KIDS » Topics » Note 2 - Basis of Presentation

This excerpt taken from the KIDS 8-K filed Dec 11, 2008.

Note 2—Basis of Presentation

Since former eToys Direct security holders owned, after the merger, approximately 66.67% of the combined company on a fully-diluted basis and as a result of certain other factors, including that all members of the executive management of the combined company are from eToys Direct, eToys Direct is deemed to be the acquiring company for accounting purposes and the transaction was accounted for as a reverse acquisition of assets and a recapitalization in accordance with accounting principles generally accepted in the United States. These financial statements reflect the historical results of eToys Direct prior to the merger and that of the combined company following the merger, and do not include the historical financial results of BabyUniverse prior to the completion of the merger. Stockholders’ equity has been retroactively restated to reflect the number of shares of common stock received by former eToys Direct security holders in the merger, after giving effect to difference between the par values of the capital stock of eToys Direct and BabyUniverse common stock, with the offset to additional paid-in capital.

Unless specifically noted otherwise, as used throughout these consolidated financial statements, “The Parent Company,” “we,” “us,” or “our” refers to the business of the combined company after the merger and the business of eToys Direct prior to the merger.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The accompanying consolidated financial statements include the accounts of The Parent Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated.

We report our financial results on a 52 or 53-week fiscal year ending on the closest Saturday to January 31st. Fiscal 2006 was a 53-week year, and fiscal 2007 was a 52-week year. Certain amounts in prior periods have been reclassified to conform to the current period presentation. The reclassifications had no effect on previously reported net loss or cash flows.

The financial statements have been prepared on a going concern basis. Financial statements prepared on this basis of accounting do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should The Parent Company be unable to continue as a going concern.

 

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Recent Events:

The Parent Company has experienced a significant reduction in revenues that has adversely affected current results of operations and liquidity. This reduction is the result of recent industry and macroeconomic conditions, including weak consumer confidence and spending, along with credit limitations imposed by our vendors and lenders, which has resulted in our being unable to obtain appropriate levels of inventory to support consumer demand through the holiday season. These developments impact our liquidity and consequently raise substantial doubt about our ability to continue as a going concern. In response to these developments, The Parent Company is pursuing a variety of strategic initiatives and restructuring alternatives, including a potential sale of all or a portion of its business, and/or seeking protection of the bankruptcy courts. The Parent Company continues to monitor working capital availability and capital resources, and our ability to maintain working capital and capital resources will have a significant impact on the ultimate resolution of our current liquidity situation and the timing of any potential actions in response to our situation. Note 15 to these financial statements describes The Parent Company’s liquidity position in greater detail.

This excerpt taken from the KIDS 10-K filed May 1, 2008.

Note 2—Basis of Presentation

Since former eToys Direct security holders owned, after the merger, approximately 66.67% of the combined company on a fully-diluted basis and as a result of certain other factors, including that all members of the executive management of the combined company are from eToys Direct, eToys Direct is deemed to be the acquiring company for accounting purposes and the transaction was accounted for as a reverse acquisition of assets and a recapitalization in accordance with accounting principles generally accepted in the United States. These financial statements reflect the historical results of eToys Direct prior to the merger and that of the combined company following the merger, and do not include the historical financial results of BabyUniverse prior to the completion of the merger. Stockholders’ equity has been retroactively restated to reflect the number of shares of common stock received by former eToys Direct security holders in the merger, after giving effect to difference between the par values of the capital stock of eToys Direct and BabyUniverse common stock, with the offset to additional paid-in capital.

Unless specifically noted otherwise, as used throughout these consolidated financial statements, “The Parent Company,” “we,” “us,” or “our” refers to the business of the combined company after the merger and the business of eToys Direct prior to the merger.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

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Since the Company’s inception on May 10, 2004, the Company has not achieved a profit. Management believes the Company can achieve profitability with continued sales growth, but there are no assurances whether the Company will be profitable in the future. As discussed in Note 10, in July 2007, the Company secured a $25.0 million bank credit facility. Additionally, on February 1, 2008, the borrowing capacity on the bank credit facility was extended. Based on the Company’s current operating plan and the structure of the Company’s amended bank credit facility, management believes existing cash and cash equivalents, cash forecasted to be generated by operations, and access to capital under the terms of the bank credit facility will be sufficient to meet the Company’s working capital and capital requirements through at least February 1, 2009. However, if events or circumstances occur such that the Company does not meet its operating plan as expected, the Company may be required to seek additional capital and/or reduce discretionary spending, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

The accompanying consolidated financial statements include the accounts of The Parent Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated.

We report our financial results on a 52 or 53-week fiscal year ending on the closest Saturday to January 31st. Fiscal 2006 was a 53-week year, and fiscal 2007 was a 52-week year. Certain amounts in prior periods have been reclassified to conform to the current period presentation. The reclassifications had no effect on previously reported net loss or cash flows.

This excerpt taken from the KIDS 10-Q filed Dec 18, 2007.

Note 2 – Basis of Presentation

Since former eToys Direct security holders own, after the merger, approximately 66.67% of the combined company on a fully-diluted basis and as a result of certain other factors, including that all members of the executive management of the combined company are from eToys Direct, eToys Direct is deemed to be the acquiring company for accounting purposes and the transaction was accounted for as a reverse acquisition of assets and a recapitalization in accordance with accounting principles generally accepted in the United States. These financial statements reflect the historical results of eToys Direct prior to the merger and that of the combined company following the merger, and do not include the historical financial results of BabyUniverse prior to the completion of the merger. Stockholders’ equity has been retroactively restated to reflect the number of shares of common stock received by former eToys Direct security holders in the merger, after giving effect to difference between the par values of the capital stock of eToys Direct and BabyUniverse common stock, with the offset to additional paid-in capital exclusive of the conversion of outstanding debt as of February 3, 2007.

Unless specifically noted otherwise, as used throughout these condensed consolidated financial statements, “BabyUniverse,” “we,” “us,” or “our” refers to the business of the combined company after the merger and the business of eToys Direct prior to the merger.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing these financial statements include estimating certain accrued expenses related to the merger, and estimates related to inventory reserves.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, all adjustments considered necessary for a fair presentation have been included. Operating results for the nine-month period ended November 3, 2007 are not necessarily indicative of the results that may be expected for the fiscal

 

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year ending February 2, 2008. This unaudited quarterly information should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended February 3, 2007 included in our amended Registration Statement on Form S-4 filed with the Securities and Exchange Commission on September 28, 2007.

The accompanying unaudited condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

BabyUniverse’s fiscal reporting year ends on the closest Saturday to January 31st. Our fiscal reporting quarter ends on the closest Saturday to the end of the last month of the fiscal quarter. BabyUniverse uses rounding in its financial presentations and as a result, for presentation purposes certain sums may not mathematically calculate. Certain amounts in prior periods have been reclassified to conform to the current period presentation.

This excerpt taken from the KIDS 10-Q filed Nov 14, 2006.

Basis of Presentation

          The accompanying unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s Annual Report  on Form 10-K for 2005 filed with the Securities and Exchange Commission.  The same accounting policies are followed for preparing quarterly and annual financial statements.  In the opinion of management, all adjustments necessary for the fair presentation of the results of operations, financial position and cash flows have been included and are of a normal, recurring nature.

This excerpt taken from the KIDS 10-Q filed Aug 14, 2006.

Basis of Presentation

          The accompanying unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s Annual Report  on Form 10-K for 2005 filed with the Securities and Exchange Commission. The same accounting policies are followed for preparing quarterly and annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the results of operations, financial position and cash flows have been included and are of a normal, recurring nature.

This excerpt taken from the KIDS 10-Q filed May 15, 2006.

Basis of Presentation

          The accompanying unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s Form 10-K Annual Report for 2005 filed with the Securities and Exchange Commission on March 30, 2006. The same accounting policies are followed for preparing quarterly and annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the results of operations, financial position and cash flows have been included and are of a normal, recurring nature.

These excerpts taken from the KIDS 8-K filed Mar 29, 2006.

Basis of Presentation

The Company has prepared the financial statements in accordance with accounting principles generally accepted in the United States of America. 

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited pro forma condensed combined financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.

This excerpt taken from the KIDS 10-Q filed Nov 15, 2005.

Basis of Presentation

          The accompanying unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Amendment No. 3 of the Company’s Registration Statement on Form S-1, declared effective by the Securities and Exchange Commission on August 2, 2005. The same accounting policies are followed for preparing quarterly and annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the results of operations, financial position and cash flows have been included and are of a normal, recurring nature.

This excerpt taken from the KIDS 8-K filed Nov 14, 2005.

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited pro forma condensed combined financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.

This excerpt taken from the KIDS 10-Q filed Sep 9, 2005.

Basis of Presentation

          The accompanying unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Amendment No. 3 of the Company’s Registration Statement on Form S-1, declared effective by the Securities and Exchange Commission on August 2, 2005. The same accounting policies are followed for preparing quarterly and annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the results of operations, financial position and cash flows have been included and are of a normal, recurring nature.

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