed
on sales transactions. Net sales represent gross sales, less provisions for returns and credit card chargebacks.
Gross sales are recognized when all the
following criteria are met:
|
·
|
A customer executes an order.
|
|
·
|
The product price and the shipping and handling fee have been determined.
|
|
·
|
Credit card authorization has occurred and collection is reasonably assured.
|
|
·
|
The product has been shipped and received by the customer.
|
Deferred revenue (which consists primarily
of goods shipped to customers, but not yet received, and customer credits) totaled approximately $4,381,000 and $4,235,000 as of
December 31, 2012 and 2011, respectively, which are presented as Current liabilities in the Consolidated Balance Sheets.
Shipping and handling fees billed to customers
are presented and included as part of gross sales, and freight costs incurred in connection with shipping customer orders are presented
and included as part of Cost of sales in the Consolidated Statements of Operations.
Sales incentives
The Company frequently offers sales incentives
to customers to receive a reduction in the sales price of merchandise. Sales incentives include, but are not limited to discounts,
coupons, daily deal programs and e-mail promotions through online marketing programs. For sales incentives issued to customers
in conjunction with the sale of merchandise, the Company recognizes the reduction in gross sales at the time of sale.
Provisions for sales returns and
doubtful accounts
The Company generally permits returns for
up to 40 days from the date of sale. The Company performs credit card authorizations and checks the verifications of its customers
prior to shipment of the merchandise. Accordingly, the Company establishes a reserve for estimated future sales returns and allowance
for doubtful accounts at the time of shipment based primarily on historical data. Accounts receivable (which represents billed
credit card transactions in process to be collected and a trade receivable (discussed further below) is, presented in the Consolidated
Balance Sheets net of the allowance for doubtful accounts.
During the second quarter of 2011, the
Company completed a bulk-sale of merchandise to a third-party for approximately $1,200,000. As a result of the third-party’s
deteriorating financial condition during the fourth quarter of 2011, the Company
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
wrote off $475,000 as bad debt expense (included
within General and administrative expenses for the year ended December 31, 2011), which the Company was unable to collect in its
entirety. As a result, the Company established an allowance for doubtful accounts for the entire remaining balance of $725,000
(with a corresponding charge to General and administrative expenses in the Consolidated Statement of Operations for the year ended
December 31, 2011).
As of December 31, 2012 and 2011,
the allowance for doubtful accounts, which represents estimated credit card chargebacks, was $122,000 and $767,000 (which also
included losses related to the trade receivable in 2011), respectively. The allowance for sales returns was $2,081,000 and $3,124,000,
at December 31, 2012 and 2011, respectively. Both are classified as Current liabilities in the Consolidated Balance Sheets.
Fulfillment expenses
The Company utilizes a third-party service
provider to perform all of its order fulfillment functions including warehousing, administrative support, returns processing and
receiving labor. For the years ended December 31, 2012, 2011 and 2010, fulfillment expenses totaled $4,407,000, $3,955,000
and $3,765,000, respectively.
Marketing expenses
In addition to staff-related costs, marketing
expenses consist primarily of online advertising, print and media advertising, costs associated with sweepstakes, direct mail campaigns
as well as the related external production costs. The costs associated with online, offline and print advertising are expensed
as incurred, with the exception of production costs related to print and television advertising which are expensed upon completion
of the initial advertising.
For the years ended December 31, 2012,
2011 and 2010, total marketing expenditures (excluding staff-related costs) were approximately $7,605,000, $9,295,000 and $11,298,000,
respectively.
Stock-based compensation expenses
The Company’s Board of Directors
has adopted three stock-based employee compensation plans, one in April 2005, one in July 2000 (which expired in December
2012) and one in May 1997 (collectively the “Plans”), which are described more fully in Note 12 – Stockholders’
Equity. The Plans, which provide for the granting of restricted stock awards, deferred stock unit awards, stock option awards,
and other equity and cash awards, were adopted for the purpose of encouraging key employees, consultants and directors who are
not employees to acquire a proprietary interest in the growth and performance of the Company, and are similar in nature. Vesting
terms for restricted stock generally range from three months to one year, while deferred stock unit awards vest every three months
over a period of one to three years. Stock option awards are granted in terms not to exceed ten years and become exercisable as
specified when the option is granted and vesting terms range from immediately to a ratable vesting period of four years. As of
December 31, 2012, the Plans have an aggregate balance of 185,967 shares available for future issuance. Total stock-based compensation
expense recorded in the Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 were $1,907,000,
$1,062,000 and $634,000, respectively.
Income taxes
Income taxes represent income taxes paid
or payable (or received or receivable) for the current year and includes any changes in deferred taxes during the year. Deferred
tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and
credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents
the change during the period in deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and
liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
As of December 31, 2012 and 2011, the only
tax authorities to which the Company is subject to are the U.S. federal tax authorities and various state tax authorities in the
United States. Open tax years that are subject to examination by the U.S. federal and state tax authorities, which extend back
to 1998, relate to years in which unused net operating losses were generated. The Company previously adopted authoritative guidance
relating to uncertainty in income taxes, in which it prescribes a comprehensive model for the manner in which a company should
recognize, measure, present and disclose in its financial statements all material uncertain tax positions that they have taken
or expect to take on a tax return. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective
date to be recognized upon the adoption of the authoritative guidance and in subsequent periods. Upon the adoption of the authoritative
guidance, and through December 31, 2012, the Company had no unrecognized tax benefits. In the event that the Company concludes
that it is subject to interest and/or penalties arising from uncertain tax positions, the Company will present interest and penalties
as a component of income taxes. No amounts of interest or penalties were recognized in the Company’s Consolidated Balance
Sheets as of December 31, 2012 and 2011 or Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and
2010.
Basic and diluted net loss per
common share attributable to Bluefly, Inc. stockholders
Basic net loss per common share attributable
to Bluefly, Inc. stockholders excludes dilution and is computed by dividing net loss attributable to Bluefly, Inc. stockholders
by the weighted average number of common shares outstanding for the period.
Diluted net loss per common share attributable
to Bluefly, Inc. stockholders is computed by dividing net loss attributable to Bluefly, Inc. stockholders by the weighted average
number of common shares outstanding for the period, adjusted to reflect potentially dilutive securities using the “treasury
stock” method for stock option awards, warrants, restricted stock awards, deferred stock unit awards, and the “if-converted”
method for the Rho Notes (as defined in Note 9 – 2012 Financing). Due to the Company’s net losses for the periods
presented, (i) stock option awards and warrants to purchase shares of Common Stock (ii) restricted stock awards that have not
yet vested and (iii) Rho Notes convertible into shares of Common Stock were not included in the computation of diluted loss per
common share attributable to Bluefly, Inc. stockholders, as the effects would be anti-dilutive. Accordingly, basic and diluted
weighted average shares outstanding are equal for the following periods presented:
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Bluefly, Inc. stockholders
|
|
$
|
(24,776,000
|
)
|
|
$
|
(10,984,000
|
)
|
|
$
|
(4,033,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (basic)
|
|
|
28,563,341
|
|
|
|
25,767,483
|
|
|
|
23,685,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
option awards and warrants
(1)(2)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
stock awards
(1)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rho Notes
(1)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (diluted)
|
|
|
28,563,341
|
|
|
|
25,767,483
|
|
|
|
23,685,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As of December 31, 2012, 2011 and 2010, respectively, the Company had weighted average shares of the following potentially dilutive securities that were excluded from the computation of net loss per common share attributable to Bluefly, Inc. stockholders as the effects would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option awards and warrants
|
|
|
59,770
|
|
|
|
90,973
|
|
|
|
3,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
|
8,904
|
|
|
|
--
|
|
|
|
11,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rho Notes
|
|
|
570,439
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Under the treasury-stock method, the Company excluded all stock option awards and warrants from the computation of weighted average shares as a result of the average market price of the Company’s Common Stock being greater than the exercise price of the stock option awards and warrants.
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Cash and cash equivalents
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash and cash equivalents. The Company’s cash and cash
equivalents are placed and maintained with financial institutions that it believes are of high credit quality. However, the Company’s
cash and cash equivalents are potentially exposed to concentration of credit risk in the event of default by financial institutions
to the extent that cash balances with financial institutions are in excess of insured limits.
Restricted cash
As of December 31, 2012, the Company had
$4,635,000 in restricted cash, which has been funded by and deducted against the availability of, the Company’s revolving
Credit Facility (discussed further in Note 10 – Revolving Credit Facility Financing Agreement), that was held as cash collateral
against the Company’s outstanding letters of credit issued and outstanding by its previous credit facility with Wells Fargo
Retail Finance, LLC (“Wells Fargo”).
Fair value of financial instruments
Authoritative guidance relating to fair
value establishes a framework for measuring fair value and expands disclosure about fair value measurements except as it applies
to non-financial assets and non-financial liabilities. The Company’s financial instruments consist of cash and cash equivalents,
restricted cash, accounts receivable, other assets, accounts payable and accrued expenses. The carrying amounts of these financial
instruments approximate fair value due to their short-term maturities. The following is the fair value hierarchy for disclosure
of fair value measurements:
Level 1 - Quoted prices in active markets for identical assets
or liabilities
Level 2 - Quoted prices for similar assets and liabilities in
active markets or inputs that are observable
Level 3 - Inputs that are unobservable (for example cash flow
modeling inputs based on assumptions)
In connection with the Embedded Derivative
in the Rho Notes (discussed below in Note 9 – 2012 Financing), the Company evaluates the fair value measurement of the Embedded
Derivative on a recurring basis to determine the appropriate fair value level to classify the Embedded Derivative at each reporting
period. This determination was based on Level 2 inputs in estimating and measuring the fair value of the Embedded Derivative using
the Black-Scholes Option Pricing model (as described further in Note 9 – 2012 Financing). This estimated measurement requires
significant estimates and judgments by the Company. The following table sets forth the Company’s liabilities that were measured
at fair value as of December 31, 2012, by level within the fair value hierarchy:
|
|
December 31, 2012
|
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivative financial liability to related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
party stockholders
|
|
$
|
379,000
|
|
|
$
|
--
|
|
|
$
|
379,000
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total embedded derivative financial liability to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related-party stockholders
|
|
$
|
379,000
|
|
|
$
|
--
|
|
|
$
|
379,000
|
|
|
$
|
--
|
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Inventories, net
Inventories, which consist of finished
goods, are stated at the lower of cost or market value. Cost is determined by the first-in, first-out (“FIFO”) method.
The Company reviews its inventory levels in order to identify slow-moving and unsellable merchandise and establishes a reserve
for such merchandise. Inventory reserves are established based on historical data and management’s best estimate. Inventory
may be marked down below cost if management determines that the inventory stock will not sell at or above its cost. Inventory is
presented net of reserves in the Consolidated Balance Sheets.
As of December 31, 2012 and 2011, inventories,
net, consist of the following:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Inventory on hand and in transit
|
|
$
|
20,199,000
|
|
|
$
|
33,541,000
|
|
Estimated inventory due from returns
|
|
|
1,463,000
|
|
|
|
1,819,000
|
|
Inventory reserves
|
|
|
(1,141,000
|
)
|
|
|
(3,277,000
|
)
|
Total inventories, net
|
|
$
|
20,521,000
|
|
|
$
|
32,083,000
|
|
Property and equipment, net
Property and equipment are stated at cost
net of accumulated depreciation and amortization expenses. Leasehold improvements are amortized over the shorter of their estimated
useful lives or the remaining term of the lease. Lease amortization is included in depreciation expense. Equipment and software
are depreciated on a straight-line basis over two to five years. Costs related to maintenance and repairs are expensed as incurred.
Website development costs
Website development costs, which consist
primarily of external direct costs, relate to the Company’s Websites. All costs incurred by the Company related to the development
phase, including costs incurred for enhancements that are expected to result in additional new functionality, are capitalized.
Such costs are amortized on a straight-line basis over 36 months. All costs related to the planning and post-implementation phase,
including training and maintenance, are expensed as incurred. Capitalized costs related to website development are included in
Property and equipment, net in the Company’s Consolidated Balance Sheets.
For the years ended December 31, 2012 and
2011, the Company capitalized website development costs of $2,840,000 and $3,575,000, respectively. For the years ended December
31, 2012, 2011 and 2010, the Company recognized amortization expenses of $2,322,000, $1,720,000 and $1,889,000, respectively, which
is included in Selling and fulfillment expenses in the Company’s Consolidated Statements of Operations.
Intangible assets
Intangible assets are recorded at cost,
net of accumulated amortization and are amortized on a straight-line basis over their estimated useful lives. No significant residual
value is estimated for intangible assets.
The Company evaluates the recoverability
of intangible assets at least annually for possible impairment or whenever events or circumstances indicate that the carrying value
of such assets may not be recoverable. Such circumstances could include, but not limited to, a significant (1) decrease in market
value of an asset or (2) adverse change in the extent or manner the asset is used. The Company measures the carrying amount of
the asset against the estimated undiscounted future cash flows. Should the sum of the expected future cash flows be less than the
carrying value, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying
value of the asset exceeds its fair value. Due to the issues encountered by the Company in connection with its potential inability
to operate as a going concern and a material adverse change in the use of its intangible assets, the assets were impaired by the
difference between fair value and carrying amount (see Note 6 - Acquisition).
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Long-lived assets
The Company’s policy is to evaluate
long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. This evaluation is based on a number of factors, including expectations for future operating income
and undiscounted cash flows that will result from the use of such assets. The Company has not identified any such impairment of
its long-lived assets at December 31, 2012 and 2011.
Deferred rent liability
The Company recognizes and records rent
expense related to its lease agreement, which includes scheduled rent increases, on a straight-line basis beginning on the commencement
date over the life of the lease. The Company also recognizes and records rent concessions, in the form of reduced rent payments,
on a straight-line basis over the life of the lease agreement. Differences between straight-line rent expense and actual rent payments
are recorded as Deferred rent liability and presented as a long-term liability in the Consolidated Balance Sheets.
Derivative financial instrument
The Company carries an embedded derivative
financial instrument on its 2012 Consolidated Balance Sheet as discussed below in Note 9 – 2012 Financing. The Company does
not use the embedded derivative financial instrument to manage financial exposure or enter into hedging activities.
The Company records its embedded derivative
financial instrument on its 2012 Consolidated Balance Sheet at fair value. The fair value is based on a valuation model that requires
inputs including contractual terms, market prices, yield curves and measures of volatility. The Company’s embedded derivative
financial instrument is classified as Level 2 within the fair value hierarchy on its 2012 Consolidated Balance Sheet. Any changes
in fair value of the embedded derivative financial instrument are recorded in the Consolidated Statement of Operations and included
as Interest expense to related-party stockholders for the year ended December 31, 2012.
Treasury stock
Treasury stock represents Common Stock
withheld by the Company to satisfy income tax withholding obligations of certain officers and employees of the Company in connection
with the distribution of Common Stock in respect of deferred stock units held by such officers and employees.
Recently issued, but not yet effective,
accounting pronouncements
The Company is not aware of any recently
issued, but not yet effective, accounting pronouncements that would have a significant impact on the Company’s consolidated
financial position or results of operations.
NOTE 4 – PREPAID EXPENSES AND
OTHER CURRENT ASSETS
As of December 31, 2012 and 2011, prepaid
expenses and other current assets consist of the following:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Prepaid inventory
|
|
$
|
512,000
|
|
|
$
|
2,690,000
|
|
Prepaid expenses
|
|
|
87,000
|
|
|
|
247,000
|
|
Other current assets
|
|
|
813,000
|
|
|
|
706,000
|
|
Total prepaid expenses and other current assets
|
|
$
|
1,412,000
|
|
|
$
|
3,643,000
|
|
In 2011, the Company assessed the recoverability
of the carrying value of merchandise credits and certain prepayments to suppliers for inventory, which resulted in a $1,013,000
write off. This write-off reflected merchandise credits from suppliers
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
that the Company did not collect. The write-off was recorded
as a component of Cost of sales in the Consolidated Statements of Operations for 2011.
NOTE 5 – PROPERTY AND EQUIPMENT
As of December 31, 2012 and 2011, property
and equipment, net, consist of the following:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Capitalized website development costs
|
|
$
|
13,031,000
|
|
|
$
|
10,386,000
|
|
Computer equipment and software
|
|
|
4,969,000
|
|
|
|
4,707,000
|
|
Leasehold improvements
|
|
|
1,191,000
|
|
|
|
1,160,000
|
|
Office equipment
|
|
|
308,000
|
|
|
|
247,000
|
|
|
|
|
19,499,000
|
|
|
|
16,500,000
|
|
Less: accumulated depreciation and amortization
|
|
|
(13,785,000
|
)
|
|
|
(10,795,000
|
)
|
Total property and equipment, net
|
|
$
|
5,714,000
|
|
|
$
|
5,705,000
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expenses
were approximately $3,105,000, $2,277,000 and $2,496,000, for the years ended December 31, 2012, 2011 and 2010, respectively.
NOTE 6 – ACQUISITION
On January 10, 2012, the Company, through
a newly-formed wholly-owned subsidiary (EVT) entered into an asset purchase agreement with Moda for Friends LLC (the “Seller”)
and purchased certain intangible assets that included a contractual-related agreement, purchased customer list, developed technologies
and trademarks (the “Acquired Intangible Assets”) owned by the Seller for a total purchase price of $600,000 plus transaction
costs of $11,000. The Company paid the purchase price through the issuance of 285,714 shares of its Common Stock, with each share
being valued at $2.10 (the closing price of the Common Stock on the day prior to the consummation of the transaction). The Company
completed the asset acquisition because it would facilitate the launch and operation of its own flash sales business.
The Company has allocated the total purchase
price plus transactions costs of the acquisition among the assets, based on their relative fair values, as follows:
Contract-related intangible
|
|
$
|
428,000
|
|
Developed technology-related intangible
|
|
|
111,000
|
|
Customer-related intangible
|
|
|
62,000
|
|
Tradename
|
|
|
10,000
|
|
Total purchase price plus transaction costs
|
|
$
|
611,000
|
|
The carrying values of the Acquired Intangible
Assets at December 31, 2012 were as follows:
|
|
Weighted
Average
Useful Life
(Years)
|
|
|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Net Carrying Amount
|
|
Contract-related intangible
|
|
|
5
|
|
|
$
|
428,000
|
|
|
$
|
(428,000
|
)
|
|
$
|
--
|
|
Customer-related intangible
|
|
|
2
|
|
|
|
62,000
|
|
|
|
(62,000
|
)
|
|
|
--
|
|
Developed technology-related intangible
|
|
|
1
|
|
|
|
111,000
|
|
|
|
(111,000
|
)
|
|
|
--
|
|
Tradename
|
|
|
1
|
|
|
|
10,000
|
|
|
|
(10,000
|
)
|
|
|
--
|
|
Total intangible assets, net
|
|
|
|
|
|
$
|
611,000
|
|
|
$
|
(611,000
|
)
|
|
$
|
--
|
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
As of December 31, 2012, the Acquired Intangible
Assets were deemed to be impaired and the fair value was determined to be zero (Level 3 in the fair value hierarchy) due to the
Company's potential inability to meet its obligations under the terms and conditions of the contract given the Company's current
limited financial resources.
For the year ended December 31, 2012, the
Company recorded $611,000 including $383,000 of impairment loss in total amortization expense in the Consolidated Statement of
Operations related to the Acquired Intangible Assets.
NOTE 7 – ACCRUED EXPENSES AND
OTHER CURRENT LIABILITIES
As of December 31, 2012 and 2011, accrued
expenses and other current liabilities consist of the following:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Returns in process liability
|
|
$
|
1,806,000
|
|
|
$
|
3,242,000
|
|
Accrued salary, vacation and bonus expenses
|
|
|
511,000
|
|
|
|
687,000
|
|
Accrued media expenses
|
|
|
342,000
|
|
|
|
431,000
|
|
Other accrued expenses
|
|
|
61,000
|
|
|
|
86,000
|
|
Total accrued expenses and other current liabilities
|
|
$
|
2,720,000
|
|
|
$
|
4,446,000
|
|
NOTE 8 – INCOME TAXES
For the years ended December 31, 2012,
2011 and 2010, the Company has incurred net operating losses and, accordingly, no provision for income taxes has been recorded,
except for minimum state and local taxes.
At December 31, 2012, the Company had approximately
$148,478,000 of U.S. federal and state net operating losses available for the benefit of the Company. The net operating loss carryforwards,
if remained unutilized, will generally begin to expire from 2018 through 2032. These net operating loss carryforwards are possibly
further limited pursuant to Section 382 of the Internal Revenue Code (the “Code”), which limits the utilization of
the benefits from net operating losses when ownership changes, as defined by that section, occur. The Company has performed an
analysis of its historical Section 382 ownership changes prior to 2001 and has determined that the utilization of certain of its
net operating loss carryforwards may be limited in connection with pre-2001 net operating losses.
The use
of the net operating loss carryforwards may have additional limitations resulting from certain additional ownership changes, including
the sale of 3,666,665 shares of the Company’s common stock to certain related parties (as defined in Note
11
– Stockholders’ Equity) in 2011, which made the Company vulnerable to an ownership change for purposes of the Code.
Transfers of shares by shareholders who own 5% or more of the Company’s outstanding common stock could also have the effect
of limiting the Company’s ability to utilize the net operating loss carryforwards. The Company has not performed a recent
analysis of its ownership changes under the Code.
Significant components of the Company’s
deferred tax assets and liabilities as of December 31, 2012 and 2011 are summarized as follows:
|
|
2012
|
|
|
2011
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating losses
|
|
$
|
56,463,000
|
|
|
$
|
46,308,000
|
|
Deferred revenue
|
|
|
1,665,000
|
|
|
|
1,532,000
|
|
Accounts receivable and inventory reserves
|
|
|
1,449,000
|
|
|
|
3,019,000
|
|
Returns reserve
|
|
|
791,000
|
|
|
|
1,196,000
|
|
Accrued expenses
|
|
|
241,000
|
|
|
|
454,000
|
|
Interest expense
|
|
|
173,000
|
|
|
|
--
|
|
Deferred rent liability
|
|
|
157,000
|
|
|
|
143,000
|
|
Stock option expenses
|
|
|
148,000
|
|
|
|
59,000
|
|
Other accruals
|
|
|
2,000
|
|
|
|
12,000
|
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Total deferred tax assets
|
|
|
61,089,000
|
|
|
|
52,723,000
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
(906,000
|
)
|
|
|
(880,000
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(906,000
|
)
|
|
|
(880,000
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets before valuation allowance
|
|
|
60,183,000
|
|
|
|
51,843,000
|
|
Valuation allowance
|
|
|
(60,183,000
|
)
|
|
|
(51,843,000
|
)
|
Net deferred tax assets
|
|
$
|
--
|
|
|
$
|
--
|
|
For financial and tax reporting purposes,
the Company has incurred net operating losses in each period since its inception and, therefore, a significant portion of the net
deferred tax assets recognized relate to such net operating losses. In determining whether the Company may realize the benefits
from these deferred tax assets, the Company considers all available objective and subjective evidence, both positive and negative.
Based on the weight of such evidence, a valuation allowance is necessary for some portion, or all, of the net deferred tax assets.
Although the realization of the benefits from utilizing the net deferred tax assets may not be assured, based on the available
objective and subjective evidence, including the Company’s history of net operating losses, management believes it is more
likely than not that the net deferred tax assets will not be fully realizable at December 31, 2012 and 2011. Accordingly, the Company
provided a valuation allowance on the entire net deferred tax assets balance to reflect the uncertainty regarding the realizability
of these assets for the periods presented.
For the year ended December 31, 2012, the
Company’s net valuation allowance has increased by $8,340,000 to $60,183,000, compared to December 31, 2011.
A reconciliation between the U.S. federal
statutory income tax benefit rate to the effective tax rate, by applying such rates to pre-tax net loss, are as follows:
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal statutory income tax benefit rate
|
|
|
(35.00
|
)%
|
|
|
(35.00
|
)%
|
|
|
(35.00
|
)%
|
State income tax benefit rate, net of federal tax benefit
|
|
|
(1.34
|
)%
|
|
|
(4.58
|
)%
|
|
|
(3.11
|
)%
|
Adjustment for prior year taxes
|
|
|
(0.23
|
)%
|
|
|
(0.80
|
)%
|
|
|
2.65
|
%
|
Other
|
|
|
0.06
|
%
|
|
|
0.12
|
%
|
|
|
0.25
|
%
|
Equity compensation
|
|
|
2.40
|
%
|
|
|
2.89
|
%
|
|
|
6.29
|
%
|
Change in valuation allowance on deferred tax assets
|
|
|
34.27
|
%
|
|
|
37.67
|
%
|
|
|
28.92
|
%
|
Effective tax rate
|
|
|
00.16
|
%
|
|
|
00.30
|
%
|
|
|
00.00
|
%
|
NOTE 9 – 2012 FINANCING
On August 13, 2012 (the “Closing
Date”), the Company entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”) with Rho Ventures
VI, L.P. (“Rho”) and Prentice Consumer Partners, LP (“Prentice”, and together with Rho, the “Purchasers”)
pursuant to which the Company issued (i) $1,500,000 aggregate principal amount of collateralized subordinated convertible promissory
notes to Rho (the “Rho Notes”) and (ii) $1,500,000 aggregate principal amount of collateralized subordinated promissory
notes to Prentice (the “Prentice Notes” and, collective with the Rho Notes, the “Notes”).
The Rho Notes bear interest at 12% per
annum, compounded annually, and interest is payable upon maturity or conversion. The Prentice Notes bear interest at 15%
per annum, compounded annually, and interest is payable quarterly. Prentice received an origination fee on the Closing Date
equal to two percent of the Prentice Notes.
The Rho Notes are convertible, at the holder's
option, (a) into equity securities that the Company might issue in any subsequent round of financing that results in proceeds to
the Company of at least $7,500,000 (a “Qualified Financing”) at a price equal to the
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
lowest price per share paid by
any investor in such Qualified Financing, or (b) into shares of the Company’s Common Stock at a price per share equal to
$1.05, which approximates the fair market value on the Closing Date (the “Rho Conversion Feature”).
The Notes have a one-year term, but may
become due prior to the end of such term in the event of a change of control or a Qualified Financing. The Notes were collateralized
by second priority liens on all assets of the Company, however, in connection with the new Credit Facility with Salus Capital Partners
LLC (as described further in Note 10 – Revolving Credit Facility Financing Agreement) on November 13, 2012, the Notes were
amended to reflect the subordination terms negotiated between the Purchasers and Salus Capital Partners LLC.
In connection with the issuance of the
Notes, the Company also issued warrants, with a seven year term, to purchase 476,190 shares of the Company’s Common
Stock (the “Warrants”) to each of Rho and Prentice at a price equal to $1.05 per share, which approximates the fair
market value of the Common Stock on the Closing Date.
The Notes contain a financial covenant
in which the Company is to maintain current assets in excess of $20,000,000 including cash and cash equivalents, restricted cash,
accounts receivable, inventories (which includes prepaid inventory), prepaid expenses and other current assets (the “Financial
Covenant”). In the event that the Company does not maintain this Financial Covenant, the outstanding principal and accrued
interest expense of the Notes shall be accelerated and automatically become due and payable.
In connection with the issuance of the
Notes, the Company incurred approximately $127,000 of debt issuance costs (“Deferred Financing Costs”), which consisted
primarily of legal and other professional fees incurred by the Company. These Deferred Financing Costs were deferred and are being
amortized to interest expense to related-party stockholders over the term of the Notes. The Deferred Financing Costs are recorded
within Other Current Assets in the Company’s Consolidated Balance Sheet.
As the Notes were issued with detachable
Warrants, the Company has initially allocated the proceeds received from the issuance between the Notes and Warrants on a relative
fair value basis. With respect to the Rho Notes, the Company then has evaluated the Rho Conversion Feature to determine whether
this feature qualifies as a beneficial conversion feature or derivative instrument. The Company noted that the Rho Conversion Feature
contains both a fixed conversion price and a contingently adjustable conversion price based on a future event.
Based
on the terms of the Rho Notes and authoritative guidance, the Company has concluded that the entire Rho Conversion Feature is an
embedded derivative liability (the “Embedded Derivative”), which requires bifurcation, and must be separately accounted
for as a derivative instrument.
The Company measured the fair value of
the Embedded Derivative using the Black-Scholes valuation model as of the Closing Date. Expected volatility is based on the historical
volatility of the price of the Company’s Common Stock, measured over the same period of time as the remaining maturity life
of the Rho Notes. The risk free interest rate is based on the interest rate for U.S. Treasury Notes having a maturity period equal
to the remaining maturity life of the Rho Notes. As a result of the bifurcation, the Company recognized an Embedded Derivative
of approximately $274,000 with a corresponding discount on the Rho Notes, which reduced the carrying value of the Rho Notes on
the date of issuance. This discount represents additional non-cash interest expense that is to be amortized over the remaining
life of the Rho Notes.
The Company also re-measures the fair value
of the Embedded Derivative at each interim date. Any change in fair value is recorded as part of Interest expense to related-party
stockholders in the Company’s Consolidated Statement of Operations for the year ended December 31, 2012.
The assumptions used are as follows:
|
August 13, 2012
|
December 31, 2012
|
Risk-free interest rate
|
0.19%
|
0.11%
|
Expected life (in years)
|
1.00%
|
0.62%
|
Dividend yield
|
0.00%
|
0.00%
|
Expected volatility
|
78.44%
|
109.02%
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
As of December 31, 2012, the Company’s
Notes and interest payable to related-party stockholders, net, consists of the following:
Notes payable to related-party stockholders
|
|
$
|
3,000,000
|
|
Unamortized discount on notes payable to related-party stockholders
|
|
|
(531,000
|
)
|
Total notes payable to related-party stockholders, net
|
|
|
2,469,000
|
|
Interest payable to related-party stockholders
|
|
|
130,000
|
|
Total notes and interest payable to related-party stockholders, net
|
|
$
|
2,599,000
|
|
For the year ended December 31, 2012, the
Company recognized interest expense in connection with the Notes, including changes in fair value of the Embedded Derivative and
amortization of the debt discount, which were all included in Interest expense to related-party stockholders in the Consolidated
Statement of Operations, as follows:
|
|
2012
|
|
|
|
|
|
Amortization of discount on notes payable to related-party stockholders
|
|
$
|
318,000
|
|
Interest expense to related-party stockholders
|
|
|
160,000
|
|
Appreciation in fair value of embedded derivative financial liability to related-party stockholders
|
|
|
105,000
|
|
Amortization expense of deferred financing costs
|
|
|
48,000
|
|
Total interest expense to related-party stockholders
|
|
$
|
631,000
|
|
NOTE 10 – REVOLVING CREDIT FACILITY
FINANCING AGREEMENT
On November 13, 2012, the Company entered
into a new three-year revolving credit facility (“Credit Facility”) with Salus Capital Partners, LLC (“Salus”)
collateralized by all assets of the Company. The Credit Facility refinanced the Company’s previous credit facility with Wells
Fargo. Pursuant to the terms of the Credit Facility, Salus provides the Company with a revolving credit facility and facilitates
the issuance of letters of credit in favor of suppliers or factors.
As of December 31, 2012, the Company’s
borrowings under its Credit Facility consist of the following:
Cash securing letters of credit
|
|
$
|
4,635,000
|
|
Borrowings under the credit facility
|
|
|
600,000
|
|
Interest payable
|
|
|
76,000
|
|
Total revolving credit facility, expiring November 2015
|
|
$
|
5,311,000
|
|
Availability under the Credit Facility
is determined by a formula that considers a specified percentage of the Company’s accounts receivable and a specified percentage
of the Company’s inventory. The maximum availability is $10 million, of which up to $5 million is available for the issuance
of letters of credit. Interest accrues under the Credit Facility at the prime rate plus 4.75%, subject to a minimum rate of 8.00%.
Letters of credit issued to third parties are cash collateralized by amounts drawn under the Credit Facility. At closing, $4,700,000
was drawn under the Credit Facility, which reduced the availability of the Credit Facility, to cash collateralize letters of credit
issued by Wells Fargo, which were outstanding at such date. In addition, the Company paid financing costs of $432,000 at closing,
which were capitalized, and will pay a collateral monitoring fee of $3,000 per month and will pay unused commitment fees of 0.75%
of the remaining availability under the Credit Facility. A termination fee of $75,000 was paid at closing to Wells Fargo, which
was included in Other interest expense in the 2012 Consolidated Statement of Operations.
As of December 31, 2012, maximum total
availability under the Credit Facility was approximately $6,899,000, of which $5,311,000 was outstanding at December
31, 2012, leaving approximately $1,588,000 available for further borrowings.
The terms of the Credit Facility contain
a material adverse condition clause. This feature may limit the Company’s ability to obtain additional borrowings or result
in a default on current outstanding letters of credit. The terms of the Credit Facility contain a material adverse effect clause
defined as a material adverse change in the ability of the Company to perform its obligations under the Credit Agreement or, upon
the operations, business, properties, liabilities (actual or contingent) or
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
condition (financial or otherwise), or impairment of
the rights and remedies of the Agent or any lender under the Credit Facility, or upon the legality, validity, binding effect or
enforceability against any party to the Credit Facility. This feature may limit our ability to obtain additional borrowings or
result in a default on current outstanding letters of credit.
For the years ended December 31, 2012,
2011 and 2010, the Company paid approximately $492,000, $291,000 and $219,000 in interest expense and fees, respectively, under
the combined credit facilities.
The Salus agreement was amended on April
11, 2013 to modify certain borrowing availability formulas. It is currently estimated that these amendments will increase
borrowing availability by up to $650,000. The Company paid a $100,000 fee in connection with the amendment. Salus also waived
covenant violations caused by the late delivery of 2012 audited financial statements and the explanatory paragraph regarding a
going concern uncertainty contained in the auditor’s unqualified opinion for such financial statements.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Employment contracts
The Company has employment agreements with
certain of its executive officers and other employees, which expire on various dates through December 31, 2015. The amounts discussed
above represent the Company's aggregate cash commitment for future base salary under these employment contracts is as follows:
2013
|
|
$
|
1,177,000
|
|
2014
|
|
|
762,000
|
|
2015
|
|
|
425,000
|
|
|
|
$
|
2,364,000
|
|
Leases
Future minimum lease payments (excluding
utilities) under the Company’s operating lease, with a term ending on December 31, 2020 and that have initial or remaining
non-cancelable terms in excess of one year are as follows:
2013
|
|
$
|
554,000
|
|
2014
|
|
|
573,000
|
|
2015
|
|
|
593,000
|
|
2016
|
|
|
614,000
|
|
2017
|
|
|
636,000
|
|
2018 & thereafter
|
|
|
2,044,000
|
|
|
|
$
|
5,014,000
|
|
Rent expense
(including amounts related to commercial rent tax) aggregated approximately $604,000, $584,000 and $613,000 for the years ended
December 31, 2012, 2011 and 2010, respectively
.
Marketing commitments
As of December 31, 2012, the Company’s
future advertising and marketing commitments, in connection with offline and online marketing programs, is as follows:
2013
|
|
$
|
1,343,000
|
|
2014
|
|
|
337,000
|
|
|
|
$
|
1,680,000
|
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Legal proceedings
The Company is, from time to time, involved
in litigation incidental to the conduct of its business. However, the Company is not party to any lawsuit or proceeding which,
in the opinion of management, is likely to have a material adverse effect on its financial condition as of December 31, 2012 and
2011.
Supply Agreements
In the normal course of business
we have entered into agreements with suppliers pursuant to which we commit to significant expenditures or make payments if minimum
levels of purchases are not made.
NOTE 12 – STOCKHOLDERS’
EQUITY
Authorized shares
The Company is incorporated in the State
of Delaware and has 50,000,000 authorized shares of Common Stock, $0.01 par value per share (the “Common Stock”), and
1,000,000 authorized shares of Preferred Stock, $0.01 par value per share (the “Preferred Stock”).
Warrants to purchase common stock
Warrants issued to Rho and Prentice
During 2012, the Company issued warrants
to each of Rho and Prentice in connection with the 2012 financing. Refer to Note 9 – 2012 Financing for further discussion.
Warrants issued to consultant
In October 2011, the Company issued a
warrant to a consultant to purchase 150,000 shares of Common Stock in exchange for marketing services and vests equally over six
months. Warrants were granted to this consultant with terms not to exceed ten years and become exercisable at the end of each
vesting term. In determining the fair value of such warrant, the Company used the Black-Scholes option pricing model to calculate
the value of the warrant. The assumptions used were as follows:
Risk-free interest rate
|
|
|
2.42
|
%
|
Expected life (in years)
|
|
|
10.00
|
|
Dividend yield
|
|
|
0.00
|
%
|
Expected volatility
|
|
|
93.20
|
%
|
Expected volatility was based on the historical
volatility of the price of the Company’s Common Stock, measured over the same period of time as the remaining maturity life
of the warrants. The risk free interest rate was based on the interest rate for U.S. Treasury Notes having a maturity period equal
to the remaining maturity life of the warrants.
Using the above assumptions, a value of
$2.00 per share was assigned to the warrants, which is amortized through the vesting term and recorded as part of marketing expenses.
For the years ended December 31, 2012 and 2011, the Company recognized expense of $200,000 and $100,000, respectively, related
to the warrants issued to this marketing consultant.
Warrants issued to Soros and Maverick
The Company has issued warrants to Quantum
Industrial Partners LDC (“QIP”), and/or, SFM Domestic Investments LLC (“SFM” and, together with QIP, “Soros”),
Maverick Fund USA, Ltd. (“Maverick USA”), Maverick Fund, L.D.C. (“Maverick Fund”) and Maverick Fund II,
Ltd. (“Maverick Fund II” and, together with Maverick USA and Maverick Fund, “Maverick”) in connection with
past financings. All expenses related to these warrants have been fully amortized.
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
The following table represents warrants
issued to purchase Common Stock that are outstanding as of December 31, 2012:
|
|
|
Number of
|
|
Exercise Price
|
|
|
|
Party
|
|
|
Warrants
|
|
Range (Per Share)
|
|
Expiration Dates
|
|
|
|
|
|
|
|
|
|
|
Rho
|
|
|
476,190
|
|
$1.05
|
|
August 2019
|
|
Prentice
|
|
|
476,190
|
|
$1.05
|
|
August 2019
|
|
Consultant
|
|
|
150,000
|
|
$2.28
|
|
October 2021
|
|
Soros
|
|
|
34,086
|
|
$5.10 – $7.80
|
|
March 2013
|
|
Maverick
|
|
|
19,796
|
|
$5.10
|
|
March 2013
|
|
Various holders
|
|
|
1,115
|
|
$5.10 – $7.80
|
|
March 2013
|
|
|
|
|
1,157,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based Compensation Plans
The Company’s Board of Directors
has adopted three stock-based employee compensation plans, of which one plan expired in December 2012. The Plans, which provide
for the granting of restricted stock awards, deferred stock unit awards, stock option awards and other equity and cash awards,
were adopted for the purpose of encouraging key employees, consultants and directors who are not employees to acquire a proprietary
interest in the growth and performance of the Company.
Stock Option Awards
The following
table summarizes the Company’s stock option award activity
:
|
|
|
|
|
Weighted Average
|
|
|
|
Number of
|
|
|
Exercise Price
|
|
|
|
Shares
|
|
|
(Per Share)
|
|
Balance at December 31, 2009
|
|
|
207,760
|
|
|
|
9.09
|
|
Stock option awards granted
|
|
|
1,904,348
|
|
|
|
2.40
|
|
Stock option awards cancelled
|
|
|
(21,000
|
)
|
|
|
3.92
|
|
Stock option awards exercised
|
|
|
--
|
|
|
|
--
|
|
Balance at December 31, 2010
|
|
|
2,091,108
|
|
|
|
3.05
|
|
Stock option awards granted
|
|
|
1,109,134
|
|
|
|
2.42
|
|
Stock option awards cancelled
|
|
|
(385,915
|
)
|
|
|
2.75
|
|
Stock option awards exercised
|
|
|
(17,645
|
)
|
|
|
1.87
|
|
Stock option awards expired
|
|
|
(1,500
|
)
|
|
|
15.83
|
|
Balance at December 31, 2011
|
|
|
2,795,182
|
|
|
|
2.84
|
|
Stock option awards granted
|
|
|
2,072,260
|
|
|
|
1.36
|
|
Stock option awards cancelled
|
|
|
(633,911
|
)
|
|
|
2.60
|
|
Stock option awards exercised
|
|
|
--
|
|
|
|
--
|
|
Stock option awards expired
|
|
|
(27,650
|
)
|
|
|
9.27
|
|
Balance at December 31, 2012
|
|
|
4,205,881
|
|
|
|
2.11
|
|
|
|
|
|
|
|
|
|
|
Vested at December 31, 2010
|
|
|
520,908
|
|
|
|
5.00
|
|
|
|
|
|
|
|
|
|
|
Vested at December 31, 2011
|
|
|
901,341
|
|
|
|
3.76
|
|
|
|
|
|
|
|
|
|
|
Vested at December 31, 2012
|
|
|
1,956,156
|
|
|
|
2.73
|
|
|
|
|
|
|
|
|
|
|
The stock option awards are exercisable
in different periods through 2022. Additional information with respect to the outstanding stock option awards as of December 31,
2012, is as follows:
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
|
|
|
|
Remaining
|
|
|
Exercise
|
|
|
|
|
|
Exercise
|
|
|
Remaining
|
|
|
|
Options
|
|
|
Contractual
|
|
|
Price
|
|
|
Options
|
|
|
Price
|
|
|
Contractual
|
|
Range of Exercise Prices
|
|
Outstanding
|
|
|
Life
|
|
|
Per Share
|
|
|
Exercisable
|
|
|
Per Share
|
|
|
Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.51 – $2.50
|
|
|
3,523,003
|
|
|
|
8.6 years
|
|
|
$
|
1.80
|
|
|
|
1,613,976
|
|
|
$
|
2.32
|
|
|
|
7.6 years
|
|
$2.51 – $5.00
|
|
|
615,628
|
|
|
|
7.6 years
|
|
|
|
2.78
|
|
|
|
274,930
|
|
|
|
2.89
|
|
|
|
7.0 years
|
|
$5.01 – $7.50
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
$7.51 – $10.00
|
|
|
6,750
|
|
|
|
3.5 years
|
|
|
|
8.71
|
|
|
|
6,750
|
|
|
|
8.71
|
|
|
|
3.5 years
|
|
$10.01 – $12.50
|
|
|
27,000
|
|
|
|
3.0 years
|
|
|
|
11.96
|
|
|
|
27,000
|
|
|
|
11.96
|
|
|
|
3.0 years
|
|
$12.51 – $15.50
|
|
|
33,500
|
|
|
|
2.3 years
|
|
|
|
12.84
|
|
|
|
33,500
|
|
|
|
12.84
|
|
|
|
2.3 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.51 – $15.50
|
|
|
4,205,881
|
|
|
|
8.3 years
|
|
|
|
2.11
|
|
|
|
1,956,156
|
|
|
|
2.73
|
|
|
|
7.4 years
|
|
The total fair value of the 1,199,685 stock
option awards that vested during the year was approximately $1,971,000. At December 31, 2012, there was no aggregate intrinsic
value of the fully vested stock option awards and the weighted average remaining contractual life of the stock option awards was
approximately seven years. The Company has not capitalized any compensation cost, or modified any of its stock option awards and
no cash was used to settle equity instruments granted under the Company’s equity incentive plans for the years ended December
31, 2012, 2011 and 2010.
There were no stock option awards exercised
for each of the years ended December 31, 2012 and 2010. For the year ended December 31, 2011, proceeds received from the exercise
of stock options was approximately $33,000.
Other selected information is as follows:
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate intrinsic value of outstanding options
|
|
$
|
76,000
|
|
|
$
|
53,000
|
|
|
$
|
935,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate intrinsic value of options exercised
|
|
|
--
|
|
|
|
6,000
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value per share of options granted
|
|
|
0.91
|
|
|
|
1.77
|
|
|
|
2.28
|
|
As of December 31, 2012, the total compensation
cost related to non-vested stock option awards not yet recognized was $2,274,000. Total compensation cost is expected to be recognized
over approximately three years on a weighted average basis.
The fair value of stock option awards granted
is estimated on the date of grant using a Black-Scholes option pricing model. Expected volatilities are calculated based on the
historical volatility of the Company's Common stock. Management monitors stock option exercises and employee termination patterns
to estimate forfeiture rates within the valuation model. The expected holding period of options represents the period of time that
options granted are expected to be outstanding. The risk-free interest rate for periods within the expected life of the option
is based on the interest rate of the U.S. Treasury note in effect on the date of the grant.
The table below presents the weighted
average assumptions used to calculate the fair value of stock option awards granted for the year ended December 31, 2012, 2011
and 2010, respectively:
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.87
|
%
|
|
|
1.88
|
%
|
|
|
2.39
|
%
|
Expected life (in years)
|
|
|
5.2
|
|
|
|
6.7
|
|
|
|
5.5
|
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Expected volatility
|
|
|
81.02
|
%
|
|
|
82.42
|
%
|
|
|
84.07
|
%
|
For the years ended December 31, 2012,
2011 and 2010, the Company recognized expense of approximately $1,895,000, $1,058,000 and $611,000, respectively, in connection
with these awards.
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
Restricted Stock and Deferred Stock
Unit Awards
The following table is a summary of activity
related to restricted stock awards and deferred stock units awards for key employees at December 31, 2012:
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
|
|
|
Restricted
|
|
|
Grant Date
|
|
|
Deferred
|
|
|
Grant Date
|
|
|
|
Stock
|
|
|
Fair Value
|
|
|
Stock
|
|
|
Fair Value
|
|
|
|
Awards
|
|
|
(per share)
|
|
|
Unit Awards
|
|
|
(per share)
|
|
Balance at December 31, 2009
|
|
|
8,437
|
|
|
$
|
0.92
|
|
|
|
12,314
|
|
|
$
|
12.70
|
|
Shares / units granted
|
|
|
8,062
|
|
|
|
2.25
|
|
|
|
--
|
|
|
|
--
|
|
Shares / units forfeited
|
|
|
(1,500
|
)
|
|
|
1.49
|
|
|
|
(51
|
)
|
|
|
12.70
|
|
Shares / units restriction lapses
|
|
|
(7,687
|
)
|
|
|
0.94
|
|
|
|
(12,263
|
)
|
|
|
12.70
|
|
Balance at December 31, 2010
|
|
|
7,312
|
|
|
|
2.25
|
|
|
|
--
|
|
|
|
--
|
|
Shares granted
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Shares forfeited
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Shares restriction lapses
|
|
|
(7,312
|
)
|
|
|
2.25
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Shares granted
|
|
|
22,321
|
|
|
|
1.12
|
|
|
|
|
|
|
|
|
|
Shares forfeited
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Shares restriction lapses
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
22,321
|
|
|
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate grant date fair value
|
|
$
|
21,000
|
|
|
|
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting service period of shares granted
|
|
|
1 year
|
|
|
|
|
|
|
|
12 – 36 months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares / units vested during
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
7,687
|
|
|
|
|
|
|
|
12,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares non-vested at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
7,312
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares vested during
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
7,312
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares non-vested at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
--
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares vested during
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
--
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares non-vested at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
22,321
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2012,
2011 and 2010 the Company recognized expense of approximately $12,000, $4,000 and $23,000, respectively, in connection with these
awards.
As of December 31, 2012, the total compensation
cost related to non-vested restricted stock awards not yet recognized was $15,000. Total compensation cost is expected to be recognized
over less than one year on a weighted average basis.
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
September 2011 Securities Purchase
Agreement
On September 7, 2011, the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”) with Rho, QIP and Prentice (the “Purchasers”)
pursuant to which the Company sold to the Purchasers 3,666,665 newly issued shares (the “Shares”) of its Common Stock,
for an aggregate purchase price of $6,600,000, or $1.80 per share. The Company received proceeds from the sale of Shares of Common
Stock of approximately $6,418,000, net of $182,000 of issuance costs.
2011 Registration Rights and Warrants
Issuance
The Company, Soros, Prentice, Maverick
and Rho (the “Existing Stockholders”) previously entered into a registration rights agreement, dated December 31, 2009
(the “Prior Agreement”).
In connection with the Purchase Agreement,
the Company and the Existing Stockholders agreed to amend and restate the Prior Agreement (the “Amended and Restated Registration
Rights Agreement”) to among other things, grant the Purchasers registration rights with respect to the Shares equivalent
to those provided under the Prior Agreement. Accordingly, the Company has agreed to file a shelf registration statement with respect
to the Shares, and subject to the receipt of stockholder approval, issue warrants to the Purchasers under certain circumstances
relating to the unavailability of a registration statement, and to register the shares underlying the warrants.
Pursuant to the Amended and Restated Registration
Rights Agreement, the Company has agreed to file the shelf registration statement no later than November 15, 2011 (the “Filing
Deadline”) and to cause such registration statement to be declared effective by the Securities and Exchange Commission within
180 days following Filing Deadline (the “Required Effectiveness Deadline”). The Amended and Restated Registration Rights
Agreement provided that the Company would be obligated to issue warrants to the Purchasers in certain circumstances if the registration
statement was not filed by the Filing Deadline or declared effective by the Required Effectiveness Deadline.
In accordance with the terms of the Amended
and Restated Registration Rights Agreement, the Company would be required to grant the Purchasers warrants representing the right
to purchase shares of its Common Stock in an aggregate amount equal to 1% of the fully diluted outstanding shares of Common Stock
for each full 30-day period following the Filing Deadline or the Required Effectiveness Deadline (as applicable); provided however,
that such warrant issuance shall not exceed, in the aggregate 10% of the fully diluted outstanding shares of Common Stock. The
warrants, if issued under the Amended and Restated Registration Rights Agreement, would have a 5-year term, an exercise price of
$1.80 per share of Common Stock and would include customary provisions requiring adjustments of the number of shares of Common
Stock issuable thereunder following a stock dividend, stock split or other similar adjustment to the Company’s capital structure.
The Company has filed the shelf registration
statement with the Securities and Exchange Commission covering the September 2011 Shares on November 14, 2011 and the shelf registration
statement was declared effective on February 7, 2012. As the registration statement was filed within the Filing Deadline and declared
effective within the Required Effectiveness Deadline, the Company did not record any amounts in the consolidated financial statements
with regards to warrants for 2011.
NOTE 13 – QUARTERLY RESULTS OF
OPERATIONS (UNAUDITED)
Amounts in thousands, except per share data:
|
|
Quarter Ended
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
24,266
|
|
|
$
|
22,215
|
|
|
$
|
21,743
|
|
|
$
|
25,220
|
|
Gross profit
|
|
$
|
3,745
|
|
|
$
|
4,429
|
|
|
$
|
2,962
|
|
|
$
|
4,983
|
|
Net loss attributable to Bluefly, Inc. stockholders
(2)(3)(4)
|
|
$
|
(7,870
|
)
|
|
$
|
(4,949
|
)
|
|
$
|
(6,277
|
)
|
|
$
|
(5,680
|
)
|
Net loss per common share attributable to Bluefly, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders – basic and diluted
|
|
$
|
(0.28
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.20
|
)
|
Weighted average common shares outstanding – basic
(5)
|
|
|
28,523,237
|
|
|
|
28,576,612
|
|
|
|
28,576,612
|
|
|
|
28,576,612
|
|
Weighted average common shares outstanding – diluted
(5)
|
|
|
28,523,237
|
|
|
|
28,576,612
|
|
|
|
28,576,612
|
|
|
|
28,576,612
|
|
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
|
|
Quarter Ended
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
21,693
|
|
|
$
|
24,037
|
|
|
$
|
21,194
|
|
|
$
|
29,358
|
|
Gross profit
(6)
|
|
$
|
8,195
|
|
|
$
|
7,493
|
|
|
$
|
6,178
|
|
|
$
|
6,419
|
|
Net loss attributable to Bluefly, Inc. stockholders
(2)(7)
|
|
$
|
(1,278
|
)
|
|
$
|
(1,032
|
)
|
|
$
|
(2,494
|
)
|
|
$
|
(6,180
|
)
|
Net loss per common share attributable to Bluefly, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders – basic and diluted
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.22
|
)
|
Weighted average common shares outstanding – basic
(5)
|
|
|
24,605,199
|
|
|
|
24,611,736
|
|
|
|
25,530,899
|
|
|
|
28,284,268
|
(8)
|
Weighted average common shares outstanding – diluted
(5)
|
|
|
24,605,199
|
|
|
|
24,611,736
|
|
|
|
25,530,899
|
|
|
|
28,284,268
|
(8)
|
|
|
Quarter Ended
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
20,240
|
|
|
$
|
20,545
|
|
|
$
|
19,202
|
|
|
$
|
28,576
|
|
Gross profit
|
|
$
|
8,337
|
|
|
$
|
7,978
|
|
|
$
|
6,924
|
|
|
$
|
9,964
|
|
Net (loss) income
|
|
$
|
(1,501
|
)
|
|
$
|
(724
|
)
|
|
$
|
(2,077
|
)
|
|
$
|
269
|
|
Net (loss) income per common share – basic and diluted
|
|
$
|
(0.07
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.01
|
|
Weighted average common shares outstanding – basic
(5)
|
|
|
20,896,437
|
|
|
|
24,597,254
|
|
|
|
24,598,151
|
|
|
|
24,598,811
|
|
Weighted average common shares outstanding – diluted
(5)
|
|
|
20,896,437
|
|
|
|
24,597,254
|
|
|
|
24,598,151
|
|
|
|
24,724,658
|
|
(1)
|
Quarterly amounts may not sum
to the annual amounts due to rounding.
|
|
|
(2)
|
These amounts exclude net losses
attributable to the non-controlling interest in Eyefly LLC.
|
|
|
(3)
|
These amounts include operating expenses attributable to EVT Acquisition Co., LLC.
|
|
|
(4)
|
These amounts include net sales, cost of sales and operating expenses attributable to the Company’s controlling interest in Eyefly LLC through October 25, 2012. This amount for the fourth quarter of 2012 includes an impairment loss adjustment of $383,000.
|
|
|
(5)
|
For years that the Company has
incurred losses, and as a result of losses incurred by the Company, all potentially dilutive securities are anti-dilutive and
accordingly, basic and diluted weighted average common shares outstanding are equal for the periods presented.
|
|
|
(6)
|
This amount, for the fourth quarter of 2011, includes (a) $2.4 million related to an increase in inventory reserves (of which $1.4 million relates to inventory written off as it was deemed unsellable) and (b) a write-off of $1.0 million related to merchandise credits from suppliers that the Company was not able to collect. The increase in inventory reserves was primarily the result of a shift in Company strategy with a view to accelerating its inventory turns.
|
|
|
(7)
|
This amount, for the fourth quarter
of 2011, includes $1.2 million of bad debt expense (which is included as part of general and administrative expenses) related
to (a) a write off of $475,000, which the Company was unable to collect in its entirety and (b) an increase in its allowance for
doubtful accounts of $725,000 related to the entire remaining balance of the trade receivable. This allowance for doubtful accounts
was necessary as the trade receivable was unsecured and the amount that the Company may ultimately recover is not presently determinable.
|
|
|
(8)
|
Weighted average common shares
outstanding (basic and diluted) increased to 28,284,268 as a result of the September 2011 financing.
|
NOTE 14 – SUBSEQUENT EVENTS
Nasdaq Compliance
On February 15, 2013, the Company was notified
by the Nasdaq Stock Market that it is not in compliance with the continued listing requirements for the Nasdaq Capital Market because
shares of the Company’s Common Stock had closed at a per share bid price of less than $1.00 for at least 30 consecutive trading
days. Under Nasdaq rules, the Company was given a 180-day grace period to regain compliance, which extends to August 14, 2013.
In order to regain compliance, shares of the Company’s Common Stock would need to close at a price of $1.00 per share or
more for at least ten consecutive trading days at any time prior to August 14, 2013. The Company may be granted an additional 180-day
grace period to regain compliance, if, at that time, it meets the initial listing criteria of the Nasdaq Capital Market, other
than the minimum bid price requirement. In the
Bluefly, Inc.
Notes to Consolidated Financial
Statements
December
31, 2012
event that the Company does not regain compliance within the requisite time period,
it would have the right to appeal any delisting. The failure to maintain listing on the Nasdaq Capital Market may have an adverse
effect on the price and/or liquidity of the Company’s Common Stock.
Bonus Arrangement
On April 2, 2013, the special committee
approved a bonus arrangement for Joseph Park, the Company’s Chief Executive Officer, that had been recommended by the Company’s
compensation committee. The bonus arrangement is intended to incentivize Mr. Park to secure the best possible price in any sale
of the Company. Under the arrangement, Mr. Park will receive five per cent of the net proceeds, which would otherwise have been
payable to the shareholders of the Company, of any transaction constituting a sale of the Company approved by the Board. The special
committee reserved the right to make any determinations requiring the interpretation of the incentive, in its sole discretion.
Salus Agreement
The Salus agreement was amended on April
11, 2013 to modify certain borrowing availability formulas. It is currently estimated that these amendments will increase
borrowing availability by up to $650,000. The Company paid a $100,000 fee in connection with the amendment. Salus also waived
covenant violations caused by the late delivery of 2012 audited financial statements and the explanatory paragraph regarding a
going concern uncertainty contained in the auditor’s unqualified opinion for such financial statements.
Strategic Transaction
The Company is currently in active discussions
regarding a strategic transaction under the direction of a special committee consisting of independent members of the Board of
Directors, together with the assistance of an independent financial advisor (“Proposed Strategic Transaction”). The
Company expects that such transaction will be at a price substantially below the current market price of the Company’s common
stock. We currently have sufficient funds to support our operations until the anticipated signing date of a definitive agreement
regarding the Proposed Strategic Transaction, at which time we believe bridge financing will be available until the transaction
can be consummated. Management believes that the Proposed Strategic Transaction, if and when consummated, will provide the necessary
liquidity to eliminate the factors that resulted in the going concern uncertainty.
Schedule II – Valuation
and Qualifying Accounts
For the Three Years Ended
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to
|
|
Charged to
|
|
|
|
|
|
|
|
Ending Balance at
|
|
Costs and Other
|
|
Other
|
|
|
|
|
|
Ending Balance at
|
Description
|
December 31, 2011
|
|
Expenses
|
|
Accounts
|
|
Deductions
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for sales returns
|
$
|
(3,124,000
|
)
|
|
$
|
(48,548,000
|
)
|
|
$
|
--
|
|
|
$
|
49,591,000
|
|
|
$
|
(2,081,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
$
|
(767,000
|
)
|
|
$
|
(358,000
|
)
|
|
$
|
--
|
|
|
$
|
1,003,000
|
|
|
$
|
(122,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory reserves
|
$
|
(3,277,000
|
)
|
|
$
|
564,000
|
|
|
$
|
--
|
|
|
$
|
1,572,000
|
|
|
$
|
(1,141,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax valuation allowance
|
$
|
(51,843,000
|
)
|
|
$
|
(8,340,000
|
)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
(60,183,000
|
)
|
Column A
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to
|
|
Charged to
|
|
|
|
|
|
|
|
Ending Balance at
|
|
Costs and Other
|
|
Other
|
|
|
|
|
|
Ending Balance at
|
Description
|
December 31, 2010
|
|
Expenses
|
|
Accounts
|
|
Deductions
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for sales returns
|
$
|
(3,142,000
|
)
|
|
$
|
(56,372,000
|
)
|
|
$
|
--
|
|
|
$
|
56,390,000
|
|
|
$
|
(3,124,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
$
|
(73,000
|
)
|
|
$
|
(1,103,000
|
)
|
|
$
|
--
|
|
|
$
|
409,000
|
|
|
$
|
(767,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory reserves
|
$
|
(1,093,000
|
)
|
|
$
|
(3,121,000
|
)
|
|
$
|
--
|
|
|
$
|
937,000
|
|
|
$
|
(3,277,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax valuation allowance
|
$
|
(47,717,000
|
)
|
|
$
|
(4,126,000
|
)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
(51,843,000
|
)
|
Column A
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to
|
|
Charged to
|
|
|
|
|
|
|
|
Ending Balance at
|
|
Costs and Other
|
|
Other
|
|
|
|
|
|
Ending Balance at
|
Description
|
December 31, 2009
|
|
Expenses
|
|
Accounts
|
|
Deductions
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for sales returns
|
$
|
(2,627,000
|
)
|
|
$
|
(55,570,000
|
)
|
|
$
|
--
|
|
|
$
|
55,055,000
|
|
|
$
|
(3,142,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
$
|
(91,000
|
)
|
|
$
|
(324,000
|
)
|
|
$
|
--
|
|
|
$
|
342,000
|
|
|
$
|
(73,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory reserves
|
$
|
(1,286,000
|
)
|
|
$
|
(359,000
|
)
|
|
$
|
--
|
|
|
$
|
552,000
|
|
|
$
|
(1,093,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax valuation allowance
|
$
|
(47,388,000
|
)
|
|
$
|
(3,322,000
|
)
|
|
$
|
2,993,000
|
|
|
$
|
--
|
|
|
$
|
(47,717,000
|
)
|
Bluefly, Inc. (MM) (NASDAQ:BFLY)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Bluefly, Inc. (MM) (NASDAQ:BFLY)
Gráfica de Acción Histórica
De May 2023 a May 2024