Summer Infant Annual Report 2016

← All annual reports

FY2016 Annual Report · Summer Infant

Loading PDF…

Use
these
links
to
rapidly
review
the
document

TABLE
OF
CONTENTS

Summer
Infant,
Inc.
and
Subsidiaries
Index
to
Financial
Statements

Table
of
Contents

UNITED
STATES

SECURITIES
AND
EXCHANGE
COMMISSION

Washington,
D.C.
20549

(Mark
One)

FORM
10-K

ANNUAL
REPORT
PURSUANT
TO
SECTION
13
or
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934

For
the
fiscal
year
ended
December
31,
2016

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

For
the
transition
period
from

Commission
File
No.
001-33346

SUMMER
INFANT,
INC.

(Exact
name
of
registrant
as
specified
in
its
charter)

Delaware

(State
or
other
jurisdiction
of

incorporation)

1275
Park
East
Drive,
Woonsocket,
Rhode
Island
(Address
of
principal
executive
offices)

20-1994619

(I.R.S.
Employer

Identification
No.)

02895

(Zip
Code)

(401)
671-6550

(Registrant's
telephone
number,
including
area
code)

Securities
registered
pursuant
to
Section
12(b)
of
the
Act:

Title
of
each
class
Common
Stock,
Par
Value
$0.0001

Name
of
exchange
on
which
registered

Nasdaq
Capital
Market

Securities
registered
pursuant
to
Section
12(g)
of
the
Act:
None

Indicate
by
check
mark
if
the
registrant
is
a
well-known
seasoned
issuer,
as
defined
in
Rule
405
of
the
Securities
Act.
Yes

Indicate
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes

Indicate
by
check
mark
whether
the
registrant:
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934
during
the
preceding
12
months
(or
for
such
shorter
period
that
the
registrant
was
required
to
file
such
reports),
and
(2)
has
been
subject
to
such
filing
requirements
for
the
past
90
days.
Yes

Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
and
posted
on
its
corporate
Web
site,
if
any,
every
Interactive
Data
File
required
to
be
submitted
and
posted
pursuant
to
Rule
405
of
Regulation
S-T
(§
232.405
of
this
chapter)
during
the
preceding
12
months
(or
for
such
shorter
period
that
the
registrant
was
required
to
submit
and
post
such
files).
Yes

Indicate
by
check
mark
if
disclosure
of
delinquent
filers
pursuant
to
Item
405
of
Regulation
S-K
(§
229.405
of
this
chapter)
is
not
contained
herein,
and
will
not
be
contained,
to
the
best
of
registrant's
knowledge,
in
definitive
proxy
or
information
statements
incorporated
by
reference
in
Part
III
of
this
Form
10-K
or
any
amendment
to
this
Form
10-K.

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

Large
accelerated
filer

Accelerated
filer

Non-accelerated
filer

(Do
not
check
if
a

smaller
reporting
company)

Smaller
reporting
company

Indicate
by
check
mark
whether
registrant
is
a
shell
company
(as
defined
in
Rule
12b-2
of
the
Exchange
Act).
Yes

The
aggregate
market
value
of
the
registrant's
voting
and
non-voting
common
equity
held
by
non-affiliates
as
of
July
1,
2016,
was
$17.7
million.
For
purposes
of
this
computation,
all
officers,
directors,
and
10%
beneficial
owners
of
the
registrant
are
deemed
to
be
affiliates.
Such
determination
should
not
be
deemed
to
be
an
admission
that
such
officers,
directors,
or
10%
beneficial
owners
are,
in
fact,
affiliates
of
the
registrant.

The
number
of
shares
issued
and
outstanding
of
the
registrant's
common
stock
as
of
February
20,
2017
was
18,506,617
(excluding
unvested
restricted
shares
that
have
been
issued
to
employees).

Portions
of
the
registrant's
Proxy
Statement
for
its
2017
Annual
Meeting
of
Stockholders
are
incorporated
by
reference
into
Part
III
of
this
Annual
Report
on
Form
10-K.

DOCUMENTS
INCORPORATED
BY
REFERENCE

Table
of
Contents

INDEX
TO
FORM
10-K

FOR
THE
FISCAL
YEAR
ENDED
DECEMBER
31,
2016

ITEM
1.
ITEM
1A.
ITEM
1B.
ITEM
2.
ITEM
3.
ITEM
4.

Business

Risk
Factors

Unresolved
Staff
Comments

Properties

Legal
Proceedings

Mine
Safety
Disclosures

PART
I

PART
II

ITEM
5.

Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
Equity

Securities

ITEM
6.
ITEM
7.
ITEM
7A.
ITEM
8.
ITEM
9.
ITEM
9A.
ITEM
9B.

Selected
Financial
Data

Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations

Quantitative
and
Qualitative
Disclosures
About
Market
Risk

Financial
Statements
and
Supplementary
Data

Changes
in
and
Disagreements
with
Accountants
on
Accounting
and
Financial
Disclosure

Controls
and
Procedures

Other
Information

ITEM
10.
ITEM
11.
ITEM
12.
ITEM
13.
ITEM
14.

PART
III

Directors,
Executive
Officers
and
Corporate
Governance

Executive
Compensation

Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters

Certain
Relationships
and
Related
Transactions,
and
Director
Independence

Principal
Accounting
Fees
and
Services

ITEM
15.
SIGNATURES

Exhibits
and
Financial
Statement
Schedules

PART
IV

PAGE

Table
of
Contents

PART
I

When
used
in
this
report,
the
terms
"Summer,"
the
"Company,"
"we,"
"us,"
and
"our"
mean
Summer
Infant,
Inc.
and
its
subsidiaries.
Note
that
all
dollar
amounts
in
Part
I
are
in
thousands
of
U.S.
dollars
unless
otherwise
noted.

Item
1.

Business

Overview

We
are
a
premier
infant
and
juvenile
products
company
originally
founded
in
1985
and
have
publicly
traded
on
the
Nasdaq
Stock
Market
since
2007
under
the
symbol
"SUMR."
We
are
a
leader
in
product
innovation
in
the
juvenile
industry,
providing
mothers
and
caregivers
a
full
range
of
high
quality,
high
value
products
to
care
for
babies
and
toddlers.
We
seek
to
improve
the
quality
of
life
of
both
caregivers
and
babies
through
our
product
offerings,
while
at
the
same
time
maximizing
shareholder
value
over
the
long
term.

We
operate
in
one
principal
industry
segment
across
geographically
diverse
marketplaces,
selling
our
products
globally
to
large,
national
retailers
as
well
as
independent
retailers,
and
on
our
partner's
websites
and
our
own
summerinfant.com
website.
In
North
America,
our
customers
include
Babies
R
Us,
Amazon.com,
Wal-Mart,
Target,
Buy
Buy
Baby,
Home
Depot,
and
Lowe's.
Our
largest
European-based
customers
are
Argos,
Amazon,
Toys
R
Us,
and
Mothercare.
We
also
sell
through
international
distributors,
representatives,
and
to
select
international
retail
customers
in
geographic
locations
where
we
do
not
have
a
direct
sales
presence.

We
estimate
the
size
of
the
juvenile
products
market
to
be
$25
billion
worldwide,
with
consumers
focusing
on
quality,
safety,
innovation,
and
style.
We
believe
we
are
positioned
to
capitalize
on
positive
market
trends
in
the
juvenile
products
industry,
including
a
predicted
increase
in
U.S.
birth
rates
over
the
next
several
years.

Strategic
Priorities

We
are
a
leading
global
juvenile
products
company
that
provides
a
full
range
of
innovative,
high
quality,
high
value
products
that
meet
the
demands
of
parents.
In
2016
our
management
team
was
strengthened
by
the
appointment
of
Mark
Messner
as
our
Chief
Executive
Officer
and
Art
Gehr
as
our
Chief
Product
Officer,
each
of
whom
has
over
20
years
of
experience
in
the
juvenile
product
industry.
As
we
enter
2017,
we
will
continue
to
focus
on
our
core
products
and
brand
building,
our
key
customer
relationships
and
creating
a
roadmap
for
sustainable
growth
in
2017
and
beyond.
Our
management
team
will
continue
to
execute
on
the
key
strategic
priorities
that
we
believe
will
support
our
future
growth:

•

Continuously
strive
for
differentiated
innovation.

We
continuously
seek
to
create
differentiated,
innovative
solutions
for
consumers
who
demand
high
quality,
long
lasting,
and
safe
products.
We
pride
ourselves
as
leaders
of
innovation
within
the
juvenile
products
industry
that
provide
differentiated
solutions
from
our
competitors.
We
deliver
innovation
in
various
ways
based
upon
the
product
category.
We
offer
sleek
and
simple
design
innovation
in
potties,
deliver
innovative
convenience
features
in
strollers,
implement
new
technology
into
our
baby
video
monitors,
and
deliver
innovative,
safe-sleep
solutions
within
our
SwaddleMe®
branded
product
line.

Increase
awareness
of
our
brands.

In
2016,
we
relaunched
all
of
our
core
brands
and
packaging
in
order
to
extend
the
relevance
of
our
products
with
our
customers
and
consumers.
We
are
committed
to
investing
in
our
core
brands
to
increase
brand
awareness.
In
2017,
we
are
launching
marketing
campaigns
that
will
reach
across
print,
digital,
and
social
media
channels.
We
are
working
closely
with
our
retail
partners
to
increase
brand
presence
within
their
stores
and
online.
We
are
also
participating
and
sponsoring
over
50
consumer
events
across
the
country

Table
of
Contents

•

in
an
effort
to
continue
to
strengthen
our
brand
and
product
recognition.
We
believe
that
aligning
our
core
brands
with
our
target
market's
values
increases
brand
awareness
and
also
drives
brand
affinity.
Our
goal
is
to
become
the
#1
baby
brand
recommended
by
parents.

Continuously
connect
with
consumers.

We
seek
to
connect
with
our
consumers
across
multiple
media
channels.
We
offer
three
branded
social
channels
(Summer
Infant,
SwaddleMe,
and
Born
Free)
across
multiple
social
media
platforms
(Facebook,
Twitter,
Instagram,
Pinterest,
etc.).
We
use
innovative
ways
to
increase
our
reach
within
these
platforms
such
as
advertisements,
campaigns,
and
sweepstakes.
Our
social
channels
have
continued
to
grow
significantly
year
over
year
and
Summer
Infant
is
among
the
largest
followed
within
the
industry.
Additionally,
in
the
second
quarter
of
2017
we
expect
to
relaunch
our
website.
We
designed
our
new
website
to
be
a
trusted
resource
of
information
for
parents
and
a
place
where
consumers
can
purchase
their
favorite
products
for
every
stage
and
age
for
their
little
one.
We
also
use
consumer
research
as
an
avenue
to
connect
with
consumers.
Our
consumer
research
is
conducted
in
numerous
ways
including
focus
groups,
in-home
ethnography
studies,
on-line
surveys,
home-user
testing,
and
product
reviews.
Insights
from
our
research
are
studied
and
integrated
with
our
new
product
development
initiatives
and
our
continuous
effort
for
product
improvements.
Our
consumer
database
is
also
growing
which
allows
us
to
engage
in
direct
marketing
opportunities
such
as
email
newsletters
and
promotions.

Operational
efficiencies.

We
continue
to
refine
our
operating
model
as
we
bring
more
focus
to
our
strategic
priorities.
These
initiatives
include
SKU
rationalization,
doing
more
direct
import
business
as
we
emphasize
core
growth
categories,
and
evaluating
the
level
of
drop
ship
partnerships
going
forward.
We
are
also
improving
our
analytic
and
forecasting
capabilities,
product
development
process,
and
management
of
working
capital.
We
believe
these
initiatives
will
continue
to
streamline
operations.

Maintain
and
grow
our
partnerships.

We
have
strong
partnerships
with
our
suppliers
in
the
US
and
Asia.
We
believe
that
our
flexibility
to
develop
products
that
are
consumer
preferred
and
cost-efficient
is
a
competitive
advantage
in
meeting
our
customer
demands.
We
have
long-
standing
relationships
with
our
brick
and
mortar
and
our
e-commerce
retail
customers
in
the
U.S.
We
value
these
relationships
and
will
continue
to
focus
on
strengthening
them
to
increase
our
presence
in
stores
and
online.
We
will
continue
to
further
develop
our
relationships
outside
the
U.S.
to
expand
our
business
internationally.
We
have
focused
our
efforts
on
growing
our
European,
Canadian
and
Asian
market
presence
by
growing
our
customer
base
and
establishing
new
distributor
relationships.
We
see
our
international
business
as
having
significant
potential
for
growth
and
expansion.

By
focusing
on
these
key
strategic
priorities,
we
expect
to
drive
future
sales
growth,
improve
profitability
and
return
on
capital,
and
further
develop
and
strengthen
our
relationships
with
our
suppliers,
our
customers
and
the
consumers
who
use
our
products.

Products

We
currently
market
over
1,100
products
in
several
product
categories
including
monitoring,
safety,
nursery,
baby
gear,
and
feeding
products.
We
market
our
core
products,
under
our
Summer
Infant®,
SwaddleMe®,
and
Born
Free®
brand
names.
No
single
product
generated
more
than
10%
of
sales
for
the
fiscal
year
ended
December
31,
2016
("fiscal
2016").

Table
of
Contents

Anchor
products
in
our
product
categories
include
the
following:

Monitoring
Wi-Fi/Internet
Video
Audio
Prenatal

Monitoring

Safety
Gates
Bath
Potties
Boosters
Positioners

Nursery
Swaddle
Travel
Accessories
Safe
Sleep
Soothers
Sleep
Aides

Baby
Gear
Strollers
Bassinets
High
Chairs
Playards

Feeding
Products
Bottles
Drinking
Cups
Bibs
&
Placemats
Electronics
Pacifiers

Our
monitors
were
first
introduced
in
2001
and
are
distinguished
by
premium
quality,
ease
of
use,
and
innovative
features.
Currently,
we
offer
audio,
video
and
internet
viewable
monitors,
and
a
new
wearable
audio
monitor
marketed
under
the
Summer
Infant®
brand.
Our
monitors
have
led
the
way
in
innovation
within
the
category
and
feature
high
quality
components,
intended
to
fulfill
the
desire
for
consumers
to
connect
with
baby
at
any
time
or
place.
In
fiscal
2016,
we
launched
our
award
winning
Babble
Band™,
the
first
ever
wearable
audio
monitor
and
the
Liv
Cam™,
a
portable
battery
operated
baby
monitor
that
streams
live
video
directly
to
smart
devices
without
wifi
or
cellular
service.
In
fiscal
2017,
we
are
launching
a
new
line
of
baby
video
monitors
that
will
introduce
innovation
in
style
and
design
while
including
quality
improvements
in
picture
quality,
battery
life,
and
range.
We
consider
monitoring
to
be
one
of
our
core
categories
and
expect
to
be
positioned
in
the
second
half
of
2017
to
gain
incremental
shelf
space
with
additional,
new
innovative
monitors.

Safety

Our
safety
line
encompasses
gates,
bedrails,
baby
proofing,
potties,
bath,
positioners,
and
infant
health.
We
are
a
North
American
market
leader
in
the
gate
category,
with
a
product
range
of
over
30
gates.
Our
line
of
gates
offer
versatility
that
covers
use
in
home,
ease
of
installation,
and
aesthetically
pleasing
designs.
In
fiscal
2017,
we
will
introduce
a
new
line
of
gates
that
are
on
trend
with
home
décor
such
as
the
new
Rustic
Home,
Modern
Home,
and
Classic
Home
designs.
We
are
partnering
with
strategic
design
influencers
to
help
bring
a
broader
awareness
to
the
designer
segment
of
the
category.

In
fiscal
2015,
we
introduced
the
My
Size
Potty™.
This
simply
designed
potty
has
become
highly
recognized
and
is
a
best
seller
for
major
retailers
nationwide.
In
fiscal
2016,
the
My
Size
Potty
was
the
most
tagged
product
by
consumers
on
social
media
within
our
portfolio
of
products.

We
first
entered
the
infant
bathing
category
in
2002,
and
we
have
continued
to
create
innovative
and
safe
solutions
for
bathing.
In
fiscal
2017,
we
expect
to
launch
our
redesigned
Lil'
Luxuries
Whirlpool
and
Spa
platforms
and
Right
Height
Tub
platform.
The
Right
Height
Tub,
introduced
in
fiscal
2010,
was
the
first
infant
bath
tub
that
elevated
baby
for
parent
comfort
and
convenience.
Our
redesigned
Right
Height
Tub
will
offer
that
same
key
benefit
with
a
modern
sleek
design,
larger
newborn
bath
sling
and
integrated
non-slip
smart
hump
for
a
more
relaxed
bathing
experience
for
both
parent
and
baby.

Nursery

Our
nursery
line
includes
our
core
brand
of
SwaddleMe®
wearable
blankets
as
well
as
our
expanded
line
of
safe
sleep
products
such
as
sleep
aides
and
soothers.
Acquired
in
2008,
SwaddleMe®
continues
to
be
a
brand
synonymous
with
infant
safe
sleep.
In
fiscal
2015,
we
refreshed
this
popular
line
which
allowed
us
to
expand
our
channels
of
trade
as
well
as
our
selection
of
product
in
this
growing
category.
In
fiscal
2016,
we
introduced
the
By
Your
Side
Sleeper
which
provided
a
safe
co-sleeping
solution
for
parents.
In
fiscal
2017,
we
expect
to
introduce
the
By
Your
Bed
Sleeper,
which

Table
of
Contents

is
a
raised
bassinet
with
an
incline
option
that
fits
snug
alongside
parents
bed.
Both
sleepers
promote
room
sharing
which
is
now
recommended
by
the
American
Academy
of
Pediatrics
(AAP).

Baby Gear

Since
the
successful
launch
of
our
3D
lite™
Convenience
Stroller
in
fiscal
2014,
we
have
continued
to
expand
our
3D
line
of
lightweight,
affordable,
feature
rich
strollers.
In
fiscal
2015
we
included
the
3D-one™
and
3D
flip™
and
in
fiscal
2016,
we
launched
our
first
dual
stroller,
the
3Dtwo™.
In
2017,
we
expect
to
continue
to
deliver
revolutionary
convenience
features
with
the
introduction
of
the
3D
tote™
and
3D
trek.
These
fully
featured
strollers
were
developed
based
upon
consumer
demand
for
more
storage,
ability
to
hold
diaper
bags
and
adaptability
for
infant
car
seats.
With
a
unique
geometric
design,
these
platforms
include
diaper
bag
clips
for
hanging
a
diaper
bag
on
the
handles
without
tipping.
These
strollers
will
also
offer
an
extra
large
storage
basket,
pockets
and
loops
for
storing
all
your
baby
supplies.
We
will
be
launching
a
marketing
campaign
in
early
2017
to
showcase
all
platforms
within
the
3D
line:
3D
lite™,
3D-one™,
3D
flip™,
3D
two™,
3D
tote™,
and
3D
trek.

Our
Pop
'n
Play
Portable
Playard
was
introduced
in
fiscal
2014,
driven
from
consumer
insights
on
their
"on-the-go"
lifestyles.
Compact,
foldable,
lightweight
and
portable,
the
Pop
'n
Play
Portable
Playard
has
been
well
received.
In
fiscal
2015,
we
expanded
the
line
to
include
a
portable
booster,
high
chair,
and
entertainer
and
launched
a
new
sub-brand
for
the
collection,
POP
(portable
on-the-go
products).
In
2017,
we
expect
the
POP
line
of
products
to
be
carried
by
all
our
major
retail
partners.

Feeding Products

We
acquired
the
Born
Free®
brand
in
2011
to
provide
calm,
safe
feeding
solutions.
The
premium
Born
Free®
Bottle
continues
to
be
the
core
product
in
the
feeding
category
that
has
evolved
to
include
pacifiers,
drinking
cups,
bibs,
and
electronics.
In
the
first
quarter
of
fiscal
2016,
we
launched
a
revolutionary
new
bottle,
Breeze™,
which
we
believe
features
the
only
2
piece
design
bottle
in
the
marketplace
today.

Product
Development
and
Design

Innovation
drives
our
product
development,
a
critical
element
of
our
strategy.
We
strive
to
produce
proprietary
products
that
offer
distinctive
benefits,
are
visually
appealing,
and
provide
safe,
thoughtful
solutions
to
the
consumer.
Our
retail
customers
are
strategically
motivated
to
buy
innovative
products
to
provide
differentiation
from
their
competitors.

We
design
the
majority
of
our
products
at
our
Rhode
Island
headquarters,
leveraging
our
internal
product
development
teams.
We
also
have
development
efforts
in
our
China
and
United
Kingdom
offices.
In
addition
to
new
product
development,
we
continuously
look
for
ways
to
improve
upon
existing
products
based
on
consumer
insights,
with
a
strong
focus
on
the
end-user
experience
and
product
safety.

We
engage
in
market
research
and
test
marketing
to
evaluate
consumer
reactions
to
our
products,
both
pre-
and
post-production.
Our
product
development
team
and
sales
force
are
essential
in
researching
consumer
buying
trends
and
analyzing
information
from
retail
stores,
customer
surveys,
focus
groups,
on-line
surveys,
industry
experts
and
vendor
recommendations.
We
continually
evaluate
our
products
to
determine
whether
they
should
be
upgraded,
modified,
or
replaced.

Suppliers
and
Manufacturing

The
majority
of
our
products
are
manufactured
in
Asia
(primarily
China).
We
also
use
several
manufacturers
in
the
United
States
for
certain
injection-molded
products,
including
bath
tubs,
potty

Table
of
Contents

seats
and
booster
seats,
which
together
accounted
for
approximately
17%
of
our
annual
sales
in
fiscal
2016.

We
are
not
dependent
on
any
one
supplier
as
we
use
many
different
manufacturers
and
own
the
tooling
and
molds
used
for
our
products.
Our
Hong
Kong
subsidiary
provides
us
with
an
Asian
sourcing
presence
and
the
ability
to
oversee
quality,
electronic
engineering
and
other
issues
that
may
arise
during
production.
Generally,
we
buy
finished
goods
from
manufacturers,
and
thus
do
not
directly
procure
raw
materials
for
product
manufacturing.
Historically,
we
have
not
experienced
any
significant
disruption
of
supply
as
a
result
of
raw
material
shortages
or
other
manufacturing
factors,
but
there
is
the
possibility
that
shortages
could
occur
in
the
future
based
on
a
variety
of
factors
beyond
our
control.

Asian-made
goods
are
shipped
on
the
water
to
our
warehouses,
which
typically
takes
four
weeks.
We
also
utilize
a
direct
import
program,
to
reduce
costs
and
shipping
time
to
certain
customers.
We
maintain
inventory
in
warehouses
located
in
the
United
States,
Canada,
United
Kingdom
and
Australia.
Most
of
our
customers
pick
up
their
goods
at
our
warehouses.
We
also
deliver
shipments
direct
to
customers
for
sales
from
our
own
website
and
our
consumer
replacements
program
as
well
as
for
other
smaller
retail
partners
that
request
such
arrangements.

Sales
and
Marketing

Our
products
are
largely
marketed
and
sold
through
our
own
direct
global
sales
force.
Our
e-commerce
sales
have
continued
to
grow
year
over
year,
which
is
consistent
with
increased
online
shopping
by
consumers.
We
have
also
established
a
strong
network
of
independent
manufacturers'
representatives
and
distributors
to
provide
sales
and
customer
service
support
for
the
remaining
portion
of
North
American
and
international
sales.

Sales
are
recognized
upon
transfer
of
title
to
our
customers
and
are
made
utilizing
standard
credit
terms
of
30
to
60
days.
We
generally
accept
returns
only
for
defective
merchandise.

Marketing,
promotion
and
consumer
engagement
are
key
elements
in
the
juvenile
products
industry.
Historically,
a
significant
percentage
of
our
promotional
spending
has
been
structured
in
coordination
with
our
large
retail
partners.
In
fiscal
2017,
we
expect
to
focus
our
marketing
efforts
on
building
brand
awareness,
promoting
our
best
selling
products
and
key
product
launches,
engaging
with
consumers
across
multiple
media
channels,
and
supporting
our
retail
partners
to
establish
brand
presence
both
in
store
and
online.
We
will
invest
in
our
brands
with
advertising
campaigns,
consumer
engagements
programs,
and
we
will
launch
our
new
consumer
ecommerce
website.
Overall,
we
are
strategically
positioning
ourselves
for
enhanced
future
growth
via
brand
awareness
and
brand
affinity.

Customer
service
is
a
critical
component
of
our
marketing
strategy.
We
maintain
an
internal
customer
service
department
that
responds
to
customer
inquiries,
investigates
and
resolves
issues,
and
is
available
to
assist
customers
and
consumers
during
business
hours.

Competition

The
juvenile
product
industry
has
many
participants,
none
of
which
has
dominant
market
share,
though
certain
companies
may
have
disproportionate
strength
in
specific
product
categories.
We
compete
with
a
number
of
different
companies
in
a
variety
of
categories,
although
there
is
no
single
company
that
competes
with
us
across
all
of
our
product
categories.
Our
largest
direct
competitors
are
Motorola®
(a
licensed
brand
of
Binatone
Communications
Group),
Munchkin®,
GB®
(Goodbaby
International
Holdings,
Ltd.),
Graco®
(a
subsidiary
of
Newell
Rubbermaid),
Chicco®,
Fisher-Price®
(a
subsidiary
of
Mattel,
Inc.),
and
Aden
&
Anais®

The
primary
method
of
competition
in
the
industry
consists
of
brand
positioning,
product
innovation,
quality,
price,
and
timely
distribution.
Our
competitive
strengths
include
our
ability
to

Table
of
Contents

develop
innovative
new
products,
speed
to
market,
our
relationships
with
major
retailers,
and
the
quality
and
pricing
of
our
products.

Intellectual
Property

We
rely
on
a
combination
of
patents,
licenses
and
trade
secrets
to
protect
our
intellectual
property.
Our
current
patents
include
various
design
features
related
to
safety
gates,
bouncers,
and
bathers,
with
several
other
patents
under
review
by
the
United
States
Patent
and
Trademark
Office
(USPTO).
These
patents
expire
at
various
times
during
the
next
20
years.
We
also
have
license
agreements
in
place
related
to
the
use
of
patented
technology
owned
by
third
parties
in
certain
of
our
products.
In
certain
circumstances,
we
will
partner
with
third
parties
to
develop
proprietary
products.

Customers

Sales
to
the
Company's
top
seven
customers
together
comprised
more
than
75%
of
our
sales
in
fiscal
2016
and
73%
of
our
sales
in
fiscal
2015.
Of
these
customers,
four
generated
more
than
10%
of
sales
for
fiscal
2016:
Babies
R
Us/Toys
R
Us
(20%),
Amazon.com
(20%),
Walmart
(15%),
and
Target
(11%).
In
fiscal
2015,
four
customers
generated
more
than
10%
of
sales:
Babies
R
Us/Toys
R
Us
(23%),
Walmart
(14%),
Amazon.com
(14%)
and
Target
(12%).

We
have
no
long-term
contracts
with
these
customers,
and
as
a
result,
our
success
depends
heavily
on
our
customers'
willingness
to
purchase
and
provide
shelf
space
for
our
products.

Seasonality

We
do
not
experience
significant
variations
in
seasonal
demand
for
our
products.
However,
we
expect
to
generate
higher
than
average
volumes
for
the
initial
shipment
of
new
products
which
typically
includes
enough
inventory
to
fill
each
store
plus
additional
amounts
to
be
kept
at
the
customer's
distribution
center.
The
timing
of
these
initial
shipments
varies
by
customer
depending
on
when
they
finalize
store
layouts
for
the
upcoming
year
and
whether
there
are
any
mid-year
product
introductions.

Geographic
Regions

North
America
accounted
for
approximately
92%
and
91%
of
our
total
net
sales
in
fiscal
2016
and
fiscal
2015,
respectively.
We
maintain
sales,
marketing,
and
distribution
offices
in
Canada
and
England,
which
services
the
United
Kingdom
and
other
parts
of
Europe.
We
also
maintain
a
product
development,
engineering
and
quality
assurance
office
in
Hong
Kong.

Regulatory
Matters

Each
of
our
products
is
designed
to
comply
with
all
applicable
mandatory,
voluntary
and
industry
safety,
labeling,
and
marketing
standards.
In
the
United
States,
these
safety
standards
are
promulgated
by
federal,
state
and
independent
agencies
such
as
the
US
Consumer
Product
Safety
Commission,
ASTM,
the
Juvenile
Products
Manufacturers
Association,
the
Federal
Communications
Commission,
the
Food
and
Drug
Administration,
the
Federal
Trade
Commission,
and
various
states
Attorney
General
and
state
regulatory
agencies.
All
of
our
products
are
independently
tested
by
third
party
laboratories
accredited
by
the
Consumer
Product
Safety
Commission,
to
verify
compliance
to
applicable
safety
standards.
A
similar
approach
is
used
to
design
and
test
products
sold
internationally.

Insurance

We
carry
product
liability
insurance
that
provides
us
with
$15
million
coverage
with
a
minimal
deductible.
We
consult
with
our
insurers
to
ascertain
appropriate
liability
coverage
for
our
product
mix.
We
believe
our
current
coverage
is
adequate
for
our
existing
business
and
will
continue
to
evaluate
our
coverage
in
the
future
in
line
with
our
expanding
sales
and
product
breadth.

Table
of
Contents

Employees

As
of
December
31,
2016,
we
had
209
employees,
202
who
were
full
time
employees,
and
108
of
whom
work
in
our
headquarters.

Available
Information

The
Company
is
incorporated
under
the
laws
of
the
State
of
Delaware.
Our
principal
executive
offices
are
located
at
1275
Park
East
Drive,
Woonsocket,
Rhode
Island
02895,
and
our
telephone
number
is
(401)
671
6550.

We
maintain
our
corporate
website
at
www.summerinfant.com
and
we
make
available,
free
of
charge,
through
this
website
our
annual
report
on
Form
10-K,
quarterly
reports
on
Form
10-Q,
current
reports
on
Form
8-K,
and
amendments
to
those
reports
that
we
file
with,
or
furnish
to,
the
Securities
and
Exchange
Commission
("SEC"),
as
soon
as
reasonably
practicable
after
we
electronically
file
that
material
with,
or
furnish
it
to,
the
SEC.
You
may
also
read
and
copy
any
material
filed
by
us
with
the
SEC
at
the
SEC's
Public
Reference
Room
at
100
F
Street,
N.E.,
Washington,
D.C.
20549,
and
you
may
obtain
information
on
the
operation
of
the
Public
Reference
Room
by
calling
the
SEC
in
the
U.S.
at
1-800-SEC-0330.
In
addition,
the
SEC
maintains
an
Internet
website,
www.sec.gov,
that
contains
reports,
proxy
and
information
statements
and
other
information
that
we
file
electronically
with
the
SEC.
Our
website
also
includes
corporate
governance
information,
including
our
Code
of
Ethics
and
our
Board
committee
charters.
The
information
contained
on
our
website
does
not
constitute
a
part
of
this
report.

Item
1A.

Risk
Factors

If
any
of
the
events
or
circumstances
described
in
the
following
risks
actually
occur,
our
business,
financial
condition
or
results
of
operations
could
be
materially
adversely
affected
and
the
trading
price
of
our
common
stock
could
decline.

The concentration of our business with certain retail customers means that economic difficulties or changes in the purchasing policies of these customers
could have a significant impact on our business and operating results.

In
fiscal
2016,
sales
to
Babies
R
Us/Toys
R
Us,
Amazon.com,
Wal-Mart
and
Target
accounted
for
66%
of
our
total
sales.
We
do
not
have
long-term
commitments
or
contracts
with
any
of
our
retail
customers,
and
retailers
make
purchases
by
delivering
one-time
purchase
orders.
As
such,
any
customer
could
periodically
renegotiate
the
terms
of
our
business
relationship
at
any
time,
which
might
include
reducing
overall
purchases
of
our
products,
altering
pricing,
reducing
the
number
and
variety
of
our
products
carried
and
the
shelf
space
allotted
for
our
products,
and
reducing
cooperative
advertising
or
promotion
support.
Because
of
the
current
concentration
of
our
business
with
these
retail
customers,
a
change
in
our
relationship
with
any
of
these
customers
could
adversely
affect
our
results
of
operations
and
financial
condition.
Furthermore,
the
bankruptcy
or
other
lack
of
success
of
one
or
more
of
our
significant
retail
customers
could
negatively
impact
our
revenues
and
profitability.

Liquidity problems or bankruptcy of our key retail customers could have a significant adverse effect on our business, financial condition, and results of
operations.

The
sales
we
make
to
customers
are
typically
made
on
credit
without
collateral.
There
is
a
risk
that
key
customers
will
not
pay
or
that
payment
may
be
delayed,
because
of
bankruptcy,
contraction
of
credit
availability
to
such
customers,
weak
retail
sales,
or
other
factors
beyond
our
control,
which
could
increase
our
exposure
to
losses
from
bad
debts.
In
addition,
if
key
customers
were
to
cease
doing
business
as
a
result
of
bankruptcy,
or
significantly
reduce
the
number
of
stores
operated,
it
could
have
a
significant
adverse
effect
on
our
business,
financial
condition,
and
results
of
operations.

Table
of
Contents

Our ability to grow and compete will be harmed if we do not successfully satisfy consumer preferences, enhance existing products, develop and introduce new
products, successfully market and achieve acceptance of those products.

Our
business
and
operating
results
depend
largely
upon
providing
our
customers
products
that
appeal
to
the
end
user.
Consumer
preferences,
particularly
among
parents
whom
are
often
the
end
purchasers
of
our
products,
are
constantly
changing.
Our
success
largely
depends
on
our
ability
to
identify
emerging
trends
in
the
infant
and
juvenile
health,
safety
and
wellness
marketplace,
and
to
design
quality
products
that
address
consumer
preferences
and
prove
safe
and
cost
effective.
Our
product
offerings
compete
with
those
of
many
other
larger
companies.
Many
of
these
companies
enjoy
broader
brand
recognition
and
have
significant
distribution
channel
relationships
in
place,
and
as
a
result,
our
market
position
is
always
at
risk.

Our
ability
to
maintain
and
increase
our
current
market
share
will
depend
upon
our
ability
to
anticipate
changes
in
consumer
preferences
and
satisfy
these
preferences,
enhance
existing
products,
develop
and
introduce
new
products,
grow
existing
distribution
channels
and
seek
additional
distribution
channels
for
these
products,
successfully
market
the
products
and,
ultimately,
achieve
consumer
acceptance
of
these
products.
A
failure
to
achieve
market
acceptance
of
our
products
would
harm
our
ability
to
grow
our
business.

An inability to develop and introduce planned new products or product lines in a timely and cost-effective manner may damage our business.

In
developing
new
products
and
product
lines,
we
have
anticipated
dates
for
the
associated
product
introductions.
When
we
state
that
we
will
introduce,
or
anticipate
introducing,
a
particular
product
or
product
line
at
a
certain
time
in
the
future,
those
expectations
are
based
on
completing
the
associated
development,
implementation,
marketing
work,
and
manufacturing
in
accordance
with
our
currently
anticipated
development
schedule.
The
risk
is
also
heightened
by
the
sophistication
of
certain
products
we
are
designing,
in
terms
of
combining
digital
and
analog
technologies,
utilizing
digital
media
to
a
greater
degree,
and
providing
greater
innovation
and
product
differentiation.
Unforeseen
delays
or
difficulties
in
the
development
process,
significant
increases
in
the
planned
cost
of
development,
changes
in
anticipated
consumer
demand
for
our
products,
and
delays
in
the
manufacturing
process
may
cause
the
introduction
date
for
products
to
be
later
than
anticipated
or,
in
some
situations,
may
cause
a
product
introduction
to
be
discontinued.
If
we
are
unable
to
manufacture,
source
and
ship
new
products
in
a
timely
manner
and
on
a
cost
effective
basis
to
meet
constantly
changing
customer
demand,
it
could
have
a
adverse
effect
on
our
business
and
operating
results.

If we do not maintain sufficient inventory levels or if we are unable to deliver our products to our customers in sufficient quantities, or on a timely basis, or if
our inventory levels are too high, our operating results will be adversely affected.

Our
business
places
stringent
demands
on
our
inventory
forecasting
and
production
planning
processes.
This
inventory
management
approach
may
be
particularly
challenging
when
combined
with
"just-in-time"
inventory
management
systems
commonly
used
by
retailers
to
minimize
their
inventory
levels.
If
we
fail
to
meet
tight
shipping
schedules,
we
could
damage
our
relationships
with
retailers,
increase
our
shipping
costs
or
cause
sales
opportunities
to
be
delayed
or
lost.
To
deliver
our
merchandise
on
a
timely
basis,
we
need
to
maintain
adequate
inventory
levels
of
the
desired
products.
This
approach
requires
us
to
begin
to
place
orders
for
components
for
certain
products
up
to
a
year
in
advance,
and
we
procure
a
significant
amount
of
product
months
in
advance
of
certain
time
periods.
At
the
time
we
place
factory
orders,
we
may
not
have
firm
orders
from
retailers
or
a
complete
understanding
of
what
consumer
demand
for
those
products
will
be.
If
our
inventory
forecasting
processes
are
not
accurate,
it
may
result
in
inventory
levels
in
excess
of
the
levels
forecasted
and
we
may
not
have
sufficient
space
at
our
main
distribution
center
to
accommodate
excess
inventory.
As
a

Table
of
Contents

result,
we
could
be
required
to
record
inventory
write-downs
for
excess
and
obsolete
inventory,
and/or
incur
additional
expense
for
storage
of
excess
inventory,
which
would
adversely
affect
our
operating
results.
In
addition,
if
our
processes
result
in
our
inventory
levels
being
too
low
to
meet
customer
demand,
we
may
lose
sales,
which
would
adversely
affect
our
operating
results.

We rely on external financing to help fund our operations. Covenants in our credit facility may affect our liquidity or limit our ability to complete acquisitions,
incur debt, make investments, sell assets, merge or complete other significant transactions.

To
meet
our
working
capital
needs,
we
rely
on
cash
generated
from
operations
and
our
credit
facility
for
working
capital.
Our
credit
facility
agreement
includes
certain
covenants
that
place
limitations
on
or
restrict
a
number
of
our
activities,
including
our
ability
to:

•

incur
additional
debt;

create
liens
on
our
assets
or
make
guarantees;

make
certain
investments
or
loans;

pay
dividends
or
make
distributions;

dispose
of
or
sell
assets;
or

enter
into
a
merger
or
similar
transaction.

These
restrictive
covenants
may
limit
our
ability
to
engage
in
acts
that
may
be
in
our
best
long-term
interests.
Our
performance
and
financial
condition
may
not
meet
our
original
expectations
at
the
time
we
entered
into
the
credit
facility,
causing
us
to
fail
to
meet
such
financial
covenants.
Non-compliance
with
the
covenants
in
our
credit
facility
could
result
in
us
being
unable
to
utilize
borrowings
under
our
credit
facility,
a
circumstance
which
potentially
could
occur
when
operating
shortfalls
would
most
require
supplementary
borrowings
to
enable
us
to
continue
to
fund
our
operations.
There
is
no
guarantee
that
we
would
be
able
to
refinance
debt
on
favorable
terms,
or
at
all.

Deviations from expected results of operations and expected cash requirements could result in a failure to meet financial covenants under our credit facility,
which would adversely affect our financial condition and results of operations.

We
are
subject
to
financial
covenants
under
our
credit
facility
agreement,
including
fixed
charge
coverage
ratio
and
certain
quarterly
leverage.
Any
significant
deviation
in
actual
results
from
our
expected
results
of
operations,
or
in
the
timing
of
material
expenditures
from
current
estimates,
any
significant
business
or
product
acquisitions,
or
other
significant
unanticipated
expenses
could
result
in
us
not
meeting
these
financial
covenants.
If
we
are
unable
to
generate
sufficient
available
cash
flow
to
service
our
outstanding
debt,
then
we
would
need
to
seek
an
amendment
to
our
credit
facility
agreement
or
refinance
such
debt
or
face
default.
In
such
circumstances,
our
lenders
could
declare
a
default,
which
would
have
a
material
adverse
effect
on
our
financial
condition
and
results
of
operations.
If
access
to
our
credit
facility
is
limited
or
terminated,
our
liquidity
would
be
constrained,
affecting
our
operations
and
growth
prospects,
and
we
would
need
to
seek
additional
equity
or
debt
financing.
There
is
no
assurance
that
such
financing
would
be
available
on
acceptable
terms
or
at
all.
Furthermore,
any
equity
financing
may
result
in
dilution
to
existing
stockholders
and
any
debt
financing
may
include
restrictive
covenants
that
could
impede
our
ability
to
effectively
operate
and
grow
our
business
in
the
future.

The intense competition in our markets could reduce our net sales and profitability.

We
operate
in
a
highly
competitive
market
and
compete
with
several
large
domestic
and
foreign
companies
and
with
other
producers
of
infant
and
juvenile
products.
Many
of
our
competitors
have

Table
of
Contents

longer
operating
histories,
greater
brand
recognition,
and
greater
financial,
technical,
marketing
and
other
resources
than
us.
In
addition,
we
may
face
competition
from
new
participants
in
our
markets
because
the
infant
and
juvenile
product
industry
has
low
barriers
to
entry.
We
experience
price
competition
for
our
products
and
competition
for
shelf
space
at
retailers,
all
of
which
may
increase
in
the
future.
If
we
cannot
compete
successfully
in
the
future,
our
net
sales
and
profitability
will
likely
decline.

Because we rely on foreign suppliers and we sell and expect to expand in foreign markets, we are subject to numerous risks associated with international
business that could increase our costs or disrupt the supply of our products, resulting in a negative impact on our business and financial condition.

While
the
majority
of
our
sales
continue
to
be
in
North
America,
we
operate
facilities
and
sell
products
in
countries
outside
the
United
States
and
expect
to
grow
our
international
presence.
Additionally,
as
we
discuss
below,
we
utilize
third-party
suppliers
and
manufacturers
located
in
Asia
to
produce
a
majority
of
our
products.
These
sales
and
manufacturing
operations,
including
operations
in
emerging
markets
that
we
have
entered,
may
enter,
or
may
increase
our
presence
in,
are
subject
to
the
risks
associated
with
international
operations,
including:

•

economic
and
political
instability;

restrictive
actions
by
foreign
governments;

greater
difficulty
enforcing
intellectual
property
rights
and
weaker
laws
protecting
intellectual
property
rights;

trade
restrictions;

work
stoppages
or
other
changes
in
labor
conditions;

reduction
in
business
activity
in
some
parts
of
the
world;

currency
fluctuations
and
devaluations;

changes
in
import
duties
or
import
or
export
restrictions;

compliance
with
anti-bribery
and
anti-corruption
regulations;

untimely
shipping
of
product
and
unloading
of
product
through
West
Coast
ports,
as
well
as
untimely
truck
delivery
to
our
warehouses;

complications
in
complying
with
the
laws
and
policies
of
the
United
States
affecting
the
importation
of
goods,
including
duties,
quotas,
and
taxes;

limitations
on
repatriation
of
foreign
earnings;
and

complications
in
complying
with
foreign
tax
laws.

Recent
uncertainty
with
respect
to
potential
changes
to
the
U.S.
tax,
tariff,
and
import/export
regulations
may
have
a
negative
effect
on
our
results
of
operations.
In
particular,
proposals
have
been
made
to
reform
the
tax
code
in
ways
that
could
increase
the
amount
of
tax
paid
on
imported
goods.
In
addition,
the
recent
presidential
and
congressional
elections
have
created
significant
uncertainty
about
the
future
relationship
between
the
United
States
and
China,
including
with
respect
to
trade
policies,
treaties,
government
regulations,
and
tariffs,
all
of
which
could
greatly
increase
the
cost
of
Chinese
imports.
Due
to
our
significant
manufacturing
presence
in
China,
from
which
we
import
a
majority
of
our
products,
the
occurrence
of
such
tax
reforms
or
trade
restrictions
could
significantly
impact
our
business
in
an
adverse
manner.

As
a
result
of
our
international
operations,
we
are
subject
to
the
U.S.
Foreign
Corrupt
Practices
Act
and
similar
foreign
anti-corruption
and
anti-bribery
laws.
Recent
years
have
seen
a
substantial

Table
of
Contents

increase
in
the
global
enforcement
of
anti-corruption
laws,
with
more
frequent
voluntary
self-disclosures
by
companies,
aggressive
investigations
and
enforcement
proceedings
by
both
the
U.S.
Department
of
Justice
and
the
SEC
resulting
in
record
fines
and
penalties,
increased
enforcement
activity
by
non-U.S.
regulators,
and
increases
in
criminal
and
civil
proceedings
brought
against
companies
and
individuals.
Complying
with
these
regulations
imposes
costs
on
us
which
can
reduce
our
profitability
and
our
failure
to
successfully
comply
with
any
such
legal
requirements
could
subject
us
to
monetary
liabilities
and
other
sanctions
that
could
further
harm
our
business
and
financial
condition.

Also,
because
we
generate
some
of
our
revenue
outside
the
United
States
but
report
our
financial
results
in
U.S.
dollars,
our
financial
results
are
impacted
by
fluctuations
in
foreign
currency
exchange
rates.
If
the
U.S.
dollar
is
strong
against
foreign
currencies,
our
translation
of
foreign
currency
denominated
revenue
or
expense
could
result
in
lower
U.S.
dollar
denominated
net
revenue
and
expense.

We rely on suppliers in Asia to manufacture the majority of our products, and any adverse change in our relationship with our suppliers could harm our
business.

We
rely
on
numerous
third-party
suppliers
located
in
Asia
for
the
manufacture
of
most
of
our
products.
While
we
believe
that
alternative
suppliers
could
be
located
if
required,
our
product
sourcing
could
be
affected
if
any
of
these
suppliers
do
not
continue
to
manufacture
our
products
in
required
quantities
or
at
all,
or
with
the
required
levels
of
quality.
We
do
not
have
any
long-term
supply
contracts
with
our
foreign
suppliers;
rather,
we
enter
into
purchase
orders
with
these
suppliers.
In
addition,
difficulties
encountered
by
these
suppliers,
such
as
fire,
accident,
natural
disasters,
outbreaks
of
contagious
diseases,
or
political
unrest,
could
halt
or
disrupt
production
at
the
affected
locations,
resulting
in
delay
or
cancellation
of
orders.
Any
of
these
events
could
result
in
delayed
deliveries
by
us
of
our
products,
causing
reduced
sales
and
harm
to
our
reputation
and
brand
name.

Increases in the cost of materials or labor used to manufacture our products could decrease our profitability and therefore negatively impact our business and
financial condition.

Because
our
products
are
manufactured
by
third-party
suppliers,
we
do
not
directly
purchase
the
materials
used
in
the
manufacture
of
our
products.
However,
the
prices
paid
by
us
to
these
suppliers
could
increase
if
raw
materials,
labor,
or
other
costs
increase.
If
we
cannot
pass
these
increases
along
to
our
customers,
our
profitability
will
be
adversely
affected.

Earthquakes or other catastrophic events out of our control may damage our primary distribution facility and harm our results of operations.

Our
primary
distribution
facility
is
located
in
Riverside,
California,
near
major
earthquake
faults.
A
catastrophic
event,
such
as
an
earthquake,
flood,
fire,
or
other
natural
or
manmade
disaster,
could
impact
operations
at
this
facility
and
impair
distribution
of
our
products,
damage
inventory,
interrupt
critical
functions,
or
otherwise
affect
our
business
negatively,
harming
our
results
of
operations.

Intellectual property claims relating to our products could increase our costs and adversely affect our business.

We
have,
from
time
to
time,
received
claims
of
alleged
infringement
of
patents
relating
to
certain
of
our
products,
and
we
may
face
similar
claims
in
the
future.
These
claims
related
to
alleged
patent
infringement
and
were
primarily
the
result
of
newly-issued
patents
that
were
not
in
force
when
we
initially
brought
the
subject
products
to
market.
The
defense
of
intellectual
property
claims
can
be
costly
and
time
consuming,
even
in
circumstances
where
the
claim
is
without
merit.
We
may
be
required
to
pay
substantial
damages
or
settlement
costs
in
order
to
resolve
these
types
of
claims.
In
addition,
these
claims
could
materially
harm
our
brand
name,
reputation
and
operations.

Table
of
Contents

As a manufacturer of consumer products, we are subject to various government regulations and may be subject to additional regulations in the future, violation
of which could subject us to sanctions or otherwise harm our business. In addition, we could be the subject of future product liability suits, product recalls, and
other claims relating to the use of our products, which could harm our business.

Because
we
produce
infant
and
juvenile
health,
safety
and
wellness
consumer
products,
we
are
subject
to
significant
government
regulation
and
face
product
liability
risks
relating
to
consumer
use
of
our
products.
We
must
comply
with
a
variety
of
state
and
federal
product
safety
and
product
testing
regulations.
In
particular,
our
products
are
subject
to
the
Consumer
Product
Safety
Act,
the
Federal
Hazardous
Substances
Act
("FHSA")
and
the
Consumer
Product
Safety
Improvement
Act
("CPSIA"),
which
empower
the
Consumer
Product
Safety
Commission
(the
"CPSC"),
to
take
action
against
hazards
presented
by
consumer
products.
With
expanded
authority
under
the
CPSIA,
the
CPSC
has
and
continues
to
adopt
new
regulations
for
safety
and
products
testing
that
apply
to
our
products.
These
new
regulations
have
or
likely
will
significantly
increase
the
regulatory
requirements
governing
the
manufacture
and
sale
of
children's
products
and
increase
the
potential
penalties
for
noncompliance
with
applicable
regulations.
The
CPSC
has
the
authority
to
exclude
from
the
market
and
recall
certain
consumer
products
that
are
found
to
be
potentially
hazardous.
Consumer
product
safety
laws
also
exist
in
some
states
and
cities
within
the
United
States
and
in
Canada
and
Europe,
as
well
as
certain
other
countries.
If
we
fail
to
comply
with
these
laws
and
regulations,
or
if
we
face
product
liability
claims,
we
may
be
subject
to
damage
awards
or
settlement
costs
that
exceed
any
available
insurance
coverage
and
we
may
incur
significant
costs
in
complying
with
recall
requirements.

We
maintain
a
quality
control
program
to
help
ensure
compliance
with
applicable
product
safety
requirements.
Nonetheless,
we
have
experienced,
and
may
in
the
future
experience,
issues
in
products
that
may
lead
to
product
liability,
personal
injury
or
property
damage
claims,
recalls,
withdrawals,
replacements
of
products,
or
regulatory
actions
by
governmental
authorities.
A
product
recall
could
have
a
material
adverse
effect
on
our
results
of
operations
and
financial
condition,
depending
on
the
product
affected
by
the
recall
and
the
extent
of
the
recall
efforts
required.
A
product
recall
could
also
negatively
affect
our
reputation
and
the
sales
of
other
products.
Furthermore,
concerns
about
potential
liability
may
lead
us
to
recall
voluntarily
selected
products.
Complying
with
existing
or
any
such
additional
regulations
or
requirements
could
impose
increased
costs
on
our
business
operations,
decrease
sales,
increase
legal
fees
and
other
costs,
and
put
us
at
a
competitive
disadvantage
compared
to
other
manufacturers
not
affected
by
similar
issues
with
products,
any
of
which
could
have
a
significant
adverse
effect
on
our
financial
condition.
Similarly,
increased
penalties
for
non-compliance
could
subject
us
to
greater
expense
in
the
event
any
of
our
products
were
found
to
not
comply
with
such
regulations.

In
addition
to
product
liability
risks
relating
to
the
use
by
consumers
of
our
products,
we
also
must
comply
with
a
variety
of
state
and
federal
laws
and
regulations
which
prohibits
unfair
or
deceptive
trade
practices,
including
dissemination
of
false
or
misleading
advertising.
While
we
take
steps
we
believe
are
necessary
to
comply
with
these
laws
and
regulations,
there
can
be
no
assurance
that
we
will
always
be
in
compliance.
Compliance
with
these
various
laws
and
regulations
could
impose
significant
costs
on
our
business
if
we
fail
to
comply,
and
could
result
in
monetary
liabilities
and
other
penalties
and
lead
to
significant
negative
media
attention
and
consumer
dissatisfaction,
which
could
have
a
significant
adverse
effect
on
our
business,
financial
condition
and
results
of
operations.

We are dependent on key personnel, and our ability to grow and compete in our industry will be harmed if we do not retain the continued services of our key
personnel, or we fail to identify, hire, and retain additional qualified personnel.

Our
success
depends
on
the
efforts
of
our
senior
management
team
and
other
key
personnel.
Although
we
believe
that
we
have
a
strong
management
team,
the
loss
of
services
of
members
of
our
senior
management
team,
who
have
substantial
experience
in
the
infant
and
juvenile
health,
safety
and

Table
of
Contents

wellness
markets,
could
have
an
adverse
effect
on
our
business.
In
addition,
if
we
expect
to
grow
our
operations,
it
will
be
necessary
for
us
to
attract
and
retain
additional
qualified
personnel.
The
market
for
qualified
and
talented
product
development
personnel
in
the
consumer
goods
market,
and
specifically
in
the
infant
and
juvenile
health,
safety
and
wellness
products
market,
is
intensely
competitive.
If
we
are
unable
to
attract
or
retain
qualified
personnel
as
needed,
the
growth
of
our
operations
could
be
slowed
or
hampered.

We may have exposure to greater than anticipated tax liabilities, that, if not identified, could negatively affect our consolidated operating results and net worth.

Our
provision
for
income
taxes
is
subject
to
volatility
and
could
be
adversely
affected
by
nondeductible
equity-based
compensation,
earnings
being
lower
than
anticipated
in
jurisdictions
where
we
have
lower
statutory
rates
and
being
higher
than
anticipated
in
jurisdictions
where
we
have
higher
statutory
rates,
transfer
pricing
adjustments,
not
meeting
the
terms
and
conditions
of
tax
holidays
or
incentives,
changes
in
the
valuation
of
our
deferred
tax
assets
and
liabilities,
changes
in
actual
results
versus
our
estimates,
or
changes
in
tax
laws,
regulations,
accounting
principles
or
interpretations
thereof,
and
taxes
relating
to
deemed
dividends
resulting
from
foreign
guarantees
made
by
certain
of
our
foreign
subsidiaries.
In
addition,
like
other
companies,
we
may
be
subject
to
examination
of
our
income
tax
returns
by
the
U.S.
Internal
Revenue
Service
and
other
tax
authorities.
While
we
regularly
assess
the
likelihood
of
adverse
outcomes
from
such
examinations
and
the
adequacy
of
our
provision
for
income
taxes,
there
can
be
no
assurance
that
such
provision
is
sufficient
and
that
a
determination
by
a
tax
authority
will
not
have
an
adverse
effect
on
our
results
of
operations.

A material impairment in the carrying value of other intangible assets could negatively affect our consolidated results of operations and net worth.

A
portion
of
our
assets
are
intangible,
which
are
reviewed
on
an
annual
basis
and
whenever
events
and
changes
in
circumstances
indicate
that
the
carrying
amount
of
an
asset
may
not
be
recoverable.
If
the
carrying
value
of
these
assets
exceeds
the
current
fair
value,
the
asset
is
considered
impaired
and
is
reduced
to
fair
value,
resulting
in
a
non-cash
charge
to
earnings
during
the
period
in
which
any
impairment
is
determined.
If
we
make
changes
in
our
business
strategy,
our
future
operating
performance
was
to
fall
significantly
below
forecast
levels
or
if
external
conditions
adversely
affect
our
business
operations,
we
may
be
required
to
record
an
impairment
charge
for
intangibles,
which
would
lead
to
decreased
assets
and
reduced
net
operating
results
and
net
worth.
As
discussed
in
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Result
of
Operations
below,
we
recorded
an
impairment
charge
for
certain
indefinite-lived
intangible
assets
in
the
fourth
quarter
of
2016.
We
cannot
accurately
predict
the
amount
and
timing
of
any
future
impairment
of
assets.

We rely on information technology in our operations, and any material failure, inadequacy, interruption, or security failure of that technology could harm our
ability to effectively operate our business.

We
rely
on
information
technology
systems
across
our
operations,
including
for
management
of
our
supply
chain,
sale
and
delivery
of
our
products,
and
various
other
processes
and
transactions,
including
credit
card
processing
for
online
sales.
Our
ability
to
effectively
manage
our
business
and
coordinate
the
production,
distribution,
and
sale
of
our
products
depends
on
the
reliability
and
capacity
of
these
systems
and
in
some
instances,
third-party
service
providers.
The
failure
of
these
systems
to
operate
effectively
due
to
service
interruptions,
problems
with
transitioning
to
upgraded
or
replacement
systems,
or
a
breach
in
security
of
these
systems
could
cause
delays
in
product
sales
and
reduced
efficiency
of
our
operations,
loss
of
proprietary
data
or
customer
information,
and
capital
investments
could
be
required
to
remediate
the
problem.

Table
of
Contents

Our stock price has been and may continue to be volatile.

The
market
price
of
our
common
stock
has
been,
and
is
likely
to
continue
to
be,
volatile.
When
we
or
our
competitors
announce
new
products,
experience
quarterly
fluctuations
in
operating
results,
announce
strategic
relationships,
acquisitions
or
dispositions,
change
earnings
estimates,
publish
financial
results
or
other
material
news,
our
stock
price
is
often
affected.
The
volatility
of
our
stock
price
may
be
accentuated
during
periods
of
low
volume
trading,
which
may
require
a
stockholder
wishing
to
sell
a
large
number
of
shares
to
do
so
in
increments
over
time
to
mitigate
any
adverse
impact
of
the
sales
on
the
market
price
of
our
stock.

Anti-takeover provisions in our organizational documents and Delaware law may limit the ability of our stockholders to control our policies and effect a
change of control of our Company and may prevent attempts by our stockholders to replace or remove our current management, which may not be in your best
interests.

There
are
provisions
in
our
certificate
of
incorporation
and
bylaws
that
may
discourage
a
third
party
from
making
a
proposal
to
acquire
us,
even
if
some
of
our
stockholders
might
consider
the
proposal
to
be
in
their
best
interests,
and
may
prevent
attempts
by
our
stockholders
to
replace
or
remove
our
current
management.
These
provisions
in
our
certificate
of
incorporation
include
authorization
for
our
Board
of
Directors
to
issue
shares
of
preferred
stock
without
stockholder
approval
and
to
establish
the
preferences
and
rights
of
any
preferred
stock
issued,
and
to
issue
one
or
more
classes
or
series
of
preferred
stock
that
could
discourage
or
delay
a
tender
offer
or
change
in
control.
Our
bylaws
require
advance
written
notice
of
stockholder
proposals
and
director
nominations.

Additionally,
we
are
subject
to
Section
203
of
the
Delaware
General
Corporation
Law,
which,
in
general,
imposes
restrictions
upon
acquirers
of
15%
or
more
of
our
stock.
Finally,
the
Board
of
Directors
may
in
the
future
adopt
other
protective
measures,
such
as
a
stockholder
rights
plan,
which
could
delay,
deter
or
prevent
a
change
of
control.

Item
1B.

Unresolved
Staff
Comments

None.

Item
2.

Properties

We
are
headquartered
in
a
62,500
square
foot
facility
in
Woonsocket,
Rhode
Island.
We
have
a
lease
on
this
facility,
which
will
expire
in
2018,
and
includes
an
option
to
extend
the
lease
for
an
additional
three-year
term.
We
also
lease
small
offices
in
Arkansas,
Canada,
Israel,
the
United
Kingdom
and
Hong
Kong.

We
maintain
inventory
at
leased
warehouses
in
California
(approximately
460,000
square
feet),
Canada
(approximately
61,000
square
feet),
Australia
(third
party
warehouse)
and
the
United
Kingdom
(approximately
25,000
square
feet).
These
leases
expire
at
various
times
through
2021.

Item
3.

Legal
Proceedings

The
information
set
forth
in
Note
10,
Commitments
and
Contingencies,
under
Part
IV,
Item
15
of
this
Annual
Report
on
Form
10-K
is
incorporated
herein
by
reference.

Item
4.

Mine
Safety
Disclosures

Not
applicable.

Table
of
Contents

PART
II

Item
5.

Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
Equity
Securities

Price Range of Common Stock

Our
common
stock
is
traded
on
the
Nasdaq
Capital
Market
under
the
symbol
"SUMR".

The
high
and
low
sales
prices
for
our
common
stock
as
reported
on
the
Nasdaq
Capital
Market
for
the
periods
indicated
below
were
as
follows:

Fiscal
Year
Ended
January
2,
2016
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
Ended
December
31,
2016
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter

High

Low

$ 3.51
$ 2.51

$ 3.24
$ 2.00

$ 2.36
$ 1.20

$ 2.25
$ 1.56

$ 2.25
$ 1.43

$ 1.95
$ 1.22

$ 2.44
$ 1.61

$ 2.32
$ 1.65

Holders of Common Stock

As
of
February
20,
2017,
there
were
34
holders
of
record
of
our
common
stock.
Because
shares
of
our
common
stock
are
held
by
depositaries,
brokers
and
other
nominees,
the
number
of
beneficial
holders
of
our
shares
is
substantially
larger
than
the
number
of
record
holders.

Dividend Policy

There
have
been
no
cash
dividends
declared
on
our
common
stock
since
our
Company
was
formed.
Dividends
are
declared
at
the
sole
discretion
of
our
Board
of
Directors.
Our
intention
is
not
to
declare
cash
dividends
and
retain
all
cash
for
our
operations
and
future
acquisitions.
In
addition,
under
the
terms
of
our
current
credit
facilities,
we
are
restricted
in
our
ability
to
pay
cash
dividends
to
our
stockholders.

Issuer Repurchases of Equity Securities

None.

Recent Sales of Unregistered Securities

Not
applicable.

Item
6.

Selected
Consolidated
Financial
Data

Not
required.

Item
7.

Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations

The
following
discussion
is
intended
to
assist
in
the
assessment
of
significant
changes
and
trends
related
to
our
results
of
operations
and
financial
condition.
The
information
contained
in
this
section
has
been
derived
from
our
consolidated
financial
statements
and
should
be
read
together
with
our
consolidated
financial
statements
and
related
notes
included
elsewhere
in
this
report.
Readers
should

Table
of
Contents

also
review
and
consider
our
disclosures
under
the
heading
"Special
Note
Regarding
Forward-Looking
Statements"
describing
various
factors
that
could
affect
our
business
and
the
disclosures
under
the
heading
"Risk
Factors"
in
this
report.

Note
that
all
dollar
amounts
in
this
Item
7
are
in
thousands
of
U.S.
dollars,
except
share
and
per
share
data.

Overview

In
fiscal
2016,
we
continued
to
focus
on
our
core
product
offerings,
phasing
out
less
profitable
categories,
and
improving
our
balance
sheet
and
working
capital
positions.
Sales
for
the
year
ended
December
31,
2016
("fiscal
2016")
decreased
5.6%
compared
to
the
year
ended
January
2,
2016
("fiscal
2015")
due
predominantly
to
the
phasing
out
of
less
profitable
categories,
unfavorable
foreign
exchange
rates
and
lower
than
expected
sales
of
certain
products.
While
gross
profit
declined
0.3%
in
fiscal
2016
as
compared
to
fiscal
2015,
our
gross
margin
improved
by
170
basis
points.

General
and
administrative
expenses
decreased
10.5%
in
fiscal
2016
due
to
the
full
year
impact
of
cost
reduction
actions
implemented
in
the
latter
half
of
fiscal
2015
and
a
reduction
in
litigation
costs.
In
December
2016
we
settled
the
litigation
(see
Note
10
to
the
Consolidated
Financial
Statements)
and
therefore
expect
no
material
legal
costs
in
2017
related
to
the
litigation.

As
discussed
further
below,
following
our
annual
intangible
asset
impairment
analysis,
we
determined
that
the
estimated
fair
value
of
an
indefinite
lived
asset
was
lower
than
its
carrying
value,
and
we
recorded
a
non-cash
impairment
charge
of
$2,993
in
the
fourth
quarter
of
fiscal
2016.
In
addition,
we
deemed
the
remaining
value
of
the
indefinite
lived
asset
to
have
a
finite
life
subject
to
amortization
over
its
remaining
useful
life
of
fifteen
years.
As
a
result,
our
earnings
per
share
for
fiscal
2016
were
negatively
impacted
by
$0.12.
However,
the
impairment
charge
had
no
impact
on
our
day-to-day
operations
or
liquidity
and
will
not
result
in
any
future
cash
expenditures.

Primarily
as
a
result
of
the
impairment
charge,
the
litigation
costs,
and
lower
than
expected
sales
in
fiscal
2016,
we
ended
fiscal
2016
with
a
net
loss
of
$0.23
per
share
as
compared
to
a
net
loss
of
$0.47
per
share
in
fiscal
2015.

In
2017,
we
expect
to
continue
to
focus
on
our
core
categories
with
innovative
product
offerings,
strengthening
margins
and,
if
necessary,
phasing
out
less
profitable
products.
With
the
settlement
of
our
litigation
in
December
2016,
litigation
costs
are
expected
to
be
immaterial
in
2017
with
improved

Table
of
Contents

bottom
line
performance.
As
a
result,
we
expect
to
continue
to
strengthen
our
balance
sheet
and
our
working
capital
results.

Summary
of
Critical
Accounting
Policies
and
Estimates

The
following
summary
of
our
critical
accounting
policies
is
presented
to
assist
in
understanding
our
consolidated
financial
statements.
The
consolidated
financial
statements
and
notes
are
representations
of
our
management,
who
are
responsible
for
their
integrity
and
objectivity.
These
accounting
policies
conform
to
accounting
principles
generally
accepted
in
the
United
States
of
America
and
have
been
consistently
applied
in
the
preparation
of
the
consolidated
financial
statements.
Additional
information
about
our
accounting
policies
and
estimates
may
be
found
in
Note
1
to
our
consolidated
financial
statements
included
in
this
report.

We
make
certain
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
and
the
reported
amounts
of
revenues
and
expenses.
The
accounting
policies
described
below
are
those
we
consider
critical
in
preparing
our
financial
statements.
Some
of
these
policies
include
significant
estimates
made
by
management
using
information
available
at
the
time
the
estimates
were
made.
However,
these
estimates
could
change
materially
if
different
information
or
assumptions
were
used.

Revenue Recognition

We
record
revenue
when
all
of
the
following
occur:
persuasive
evidence
of
an
arrangement
exists,
product
delivery
has
occurred,
the
sales
price
to
the
customer
is
fixed
or
determinable
and
collectability
is
reasonably
assured.
Sales
are
recorded
net
of
provisions
for
returns
and
allowances,
cash
discounts
and
markdowns.
We
base
our
estimates
for
discounts,
returns
and
allowances
on
negotiated
customer
terms,
and
historical
experience.
These
estimates
are
subject
to
variability,
as
actual
deductions
taken
by
customers
may
be
different
from
the
estimates
recorded.
Customers
do
not
have
the
right
to
return
products
unless
the
products
are
defective.
We
record
a
reduction
of
sales
for
estimated
future
defective
product
deductions
based
on
contractual
terms
and
historical
experience.

Sales
incentives
or
other
consideration
given
by
us
to
customers
that
are
considered
adjustments
of
the
selling
price
of
products,
such
as
markdowns,
are
reflected
as
reductions
of
revenue.
Sales
incentives
and
other
consideration
that
represent
costs
incurred
by
us
for
assets
or
services
received,
such
as
the
appearance
of
our
products
in
a
customer's
national
circular
ad
(co-op
advertising),
are
reflected
as
selling
and
marketing
expenses
in
our
accompanying
statement
of
operations.

Trade Receivables

Trade
receivables
are
carried
at
their
outstanding
unpaid
principal
balances
reduced
by
an
allowance
for
doubtful
accounts.
The
Company
estimates
doubtful
accounts
based
on
historical
bad
debts,
factors
related
to
specific
customers'
ability
to
pay
and
current
economic
trends.
The
Company
writes
off
accounts
receivable
against
the
allowance
when
a
balance
is
determined
to
be
uncollectible.
Amounts
are
considered
to
be
uncollectable
based
upon
historical
experience
and
management's
evaluation
of
outstanding
accounts
receivable.

Allowance for Doubtful Accounts

The
allowance
for
doubtful
accounts
represents
adjustments
to
customer
trade
accounts
receivable
for
amounts
deemed
uncollectible.
The
allowance
for
doubtful
accounts
reduces
gross
trade
receivables
to
their
estimated
net
realizable
value.
The
allowance
is
based
on
our
assessment
of
the
business
environment,
customers'
financial
condition,
historical
trends,
customer
payment
practices,
receivable
aging
and
customer
disputes.
We
will
continue
to
proactively
review
our
credit
risks
and
adjust
customer
terms
to
reflect
the
current
environment.

Table
of
Contents

Inventory Valuation

Inventory
is
comprised
of
finished
goods
and
is
stated
at
the
lower
of
cost,
inclusive
of
freight
and
duty,
or
market
(net
realizable
value)
using
the
first-in,
first-out
(FIFO)
method.
Our
warehousing
costs
are
charged
to
expense
as
incurred.
We
regularly
review
slow-moving
and
excess
inventory,
and
write-down
inventories
as
appropriate.
Management
uses
estimates
to
record
write-downs
based
on
its
review
of
inventory
by
product
category,
including
length
of
time
on
hand
and
estimates
of
future
orders
for
each
product.
Changes
in
consumer
preferences,
as
well
as
demand
for
products,
customer
buying
patterns
and
inventory
management
could
impact
the
inventory
valuation.

Long-Lived Assets with Finite Lives

We
review
long-lived
assets
with
finite
lives
for
impairment
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying
amount
of
a
long-lived
asset
may
not
be
recoverable.
An
asset
is
considered
to
be
impaired
when
its
carrying
amount
exceeds
both
the
sum
of
the
undiscounted
future
net
cash
flows
expected
to
result
from
the
use
of
the
asset
and
its
eventual
disposition
and
the
assets'
fair
value.
Long-lived
assets
include
property
and
equipment
and
finite-lived
intangible
assets.
The
amount
of
impairment
loss,
if
any,
is
charged
by
us
to
current
operations.

Indefinite-Lived Intangible Assets

We
account
for
indefinite-lived
intangible
assets
in
accordance
with
accounting
guidance
that
requires
indefinite-lived
intangible
assets
be
tested
annually
for
impairment
and
more
frequently
if
events
or
changes
in
circumstances
indicate
that
the
asset
might
be
impaired.
Our
annual
impairment
testing
is
conducted
in
the
fourth
quarter
of
every
year.

We
test
indefinite-lived
intangible
assets
for
impairment
by
comparing
the
asset's
fair
value
to
its
carrying
amount.
If
the
fair
value
is
less
than
the
carrying
amount,
the
excess
of
the
carrying
amount
over
fair
value
is
recognized
as
an
impairment
charge
and
the
adjusted
carrying
amount
becomes
the
assets'
new
accounting
basis.

Management
also
evaluates
the
remaining
useful
life
of
an
intangible
asset
that
is
not
being
amortized
each
reporting
period
to
determine
whether
events
and
circumstances
continue
to
support
an
indefinite
useful
life.
If
an
intangible
asset
that
is
not
being
amortized
is
subsequently
determined
to
have
a
finite
useful
life,
it
is
amortized
prospectively
over
its
estimated
remaining
useful
life.

Income Taxes

Income
taxes
are
computed
using
the
asset
and
liability
method
of
accounting.
Under
the
asset
and
liability
method,
a
deferred
tax
asset
or
liability
is
recognized
for
estimated
future
tax
effects
attributable
to
temporary
differences
and
carry
forwards.
The
measurement
of
deferred
income
tax
assets
is
adjusted
by
a
valuation
allowance,
if
necessary,
to
recognize
future
tax
benefits
only
to
the
extent,
based
on
available
evidence;
it
is
more
likely
than
not
that
such
benefit
will
be
realized.

We
recognize
interest
and
penalties,
if
any,
related
to
uncertain
tax
positions
in
interest
expense.
Interest
and
penalties
related
to
uncertain
tax
positions
were
accrued
at
December
31,
2016.
All
audit
adjustments
have
been
recorded
without
significant
impact
on
our
results
of
operations.
On
a
global
basis,
the
open
tax
years
subject
to
examination
by
major
taxing
jurisdictions
in
which
we
operate
is
between
two
to
six
years.

Table
of
Contents

Results
of
Operations

The
following
table
presents
selected
condensed
consolidated
financial
information
for
our
Company
for
the
fiscal
years
ended
December
31,
2016
("fiscal
2016")
and
January
2,
2016
("fiscal
2015").

Year
ended

December
31,
2016

Year
Ended

January
2,
2016

Net
sales
Cost
of
goods
sold
Gross
profit
General
and
administrative
expenses
Selling
expenses
Depreciation
and
amortization
Impairment
of
intangible
assets
(Loss)
from
operations
Interest
expense,
net
(Benefit)
for
income
taxes
Net
loss

$ 194,328

132,577

61,751

41,292

15,269

5,011

2,993

(2,814)

2,682

(1,174)

(4,322)

100.0% $ 205,804

68.2%
143,854

61,950

31.8%

46,132

21.2%

17,780

7.9%

6,780

2.6%

—

1.5%

(8,742)

(1.4)%

3,333

1.4%

(3,424)

0.6%

(8,651)

(2.2)% $

100.0%
69.9%
30.1%
22.4%
8.6%
3.3%
0.0%
(4.2)%
1.6%
1.7%
(4.2)%

Fiscal 2016 Compared with Fiscal 2015

Net
sales
decreased
5.6%
from
$205,804
for
fiscal
2015
to
$194,328
for
fiscal
2016.
Fiscal
2015
included
$8,265
of
sales
related
to
our
bank-approved
inventory
reduction
plan
and
our
furniture
product
line
exit.
Fiscal
2016
included
$2,054
of
unfavorable
foreign
exchange
on
a
constant
currency
basis
primarily
due
to
the
decline
in
the
value
of
the
British
pound.
The
year-over-year
net
sales
decrease
was
also
attributable
to
lower
sales
of
BornFree®
Breeze™
bottles
and
certain
Summer®
monitors
partially
offset
by
increased
safety
and
gear
product
sales.

Cost
of
goods
sold
includes
the
cost
of
the
finished
product
from
suppliers,
duties
on
certain
imported
items,
freight-in
from
suppliers,
and
miscellaneous
charges.
The
components
of
cost
of
goods
sold
remained
substantially
the
same
for
fiscal
2016
as
compared
to
fiscal
2015.

Gross
profit
declined
0.3%
from
$61,950
for
fiscal
2015
to
$61,751
for
fiscal
2016,
however,
gross
margin
increased
from
30.1%
for
fiscal
2015
to
31.8%
for
fiscal
2016.
Fiscal
2015
included
$1,937
in
losses
on
the
sale
of
inventory
below
cost
relating
to
our
bank-approved
inventory
reduction
plan,
$949
of
inventory
charges
taken
as
we
completed
our
exit
of
the
furniture
category,
and
$690
in
temporary
additional
costs
due
to
inventory
mix
changes
in
our
west
coast
distribution
center.
Fiscal
2016
included
$933
of
unfavorable
foreign
exchange
on
a
constant
currency
basis
primarily
due
to
the
decline
in
the
value
of
the
British
pound,
$891
in
cost
overages
relating
to
the
introduction
of
our
BornFree®
Breeze™
bottle,
and
$275
in
temporary
additional
costs
due
to
inventory
mix
changes
in
our
west
coast
distribution
center.

General
and
administrative
expenses
decreased
10.5%
from
$46,132
for
fiscal
2015
to
$41,292
for
fiscal
2016
and
as
a
percent
of
sales
from
22.4%
for
fiscal
2015
to
21.2%
for
fiscal
2016.
The
decline
in
general
and
administrative
expenses
was
attributable
to
cost
reduction
actions
implemented
in
the
latter
half
of
fiscal
2015
combined
with
a
reduction
in
litigation
costs
that
declined
to
$2,397
for
fiscal
2016
as
compared
to
$6,645
for
fiscal
2015.
In
December
2016,
we
settled
the
litigation
and
therefore
do
not
expect
to
incur
any
material
legal
costs
in
2017
related
to
the
litigation.

Selling
expenses
decreased
by
14.1%
from
$17,780
for
fiscal
2015
to
$15,269
for
fiscal
2016
and
as
a
percent
of
sales
from
8.6%
for
fiscal
2015
to
7.9%
for
fiscal
2016.
This
decrease
in
selling
expense

Table
of
Contents

was
primarily
attributable
to
lower
sales
volume
as
well
as
lower
cooperative
advertisement
costs
and
lower
freight
out
costs
due
to
customer
mix.

Depreciation
and
amortization
decreased
26.1%
from
$6,780
in
fiscal
2015
to
$5,011
for
fiscal
2016.
Fiscal
2015
included
$1,532
of
accelerated
amortization
due
to
the
shortened
estimated
useful
life
on
older
technology
as
we
move
to
our
next
generation
of
technology
that
is
being
developed
in
certain
product
lines.
Fiscal
2016
included
$341
of
accelerated
depreciation
due
to
the
shortened
estimated
useful
life
on
some
next
generation
technology
that
was
discontinued.

In
the
fourth
quarter
of
2016,
we
undertook
our
annual
intangible
asset
impairment
analysis
and
engaged
a
third
party
to
assist
management
in
valuing
our
infinite
lived
intangible
assets
recorded
on
our
balance
sheet.
Management
determined
that
the
estimated
fair
value
of
that
indefinite
lived
asset
was
lower
than
its
carrying
value,
and
we
recorded
a
non-cash
impairment
charge
of
$2,993
in
the
fourth
quarter
of
fiscal
2016.
In
addition,
management
deemed
the
remaining
value
of
the
indefinite
lived
asset
to
have
a
finite
life
subject
to
amortization
over
its
remaining
useful
life
estimated
to
be
15
years.
While
the
charge
affected
our
financial
condition
and
results
of
operations
for
fiscal
2016,
it
had
no
impact
on
our
day-to-day
operations
or
liquidity
and
will
not
result
in
any
future
cash
expenditures.
No
impairment
existed
for
the
fiscal
year
ended
January
2,
2016.

Interest
expense
decreased
19.5%
from
$3,333
in
fiscal
2015
to
$2,682
for
fiscal
2016.
Interest
expense
for
fiscal
2015
included
a
write
off
of
$685
for
past
unamortized
financing
fees
and
termination
fees
in
connection
with
the
refinancing
of
our
credit
facility
in
April
2015.

For
fiscal
2016,
we
recorded
a
$1,174
tax
benefit
on
$5,496
of
pretax
loss
for
the
period.
The
21.4%
tax
rate
for
fiscal
2016
included
the
effects
of
$471
of
non-deductible
tooling
depreciation,
$270
of
expiring
charitable
donation
carryforwards,
and
$299
related
to
the
impairment
charge.
For
fiscal
2015,
we
recorded
a
$3,424
tax
benefit
on
$12,075
of
pretax
loss
for
the
period.
The
28.4%
tax
rate
for
fiscal
2015
included
the
effect
of
$150
of
reinstated
research
and
development
tax
credits,
a
$327
charge
for
uncertain
tax
positions,
and
a
$342
valuation
reserve
established
on
foreign
tax
depreciation
and
related
assets.

Liquidity
and
Capital
Resources

We
fund
our
operations
and
working
capital
needs
through
cash
generated
from
operations
and
borrowings
under
our
credit
facilities.

Cash Flows

In
our
typical
operational
cash
flow
cycle,
inventory
is
purchased
to
meet
expected
demand
plus
a
safety
stock.
The
majority
of
our
inventory
is
sourced
from
Asia
which
takes
approximately
three
to
four
weeks
to
arrive
at
the
various
distribution
points
we
maintain
in
the
United
States,
Canada
and
the
United
Kingdom.
Payment
terms
for
these
vendors
are
approximately
60-90
days
from
the
date
the
product
ships
from
Asia,
therefore
we
are
generally
paying
for
the
product
a
short
time
after
it
is
physically
received
in
the
United
States.
In
turn,
sales
to
customers
generally
have
payment
terms
of
30
to
60
days,
resulting
in
an
accounts
receivable
and
increasing
the
amount
of
cash
required
to
fund
working
capital.
To
bridge
the
gap
between
paying
our
suppliers
and
receiving
payment
from
our
customers
for
goods
sold,
we
rely
on
our
credit
facilities.

The
majority
of
our
capital
expenditures
are
for
tools
and
molds
related
to
new
product
introductions.
We
receive
indications
from
retailers
generally
around
the
middle
of
each
year
as
to
what
products
the
retailer
will
be
taking
into
its
product
line
for
the
upcoming
year.
Based
on
these
indications,
we
will
acquire
tools
and
molds
required
to
build
and
produce
the
products.
In
most
cases,
the
payments
for
the
tools
and
molds
are
spread
over
a
three
to
four
month
period.

For
fiscal
2016,
net
cash
provided
by
operating
activities
was
approximately
$8,788
and
was
generated
primarily
from
improved
operating
performance
as
well
as
lower
accounts
receivable
due
to

Table
of
Contents

a
combination
of
lower
sales
and
improved
collections.
For
fiscal
2015
net
cash
provided
by
operating
activities
totaled
$9,339
and
was
primarily
attributable
to
improved
inventory
turns
and
more
favorable
payment
terms
from
our
suppliers.

For
fiscal
2016,
net
cash
used
in
investing
activities
was
approximately
$2,266.
For
fiscal
2015,
net
cash
used
in
investing
activities
was
$3,505.
The
use
of
cash
in
investing
activities
was
primarily
attributable
to
tooling
and
mold
expenditures
related
to
new
product
introductions.

For
fiscal
2016,
net
cash
used
in
financing
activities
was
approximately
$6,548,
reflecting
repayments
on
our
credit
facility.
For
fiscal
2015,
net
cash
used
in
financing
activities
was
approximately
$5,116,
reflecting
repayments
on
our
credit
facility.

Based
primarily
on
the
above
factors,
net
cash
increased
for
fiscal
2016
by
$76,
resulting
in
a
cash
balance
of
approximately
$999
at
fiscal
year
end.

The
following
table
summarizes
our
significant
contractual
commitments
at
fiscal
2016
year
end:

Payment
Due
by
Fiscal
Period

2017

2018

2019

2020

2021
and

beyond

Contractual
Obligations
Revolving
Facility
FILO
Facility
Term
Loan
Facility
Estimated
future
interest
payments
on
Revolving
Facility

Estimated
future
interest
payments
on
FILO
Facility
Estimated
future
interest
payments
on
Term
Loan
Facility

Operating
leases
Sale-leaseback
lease
Total
contractual
cash
obligations

Total

$ 36,182

—

3,750
$ 2,500
$ 1,250

2,000

7,000

1,170

3,629

119

149

594

285

2,415

10,631

429

536

—
$ 36,182

—

1,000

2,000
$ 2,000

322

1,035

1,102

—

190

2,185
$
2,140

2,215

—

107

$ 62,471
$ 8,918
$ 6,894
$ 5,270
$ 39,713
$

—

1,676

—

1,676

Estimated
future
interest
payments
on
our
Revolving
Facility,
FILO
Facility,
and
Term
Loan
Facility
are
based
upon
the
interest
rates
in
effect
at
December
31,
2016.

Capital Resources

In
addition
to
operating
cash
flow,
we
also
rely
on
our
existing
asset-based
revolving
credit
facility
with
Bank
of
America,
N.A.
to
meet
our
financing
requirements,
which
is
subject
to
changes
in
our
inventory
and
account
receivable
levels.
We
regularly
evaluate
market
conditions,
our
liquidity
profile,
and
various
financing
alternatives
for
opportunities
to
enhance
our
capital
structure.
If
market
conditions
are
favorable,
we
may
refinance
our
existing
debt
or
issue
debt
or
equity
securities.
Based
on
past
performance
and
current
expectations,
we
believe
that
our
anticipated
cash
flow
from
operations
and
availability
under
our
existing
credit
facility
are
sufficient
to
fund
our
working
capital,
capital
expenditures
and
debt
service
requirements
for
at
least
the
next
12
months.

However,
if
we
are
unable
to
meet
our
current
financial
forecast,
do
not
adequately
control
expenses,
and
cannot
raise
additional
funds
or
adjust
our
operations
accordingly,
we
may
not
remain
in
compliance
with
the
financial
covenants
required
under
our
revolving
credit
facility.
Unforeseen
circumstances,
such
as
softness
in
the
retail
industry
or
deterioration
in
the
business
of
a
significant
customer,
could
create
a
situation
where
we
cannot
access
all
of
our
available
lines
of
credit
due
to
insufficient
asset
availability
or
an
inability
to
meet
the
financial
covenants
as
required
under
our
credit
facility.
There
is
no
assurance
that
we
will
meet
all
of
our
financial
or
other
covenants
in
the
future,
or

Table
of
Contents

that
our
lenders
will
grant
waivers
if
there
are
covenant
violations.
In
addition,
should
we
need
to
raise
additional
funds
through
debt
or
equity
financings,
any
sale
of
debt
or
equity
securities
may
cause
dilution
to
existing
stockholders.
If
sufficient
funds
are
not
available
or
are
not
available
on
acceptable
terms,
our
ability
to
address
any
unexpected
changes
in
our
operations
could
be
limited.
Furthermore,
there
can
be
no
assurance
that
we
will
be
able
to
raise
such
funds
if
and
when
they
are
required.
Failure
to
obtain
future
funding
when
needed
or
on
acceptable
terms
could
materially
adversely
affect
our
results
of
operations.

Credit Facilities

We
and
our
wholly
owned
subsidiary,
Summer
Infant
(USA),
Inc.,
are
parties
to
an
amended
and
restated
loan
and
security
agreement
with
Bank
of
America,
N.A.,
as
agent,
providing
for
an
asset-based
credit
facility
(as
amended
in
December
2015
and
May
2016,
the
"Credit
Facility").

The
Credit
Facility
consists
of
a
$60,000
asset-based
revolving
credit
facility,
with
a
$10,000
letter
of
credit
sub-line
facility
(the
"Revolving
Facility"),
a
$5,000
"first
in
last
out"
(FILO)
revolving
credit
facility
(the
"FILO
Facility")
and
a
$10,000
term
loan
facility
(the
"Term
Loan
Facility").
Pursuant
to
an
accordion
feature,
the
Credit
Facility
includes
the
ability
to
increase
the
Revolving
Facility
by
an
additional
$15,000
upon
the
Company's
request
and
the
agreement
of
the
lenders
participating
in
the
increase.
The
total
borrowing
capacity
under
the
Revolving
Facility
is
based
on
a
borrowing
base,
generally
defined
as
85%
of
the
value
of
eligible
accounts
plus
the
lesser
of
(i)
70%
of
the
value
of
eligible
inventory
or
(ii)
85%
of
the
net
orderly
liquidation
value
of
eligible
inventory,
less
reserves.
The
total
borrowing
capacity
under
the
FILO
Facility
is
based
on
a
borrowing
base,
generally
defined
as
a
specified
percentage
of
the
value
of
eligible
accounts
that
steps
down
over
time,
plus
a
specified
percentage
of
the
value
of
eligible
inventory
that
steps
down
over
time.
For
additional
information
on
the
Credit
Facility,
please
see
Note
4
to
our
consolidated
financial
statements
included
in
this
Annual
Report
on
Form
10-K.

As
of
December
31,
2016,
the
rate
for
base-rate
loans
was
4.75%
and
rate
for
LIBOR-rate
loans
was
3.375%.
The
amount
outstanding
on
the
Revolving
Facility
at
December
31,
2016
was
$36,182.
Total
borrowing
capacity
under
the
Revolving
Facility
at
December
31,
2016
was
$47,196
and
borrowing
availability
was
$11,014.
The
amounts
outstanding
on
the
Term
Loan
Facility
and
FILO
Facility
at
December
31,
2016
were
$7,000
and
$3,750,
respectively.

We
were
in
compliance
with
the
financial
covenants
under
the
Credit
Facility
as
of
December
31,
2016.

Subsequent
to
fiscal
year
end,
on
February
17,
2017,
the
Company
amended
the
Credit
Facility
to
provide
additional
flexibility
under
its
covenant
requirements
to
the
Company
during
fiscal
2017.
See
Item
9B.
Other
Information
below
for
additional
information
regarding
the
amendment.

Off-Balance
Sheet
Arrangements

We
did
not
have
any
off-balance
sheet
arrangements
during
the
year
ended
December
31,
2016
or
the
year
ended
January
2,
2016.

Recently
Issued
Accounting
Pronouncements

In
May
2014,
the
FASB
issued
new
accounting
guidance
related
to
revenue
recognition.
This
guidance
was
originally
proposed
to
be
effective
for
reporting
periods
beginning
after
December
15,
2016,
however
in
July
2015,
the
FASB
approved
the
delay
in
this
guidance
until
reporting
periods
beginning
after
December
15,
2017.
We
are
still
finalizing
the
analysis
to
quantify
the
adoption
impact
of
the
provisions
of
the
new
standard,
but
we
do
not
currently
expect
it
to
have
a
material
impact
on
our
consolidated
financial
position
or
results
of
operations.
Based
on
the
evaluation
of
our
current
contracts
and
revenue
streams,
most
will
be
recorded
consistently
under
both
the
current
and
new
standard.
The
FASB
has
issued,
and
may
issue
in
the
future,
interpretive
guidance
which
may
cause
our
evaluation
to
change.
We
believe
we
are
following
an
appropriate
timeline
to
allow
for
proper
recognition,
presentation
and
disclosure
upon
adoption
effective
the
beginning
of
fiscal
year
2018.

Table
of
Contents

In
April
2015,
the
FASB
issued
ASU
2015-03,
"Interest-Imputation
of
Interest
(Subtopic
835-30):
Simplifying
the
Presentation
of
Debt
Issuance
Costs."
This
guidance
requires
debt
issuance
costs
related
to
a
recognized
debt
liability
be
presented
in
the
balance
sheet
as
a
direct
deduction
from
the
carrying
amount
of
the
debt
liability.
This
guidance
is
effective
for
fiscal
years
beginning
after
December
15,
2015.
The
Company
adopted
this
guidance
in
the
first
quarter
of
2016
and
it
resulted
in
the
retrospective
reclassification
of
$1,489
as
of
January
2,
2016
in
unamortized
debt
issuance
costs
from
other
assets
to
a
direct
reduction
of
long-term
debt.

In
July
2015,
the
FASB
issued
ASU
2015-11,
"Simplifying
the
Measurement
of
Inventory."
This
guidance
requires
inventory
within
the
scope
of
ASU
2015-
11
to
be
measured
at
the
lower
of
cost
and
net
realizable
value.
Net
realizable
value
is
defined
as
the
estimated
selling
price
in
the
ordinary
course
of
business,
less
reasonably
predictable
costs
of
completion,
disposal,
and
transportation.
This
guidance
is
effective
for
fiscal
years
beginning
after
December
15,
2016.
The
Company
has
evaluated
the
impact
this
guidance
will
have
on
its
consolidated
financial
statements
and
expects
the
impact
to
be
immaterial.

In
November
2015,
the
FASB
issued
ASU
2015-17,
"Income
Taxes
(Topic
740):
Balance
Sheet
Classification
of
Deferred
Taxes."
This
guidance
eliminates
the
current
requirement
for
an
entity
to
separate
deferred
income
tax
liabilities
and
deferred
tax
assets
into
current
and
non-current
amounts
in
a
classified
balance
sheet.
Instead,
this
guidance
requires
deferred
tax
liabilities,
deferred
tax
assets,
and
valuation
allowances
be
classified
as
noncurrent
in
a
classified
balance
sheet.
This
ASU
is
effective
for
annual
reporting
periods
beginning
after
December
15,
2016
and
interim
periods
within
those
annual
periods.
Early
adoption
is
permitted.
The
Company
adopted
this
guidance
in
the
first
quarter
of
2016
and
it
resulted
in
the
retrospective
reclassification
of
$799
as
of
January
2,
2016
in
current
deferred
tax
assets
to
noncurrent
deferred
tax
assets.

In
February
2016,
the
FASB
issued
ASU
2016-02,
"Leases
(Topic
842),"
("ASU
2016-02").
ASU
2016-02
requires
lessees
to
recognize
assets
and
liabilities
on
the
balance
sheet
for
leases
with
lease
terms
greater
than
twelve
months
and
disclose
key
information
about
leasing
arrangements.
The
effective
date
will
be
the
first
quarter
of
fiscal
year
2019,
with
early
adoption
permitted.
The
Company
is
evaluating
the
impact
that
adoption
of
this
new
standard
will
have
on
its
consolidated
financial
statements.

In
August
2016,
the
FASB
issued
ASU
2016-15,
"Statement
of
Cash
Flows
(Topic
230):
Classification
of
Certain
Cash
Receipts
and
Cash
Payments
(A
Consensus
of
the
FASB
Emerging
Issues
Task
Force).
In
an
effort
to
reduce
diversity
in
practice,
ASU
2016-15
provides
solutions
for
eight
specific
statement
of
cash
flow
classification
issues.
The
ASU
is
effective
for
public
companies
beginning
after
December
15,
2017,
and
interim
periods
within
those
fiscal
years.
Early
adoption
is
permitted,
including
adoption
in
an
interim
period.
The
Company
has
evaluated
the
impact
this
guidance
will
have
on
its
consolidated
financial
statements
and
expects
the
impact
to
be
immaterial.

Management
does
not
believe
that
any
other
recently
issued,
but
not
yet
effective,
accounting
standards
if
currently
adopted
would
have
a
material
effect
on
the
accompanying
financial
statements.

Special
Note
Regarding
Forward
Looking
Statements

This
report
contains
"forward-looking
statements"
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
as
amended,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended.
These
statements
concern
management's
current
assumptions,
estimates,
beliefs,
plans,
strategies
and
expectations
and
anticipated
events
or
trends
and
similar
expressions
concerning
matters
that
are
not
historical
facts.
Such
forward-looking
information
may
be
identified
by
terms
such
as
"expect,"
"anticipate,"
"believe,"
"outlook,"
"may,"
"estimate,"
"should,"
"predict"
and
similar
terms
or
variations
thereof,
and
includes
statements
regarding
the
effectiveness
of
our
strategy
to
promote
future
growth
and
profitability,
the
strength
of
our
customer
and
supplier
relationships,
expected

Table
of
Contents

litigation
costs
in
2017,
improved
bottom
line
performance
in
2017,
our
liquidity
for
the
next
12
months,
and
expected
trends
and
product
offerings
in
2017.
These
statements
are
based
on
a
series
of
expectations,
assumptions,
estimates
and
projections
about
our
Company,
are
not
guarantees
of
future
results
or
performance,
and
involve
significant
risks,
uncertainties
and
other
factors,
including
assumptions
and
projections,
for
all
forward
periods.
Our
actual
results
may
differ
materially
from
any
future
results
expressed
or
implied
by
such
forward-looking
statements.
Such
factors
include,
among
others,
the
following:

•

the
concentration
of
our
business
with
a
small
number
of
retail
customers;

liquidity
problems
or
bankruptcy
of
any
key
retail
customers;

our
ability
to
compete
by
introducing
new
products
or
enhancing
existing
products
that
satisfy
consumer
preferences;

our
ability
to
develop
new
products
in
a
timely
and
cost-efficient
manner;

our
ability
to
manage
inventory
levels
and
meet
customer
demand;

our
ability
to
comply
with
financial
and
other
covenants
in
our
credit
facility;

our
ability
to
effectively
compete
in
the
juvenile
product
market;

our
reliance
on
foreign
suppliers
and
potential
disruption
in
foreign
markets
in
which
we
operate;

exchange
rate
and
foreign
currency
devaluations;

increases
in
the
cost
of
raw
materials
used
to
manufacture
our
products;

earthquakes
or
other
catastrophic
events
that
may
damage
our
properties
or
disrupt
our
operations;

our
ability
to
protect
our
intellectual
property;

compliance
with
safety
and
testing
regulations
for
our
products;

product
liability
claims
arising
from
use
of
our
products;

our
dependence
on
key
personnel;

unanticipated
tax
liabilities;

an
impairment
of
other
intangible
assets;
and

any
failure,
inadequacy
or
interruption
of
our
information
technology
systems
that
may
disrupt
our
operations.

The
foregoing
list
of
important
factors
does
not
include
all
such
factors,
nor
necessarily
present
them
in
order
of
importance.
In
addition,
please
refer
to
the
"Risk
Factors"
section
of
this
report
for
additional
information
regarding
factors
that
could
affect
our
results
of
operations,
financial
condition
and
liquidity.

We
intend
our
forward-looking
statements
to
speak
only
as
of
the
time
of
such
statements
and
do
not
undertake
or
plan
to
update
or
revise
them
as
more
information
becomes
available
or
to
reflect
changes
in
expectations,
assumptions
or
results.
We
cannot
give
any
assurance
that
such
expectations
or
forward-
looking
statements
will
prove
to
be
correct.
An
occurrence
of,
or
any
material
adverse
change
in,
one
or
more
of
the
risk
factors
or
risks
and
uncertainties
referred
to
in
this
report
or
included
in
our
other
periodic
reports
filed
with
the
SEC
could
materially
and
adversely
impact
our
operations
and
our
future
financial
results.

Table
of
Contents

Any
public
statements
or
disclosures
by
us
following
this
report
that
modify
or
impact
any
of
the
forward-looking
statements
contained
in
or
accompanying
this
report
will
be
deemed
to
modify
or
supersede
such
outlook
or
other
forward-looking
statements
in
or
accompanying
this
report.

Item
7A.

Quantitative
and
Qualitative
Disclosures
About
Market
Risk

Not
required.

Item
8.

Financial
Statements
and
Supplementary
Data

The
financial
statements
required
by
this
item
are
attached
to
this
Annual
Report
on
Form
10-K
beginning
on
Page
F-1.

Item
9.

Changes
in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure

None.

Item
9A.

Controls
and
Procedures

(a)

Evaluation of Disclosure Controls and Procedures

As
required
by
Rule
13a-15
under
the
Securities
Exchange
Act
of
1934,
as
of
the
end
of
the
period
covered
by
this
report,
we
carried
out
an
evaluation,
under
the
supervision
and
with
the
participation
of
our
Chief
Executive
Officer
and
our
Chief
Financial
Officer,
of
the
effectiveness
of
our
disclosure
controls
and
procedures
as
of
December
31,
2016.
Our
principal
executive
officer
and
principal
financial
officer
have
concluded,
based
on
their
evaluation,
that
our
disclosure
controls
and
procedures
were
effective
as
of
December
31,
2016.

(b)

Management's Report on Internal Control over Financial Reporting

Management
of
our
Company
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
financial
reporting.
As
defined
in
Rule
13a-15(f)
under
the
Exchange
Act,
internal
control
over
financial
reporting
is
a
process
designed
by,
or
under
the
supervision
of,
a
company's
principal
executive
and
principal
financial
officers
and
effected
by
a
company's
board
of
directors,
management
and
other
personnel,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
It
includes
those
policies
and
procedures
that:

Pertain
to
the
maintenance
of
records
that
in
reasonable
detail
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
the
assets
of
a
company;

Provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receipts
and
expenditures
of
a
company
are
being
made
only
in
accordance
with
authorizations
of
management
and
the
board
of
directors
of
the
company;
and

Provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use
or
deposition
of
a
company's
assets
that
could
have
a
material
effect
on
its
financial
statements.

Because
of
the
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
of
effectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
with
the
policies
or
procedures
may
deteriorate.

Table
of
Contents

The
Company's
management
has
used
the
criteria
established
in
the
2013
"Internal
Control—Integrated
Framework"
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
("COSO
Framework")
to
evaluate
the
effectiveness
of
the
Company's
internal
control
over
financial
reporting.

Management
of
the
Company
conducted
an
evaluation
of
the
effectiveness,
as
of
December
31,
2016,
of
the
Company's
internal
control
over
financial
reporting
and
based
on
its
evaluation
under
the
COSO
Framework,
management
has
concluded
that
the
Company's
internal
control
over
financial
reporting
was
effective
as
of
December
31,
2016.

(c)

Changes in Internal Control Over Financial Reporting

There
was
no
change
in
our
internal
control
over
financial
reporting
that
occurred
during
the
quarter
ended
December
31,
2016
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
our
internal
control
over
financial
reporting.

Item
9B.

Other
Information

On
February
17,
2017,
the
Company
and
its
subsidiaries,
Summer
Infant
(USA),
Inc.,
Summer
Infant
Canada,
Limited
and
Summer
Infant
Europe
Limited,
entered
into
an
amendment
and
waiver
(the
"Loan
Amendment")
to
its
Credit
Facility
with
Bank
of
America,
N.A.,
as
agent,
and
the
lenders
under
the
Credit
Facility.
Pursuant
to
the
Loan
Amendment,
the
lenders
agreed
to
waive
the
existing
delivery
date
by
which
the
Company
must
deliver
projections
for
the
2017
fiscal
year,
and
extended
the
date
to
March
1,
2017.
In
addition,
the
Loan
Amendment
amended
certain
provisions
of
the
Credit
Facility
to
provide
additional
flexibility
to
the
Company
during
fiscal
2017,
including:

•

amending
the
definitions
of
"Availability,"
"Availability
Reserve"
and
"Eligible
Account";

amending
the
definition
of
EBITDA
with
respect
to
bonus
payments
and
certain
fees
and
expenses
that
can
be
added
back
to
the
calculation
of
EBITDA;
and

amending
the
definition
of
"Fixed
Charges"
and
revised
the
maximum
leverage
ratio
financial
covenant
to
be
maintained
as
of
the
end
of
each
fiscal
quarter.

The
foregoing
summary
of
the
Loan
Amendment
does
not
purport
to
be
complete
and
is
qualified
in
its
entirety
by
reference
to
the
full
text
of
the
Loan
Amendment,
a
copy
of
which
is
filed
herewith
as
Exhibit
10.14
and
is
incorporated
herein
by
reference.

Table
of
Contents

Item
10.

Directors,
Executive
Officers
and
Corporate
Governance

PART
III

The
information
relating
to
directors
and
director
nominees
of
the
Company
is
set
forth
in
our
definitive
Proxy
Statement
to
be
filed
with
the
SEC
in
connection
with
our
2017
Annual
Meeting
of
Stockholders
(the
"2017
Proxy
Statement")
and
is
incorporated
herein
by
reference.

The
information
relating
to
the
Company's
executive
officers
and
Section
16(a)
beneficial
ownership
reporting
compliance
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference.

We
have
adopted
a
Code
of
Ethics
that
applies
to
all
of
our
directors,
officers
and
employees.
The
Code
of
Ethics
is
publicly
available
in
the
Investor
Relations
section
of
our
website
at
www.summerinfant.com.
Amendments
to
the
Code
of
Ethics
and
any
grant
of
a
waiver
from
a
provision
of
the
Code
of
Ethics
requiring
disclosure
under
applicable
SEC
and
Nasdaq
rules
will
be
disclosed
on
our
website.

The
information
relating
to
the
Company's
Audit
Committee
and
its
designated
audit
committee
financial
expert
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference.

The
information
concerning
procedures
by
which
stockholders
may
recommend
director
nominees
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference.

Item
11.

Executive
Compensation

The
information
relating
to
executive
compensation
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference,
provided
that
the
information
under
the
caption
"Compensation
Committee
Report"
shall
be
deemed
"furnished"
and
shall
not
be
deemed
"filed"
with
this
report,
not
deemed
incorporated
by
reference
into
any
filing
under
the
Securities
Act
of
1933,
as
amended,
except
only
as
may
be
expressly
set
forth
in
any
such
filing
by
specific
reference.

Item
12.

Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters

The
information
relating
to
security
ownership
of
management,
certain
beneficial
owners,
and
the
Company's
equity
plans
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference.

Item
13.

Certain
Relationships
and
Related
Transactions,
and
Director
Independence

The
information
relating
to
certain
relationships
and
related
party
transactions
and
director
independence
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference.

Item
14.

Principal
Accounting
Fees
and
Services

The
information
relating
to
the
independent
registered
public
accounting
firm
fees
and
services
and
the
Company's
pre-approval
policies
and
procedures
for
audit
and
non-audit
services
provided
by
such
accounting
firm
is
set
forth
in
the
2017
Proxy
Statement
and
is
incorporated
herein
by
reference.

Table
of
Contents

Item
15.

Exhibits
and
Financial
Statement
Schedules

(a)

(1)
Financial
Statements

PART
IV

The
list
of
consolidated
financial
statements
and
notes
required
by
this
Item
15
(a)(1)
is
set
forth
in
the
"Index
to
Financial
Statements"
on
page
F-1
of
this
Annual
Report.

(2)

Financial
Statement
Schedules

All
schedules
have
been
omitted
because
the
required
information
is
included
in
the
financial
statements
or
notes
thereto.

(b)

Exhibits

The
exhibits
listed
in
the
"Index
to
Exhibits"
immediately
preceding
the
exhibits
are
filed
as
part
of
this
Annual
Report.

Table
of
Contents

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
on
the
22nd
day
of
February
2017.

SIGNATURES

SUMMER
INFANT,
INC.

By:

/s/
MARK
MESSNER

Mark
Messner

Chief Executive Officer
(Principal Executive Officer)

By:

/s/
WILLIAM
E.
MOTE,
JR.

William
E.
Mote,
Jr.

Chief Financial Officer
(Principal Financial and Accounting Officer)

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.

Name

Title

Date

/s/
MARK
MESSNER

Mark
Messner

/s/
WILLIAM
E.
MOTE,
JR.

William
E.
Mote,
Jr.

/s/
ROBIN
MARINO

Robin
Marino

/s/
MARTIN
FOGELMAN

Martin
Fogelman

/s/
ALAN
MUSTACCHI

Alan
Mustacchi

/s/
ROBERT
STEBENNE

Robert
Stebenne

/s/
EVELYN
D'AN

Evelyn
D'An

/s/
STEPHEN
ZELKOWICZ

Stephen
Zelkowicz

Chief
Executive
Officer
(Principal
Executive
Officer)

February
22,
2017

Chief
Financial
Officer
(Principal
Financial
and
Accounting
Officer)

February
22,
2017

Chairwoman
of
the
Board

February
22,
2017

Director

February
22,
2017

Table
of
Contents

Summer
Infant,
Inc.
and
Subsidiaries

Index
to
Financial
Statements

Report
of
Independent
Registered
Public
Accounting
Firm
Consolidated
Balance
Sheets
Consolidated
Statements
of
Operations
Consolidated
Statements
of
Comprehensive
Loss
Consolidated
Statements
of
Cash
Flows
Consolidated
Statements
of
Stockholders'
Equity
Notes
to
Consolidated
Financial
Statements

F-1

F-2

F-3

F-4

F-5

F-6

F-7

F-8
-
F-27

Table
of
Contents

REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM

To
the
Board
of
Directors
and
Stockholders

Summer
Infant,
Inc.

We
have
audited
the
accompanying
consolidated
balance
sheets
of
Summer
Infant,
Inc.
and
Subsidiaries
as
of
December
31,
2016
and
January
2,
2016,
and
the
related
consolidated
statements
of
operations,
comprehensive
loss,
cash
flows,
and
stockholders'
equity
for
the
years
then
ended.
These
financial
statements
are
the
responsibility
of
the
Company's
management.
Our
responsibility
is
to
express
an
opinion
on
these
financial
statements
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
audits
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement.
The
Company
is
not
required
to
have,
nor
were
we
engaged
to
perform,
an
audit
of
its
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
controls
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
financial
position
of
Summer
Infant,
Inc.
and
Subsidiaries
as
of
December
31,
2016
and
January
2,
2016,
and
the
results
of
their
operations
and
their
cash
flows
for
the
years
then
ended,
in
conformity
with
U.S.
generally
accepted
accounting
principles.

/s/
RSM
US
LLP

RSM
US
LLP

Boston,
Massachusetts

February
22,
2017

F-2

Table
of
Contents

Summer
Infant,
Inc.
and
Subsidiaries

Consolidated
Balance
Sheets

Note
that
all
amounts
presented
in
the
table
below
are
in
thousands
of
U.S.
dollars,
except
share
amounts
and
par
value
per
share.

December
31,

2016

January
2,

2016

ASSETS
CURRENT
ASSETS

Cash
and
cash
equivalents
Trade
receivables,
net
of
allowance
for
doubtful
accounts
of
$59
and
$142
at
December
31,
2016

and
January
2,
2016,
respectively

Inventory,
net
Prepaids
and
other
current
assets
TOTAL
CURRENT
ASSETS

Property
and
equipment,
net
Intangible
assets,
net
Deferred
tax
assets,
noncurrent
Other
assets

TOTAL
ASSETS

LIABILITIES
AND
STOCKHOLDERS'
EQUITY
CURRENT
LIABILITIES

Accounts
payable
Accrued
expenses
Current
portion
of
long-term
debt
and
capital
leases

TOTAL
CURRENT
LIABILITIES

Long-term
debt,
less
current
portion
and
unamortized
debt
issuance
costs
Other
liabilities

TOTAL
LIABILITIES

STOCKHOLDERS'
EQUITY

Preferred
Stock,
$0.0001
par
value,
1,000,000
authorized,
none
issued
or
outstanding
at

December
31,
2016
and
January
2,
2016

Common
Stock
$0.0001
par
value,
authorized,
issued
and
outstanding
of
49,000,000,
18,778,266,
and
18,506,617
at
December
31,
2016
and
49,000,000,
18,639,407
and
18,367,758
at
January
2,
2016,
respectively

Treasury
Stock
at
cost
(271,649
shares
at
December
31,
2016
and
January
2,
2016)
Additional
paid-in
capital
Accumulated
deficit
Accumulated
other
comprehensive
loss

TOTAL
STOCKHOLDERS'
EQUITY

TOTAL
LIABILITIES
AND
STOCKHOLDERS'
EQUITY

See
notes
to
consolidated
financial
statements.

F-3

999
$

923

34,137

36,140

1,737

73,013

9,965

14,813

3,848

40,514

36,846

1,758

80,041

12,007

18,512

2,483

101,737
$ 113,138

30,684
$
7,757

4,500

42,941

41,206

2,770

86,917

29,541

9,584

3,318

42,443

48,767

2,962

94,172

—

(1,283)
(1,283)

75,812

76,348

(53,063)
(57,385)

(2,502)
(2,862)

18,966

14,820

101,737
$ 113,138

Table
of
Contents

Note
that
all
amounts
presented
in
the
table
below
are
in
thousands
of
U.S.
dollars,
except
share
and
per
share
amounts.

Summer
Infant,
Inc.
and
Subsidiaries

Consolidated
Statements
of
Operations

Net
sales
Cost
of
goods
sold
Gross
profit
General
and
administrative
expenses
Selling
expenses
Depreciation
and
amortization
Impairment
of
intangible
assets

Operating
loss
Interest
expense,
net

Loss
before
provision
for
income
taxes

Benefit
for
income
taxes

NET
LOSS

Net
loss
per
share
BASIC
and
DILUTED
Weighted
average
shares
outstanding
BASIC
and
DILUTED

See
notes
to
consolidated
financial
statements.

F-4

For
the
fiscal
year
ended

December
31,

2016
194,328
$
132,577

61,751

41,292

15,269

5,011

2,993

(2,814)

2,682

(5,496)

(1,174)

(4,322) $
(0.23) $

18,440,436

January
2,

2016
205,804

143,854

61,950

46,132

17,780

6,780

—

(8,742)
3,333

(12,075)
(3,424)
(8,651)
(0.47)
18,267,596

Table
of
Contents

Note
that
all
amounts
presented
in
the
table
below
are
in
thousands
of
U.S.
dollars.

Summer
Infant,
Inc.
and
Subsidiaries

Consolidated
Statements
of
Comprehensive
Loss

For
the
fiscal
year
ended

Net
loss
Other
comprehensive
loss:

Foreign
currency
translation
adjustments

Comprehensive
loss

See
notes
to
consolidated
financial
statements.

F-5

December
31,

2016

(4,322) $

January
2,

2016
(8,651)

(360)

(4,682) $

(1,092)
(9,743)

Table
of
Contents

Note
that
all
amounts
presented
in
the
table
below
are
in
thousands
of
U.S.
dollars.

Summer
Infant,
Inc.
and
Subsidiaries

Consolidated
Statements
of
Cash
Flows

Cash
flows
from
operating
activities:
Net
loss
Adjustments
to
reconcile
net
loss
to
net
cash
provided
by
operating
activities:
Impairment
of
intangible
assets
Depreciation
and
amortization
Stock-based
compensation
Loss
on
asset
disposal
Deferred
income
taxes
Changes
in
assets
and
liabilities,
net
of
effects
of
acquisitions

Decrease
(increase)
in
accounts
receivable
Decrease
in
inventory
(Increase)
decrease
in
prepaids
and
other
current
assets
Decrease
(increase)
in
other
assets
(Decrease)
increase
in
accounts
payable
and
accrued
expenses

Net
cash
provided
by
operating
activities
Cash
flows
from
investing
activities:
Acquisitions
of
property
and
equipment
Acquisitions
of
other
intangible
assets
Net
cash
used
in
investing
activities
Cash
flows
from
financing
activities:
Proceeds
from
New
Term
Loan
Facility
Proceeds
from
New
FILO
Facility
(Repayment)
of
Prior
Term
Loan
(Repayment)
of
New
Term
Loan
Facility
(Repayment)
of
New
FILO
Facility
Net
(repayments)
borrowings
on
revolving
facilities
Issuance
of
common
stock
upon
exercise
of
stock
options
Net
cash
used
in
financing
activities
Effect
of
exchange
rate
changes
on
cash
and
cash
equivalents
Net
increase
(decrease)
in
cash
and
cash
equivalents
Cash
and
cash
equivalents
at
beginning
of
year
Cash
and
cash
equivalents
at
end
of
year
Supplemental
disclosure
of
cash
flow
information:
Cash
paid
during
the
year
for
interest
Cash
paid
during
the
year
for
income
taxes

See
notes
to
consolidated
financial
statements.

F-6

For
the
fiscal
year
ended

December
31,

2016

January
2,

2016

(4,322) $

(8,651)

2,993

5,011

482

(1,384)

6,151

344

(44)

164

(644)

8,788

(2,266)

—

(2,266)

—

(1,500)

(1,250)

(3,798)

—

(6,548)

102

923

999
$

—

6,780

865

(3,685)

(1,715)
7,170

250

(342)
8,625

9,339

(3,033)
(472)
(3,505)

10,000

5,000

(12,500)
(1,500)
—

(6,163)
47

(5,116)
(1,067)
(349)
1,272

923

1,963
$
100
$

2,318

158

Table
of
Contents

Consolidated
Statements
of
Stockholders'
Equity

For
the
Fiscal
Years
Ended
December
31,
2016
and
January
2,
2016

Note
that
all
amounts
presented
in
the
table
below
are
in
thousands
of
U.S.
dollars,
except
share
and
per
share
data.

Balance
at
January
3,
2015

18,144,285
$

2
$

74,954
$ (1,283) $ (44,412) $

(1,410) $ 27,851

Common
Stock

Amount

Additional

Paid
in

Capital

Treasury

Stock

Retained

Earnings

Accumulated

Comprehensive

Loss

Total

Equity

Issuance
of
common
stock
upon
vesting
of
restricted
shares
Issuance
of
common
stock
upon
exercise
of
stock
options
Stock-based
compensation
Net
loss
for
the
year
Foreign
currency
translation

adjustment

Balance
at
January
2,
2016
Issuance
of
common
stock
upon
vesting
of
restricted
shares

Stock-based
compensation
Net
loss
for
the
year
Foreign
currency
translation

adjustment

198,473

25,000

—

811

(8,651)

18,367,758
$

2
$

75,812
$ (1,283) $ (53,063) $

138,859

456

(4,322)

Balance
at
December
31,
2016

18,506,617
$

2
$

76,348
$ (1,283) $ (57,385) $

811

(8,651)

(1,092)
(1,092)

(2,502) $ 18,966

456

(4,322)

(360)

(360)
(2,862) $ 14,820

See
notes
to
consolidated
financial
statements.

F-7

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS

1.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES

Nature of Operations

The
Company
designs,
markets
and
distributes
branded
juvenile
health,
safety
and
wellness
products
that
are
sold
globally
to
large
national
retailers
as
well
as
independent
retailers,
primarily
in
North
America.
The
Company
currently
markets
its
products
in
several
product
categories
including
monitoring,
safety,
nursery,
baby
gear,
and
feeding
products.
Most
products
are
sold
under
our
core
brand
names
of
Summer®,
SwaddleMe®,
and
Born
Free®.

Basis of Presentation and Principles of Consolidation

It
is
the
Company's
policy
to
prepare
its
financial
statements
on
the
accrual
basis
of
accounting
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
The
consolidated
financial
statements
include
the
accounts
of
its
wholly-owned
subsidiaries.
All
significant
intercompany
accounts
and
transactions
have
been
eliminated
in
the
consolidation.

All
dollar
amounts
included
in
the
Notes
to
Consolidated
Financial
Statements
are
in
thousands
of
U.S.
dollars
except
share
and
per
share
amounts.

Fiscal Year

The
Company's
fiscal
year
ends
on
the
Saturday
closest
to
December
31
of
each
calendar
year.
There
were
fifty
two
weeks
in
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016.

Summary
of
Significant
Accounting
Policies

Revenue Recognition

The
Company
records
revenue
when
all
of
the
following
occur:
persuasive
evidence
of
an
arrangement
exists,
product
delivery
has
occurred,
the
sales
price
to
the
customer
is
fixed
or
determinable,
and
collectability
is
reasonably
assured.
Sales
are
recorded
net
of
provisions
for
returns
and
allowances,
customer
discounts,
and
other
sales
related
discounts.
The
Company
bases
its
estimates
for
discounts,
returns
and
allowances
on
negotiated
customer
terms
and
historical
experience.
Customers
do
not
have
the
right
to
return
products
unless
the
products
are
defective.
The
Company
records
a
reduction
of
sales
for
estimated
future
defective
product
deductions
based
on
contractual
terms
and
historical
experience.

Sales
incentives
or
other
consideration
given
by
the
Company
to
customers
that
are
considered
adjustments
of
the
selling
price
of
products,
such
as
markdowns,
are
reflected
as
reductions
of
revenue.
Sales
incentives
and
other
consideration
that
represent
costs
incurred
by
the
Company
for
assets
or
services
received,
such
as
the
appearance
of
the
Company's
products
in
a
customer's
national
circular
ad,
are
reflected
as
selling
and
marketing
expenses
in
the
accompanying
statements
of
operations.

Use of Estimates

The
preparation
of
financial
statements
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America
requires
management
to
make
estimates
and
assumptions
that
affect
certain
reported
amounts
and
disclosures.
These
estimates
are
based
on
management's
best
knowledge
of
current
events
and
actions
the
Company
may
undertake
in
the
future.
Accordingly,
actual
results
could
differ
from
those
estimates.

F-8

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

1.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)

Cash and Cash Equivalents

Cash
flows,
cash
and
cash
equivalents
include
money
market
accounts
and
investments
with
an
original
maturity
of
three
months
or
less.
At
times,
the
Company
possesses
cash
balances
in
excess
of
federally-insured
limits.

Trade Receivables

Inventory Valuation

Inventory
is
comprised
mostly
of
finished
goods
and
some
component
parts
and
is
stated
at
the
lower
of
cost
using
the
first-in,
first-out
(FIFO)
method,
or
market
(net
realizable
value).
The
Company
regularly
reviews
slow-moving
and
excess
inventories,
and
writes
down
inventories
to
net
realizable
value
if
the
ultimate
expected
net
proceeds
from
the
disposals
of
excess
inventory
are
less
than
the
carrying
cost
of
the
merchandise.

Property and Equipment

Property
and
equipment
are
recorded
at
cost.
The
Company
owns
the
tools
and
molds
used
in
the
production
of
its
products
by
third
party
manufacturers.
Capitalized
mold
costs
include
costs
incurred
for
the
pre-production
design
and
development
of
the
molds.

Depreciation
is
provided
over
the
estimated
useful
lives
of
the
respective
assets
using
either
straight-line
or
accelerated
methods.

Long-Lived Assets with Finite Lives

The
Company
reviews
long-lived
assets
with
finite
lives
for
impairment
(using
the
group
concept)
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying
amount
of
a
long-lived
asset
may
not
be
recoverable.
An
asset
is
considered
to
be
impaired
when
its
carrying
amount
exceeds
both
the
sum
of
the
undiscounted
future
net
cash
flows
expected
to
result
from
the
use
of
the
asset
and
its
eventual
disposition
and
the
assets'
fair
value.
Long-lived
assets
include
property
and
equipment
and
finite-lived
intangible
assets.
The
amount
of
impairment
loss,
if
any,
is
charged
by
the
Company
to
current
operations.

Indefinite-Lived Intangible Assets

The
Company
accounts
for
intangible
assets
in
accordance
with
accounting
guidance
that
requires
that
intangible
assets
with
indefinite
useful
lives
be
tested
annually
for
impairment
and
more
frequently
if
events
or
changes
in
circumstances
indicate
that
the
asset
might
be
impaired.
The
Company's
annual
impairment
testing
is
conducted
in
the
fourth
quarter
of
every
year.

F-9

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

1.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)

The
Company
tests
indefinite-lived
intangible
assets
for
impairment
by
comparing
the
asset's
fair
value
to
its
carrying
amount.
If
the
fair
value
is
less
than
the
carrying
amount,
the
excess
of
the
carrying
amount
over
fair
value
is
recognized
as
an
impairment
charge
and
the
adjusted
carrying
amount
becomes
the
assets'
new
cost
basis.

For
the
year
ended
December
31,
2016,
the
Company
determined
that
certain
indefinite-lived
intangible
assets
were
impaired.
For
the
year
ended
January
2,
2016,
the
Company
determined
that
no
impairment
existed
on
its
indefinite-lived
intangible
assets.
See
Note
3
for
a
discussion
on
the
fiscal
year
2016
impairment
charge.

Fair Value Measurements

The
Company
follows
ASC
820,
"Fair
Value
Measurements
and
Disclosures"
which
includes
a
framework
for
measuring
fair
value
and
expanded
related
disclosures.
Broadly,
the
framework
requires
fair
value
to
be
determined
based
on
the
exchange
price
that
would
be
received
for
an
asset
or
paid
to
transfer
a
liability
(an
exit
price)
in
the
principal
or
most
advantageous
market
for
the
asset
or
liability
in
an
orderly
transaction
between
market
participants.
The
standard
established
a
three-level
valuation
hierarchy
based
upon
observable
and
non-observable
inputs.

Observable
inputs
reflect
market
data
obtained
from
independent
sources,
while
unobservable
inputs
reflect
our
market
assumptions.
Preference
is
given
to
observable
inputs.
These
two
types
of
inputs
create
the
following
fair
value
hierarchy:

Level
1—Quoted
prices
for
identical
instruments
in
active
markets.

Level
2—Quoted
prices
for
similar
instruments
in
active
markets;
quoted
prices
for
identical
or
similar
instruments
in
markets
that
are
not
active;
and
model-derived
valuations
whose
inputs
are
observable
or
whose
significant
value
drivers
are
observable.

Level
3—Significant
inputs
to
the
valuation
model
are
unobservable.

The
Company
maintains
policies
and
procedures
to
value
instruments
using
the
best
and
most
relevant
data
available.
In
addition,
the
Company
utilizes
third
party
specialists
that
review
valuation,
including
independent
price
validation.

The
Company's
financial
instruments
include
cash
and
cash
equivalents,
accounts
and
notes
receivable,
accounts
payable,
accrued
expenses,
and
short
and
long-term
borrowings.
Because
of
their
short
maturity,
the
carrying
amounts
of
cash
and
cash
equivalents,
accounts
and
notes
receivable,
accounts
payable,
accrued
expenses
and
short-term
borrowings
approximate
fair
value.
The
carrying
value
of
long-term
borrowings
approximates
fair
value.

Non-recurring Fair Value Measurements

The
Company's
assets
measured
at
fair
value
on
a
nonrecurring
basis
include
long-lived
assets
and
intangible
assets.
The
Company
tests
its
long-lived
assets
for
impairment
at
least
annually
and
whenever

F-10

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

1.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)

events
or
changes
in
circumstances
indicate
that
the
carrying
value
may
not
be
recoverable
or
that
the
carrying
value
may
exceed
its
fair
value.
The
resulting
fair
value
measurements
are
considered
to
be
Level
3
inputs.
During
the
fourth
quarter
of
fiscal
2016,
the
Company
determined
that
the
estimated
fair
value
of
an
indefinite
lived
asset
was
lower
than
its
carrying
value
and
the
Company
recorded
a
non-cash
impairment
charge
of
$2,993
which
reduced
the
value
of
the
intangible
asset
to
approximately
$915,
as
more
fully
described
in
"Note
3
to
the
Consolidated
Financial
Statements—Intangible
Assets."
The
Company
did
not
incur
an
impairment
charge
in
fiscal
2015.

Income taxes

Income
taxes
are
computed
using
the
asset
and
liability
method
of
accounting.
Under
the
asset
and
liability
method,
a
deferred
tax
asset
or
liability
is
recognized
for
estimated
future
tax
effects
attributable
to
temporary
differences
and
carryforwards.
The
measurement
of
deferred
income
tax
assets
is
adjusted
by
a
valuation
allowance,
if
necessary,
to
recognize
future
tax
benefits
only
to
the
extent,
based
on
available
evidence,
it
is
more
likely
than
not
that
such
benefits
will
be
realized.

The
Company
follows
the
applicable
guidance
relative
to
uncertain
tax
positions.
This
standard
provides
detailed
guidance
for
the
financial
statement
recognition,
measurement
and
disclosure
of
uncertain
tax
positions
recognized
in
the
financial
statements.
Uncertain
tax
positions
must
meet
a
recognition
threshold
of
more-likely-than-not
in
order
for
those
tax
positions
to
be
recognized
in
the
financial
statements.

Translation of Foreign Currencies

The
assets
and
liabilities
of
the
Company's
European,
Canadian,
Israeli,
and
Asian
operations
have
been
translated
into
U.S.
dollars
at
year-end
exchange
rates
and
the
income
and
expense
accounts
of
these
subsidiaries
have
been
translated
at
average
rates
prevailing
during
each
respective
year.
Resulting
translation
adjustments
are
made
to
a
separate
component
of
stockholders'
equity
within
accumulated
other
comprehensive
loss.
Foreign
exchange
transaction
gains
and
losses
are
included
in
the
accompanying
consolidated
statements
of
operations.

Shipping Costs

Shipping
costs
to
customers
are
included
in
selling
expenses
and
amounted
to
approximately
$1,477
and
$1,882
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.

Advertising Costs

The
Company
charges
advertising
costs
to
selling
expense
as
incurred.
Advertising
expense,
which
consists
primarily
of
promotional
and
cooperative
advertising
allowances
provided
to
customers,
was
approximately
$12,863
and
$14,743
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.

Segment Information

Operating
segments
are
identified
as
components
of
an
enterprise
about
which
separate,
discrete
financial
information
is
available
for
evaluation
by
the
chief
operating
decision-maker,
or
decision-making
group,
in
making
decisions
on
how
to
allocate
resources
and
assess
performance.
The
Company

F-11

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

1.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)

views
its
operations
and
manages
its
business
as
one
operating
segment
utilizing
an
omni-channel
distribution
strategy.

Net Loss Per Share

Basic
earnings
per
share
is
calculated
by
dividing
net
loss
for
the
period
by
the
weighted
average
number
of
common
stock
outstanding
during
the
period.

Diluted
loss
per
share
for
the
Company
is
computed
by
dividing
net
loss
by
the
dilutive
weighted
average
shares
outstanding
which
includes:
the
dilutive
impact
(using
the
"treasury
stock"
method)
of
"in
the
money"
stock
options
and
unvested
restricted
shares
issued
to
employees.
Options
to
purchase
1,023,825
and
1,380,147
shares
of
the
Company's
common
stock
and
268,432
and
197,572
of
restricted
shares
were
not
included
in
the
calculation,
due
to
the
fact
that
these
instruments
were
anti-dilutive
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.

New Accounting Pronouncements

F-12

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

1.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)

valuation
allowances
be
classified
as
noncurrent
in
a
classified
balance
sheet.
This
ASU
is
effective
for
annual
reporting
periods
beginning
after
December
15,
2016
and
interim
periods
within
those
annual
periods.
Early
adoption
is
permitted.
The
Company
adopted
this
guidance
in
the
first
quarter
of
2016
and
it
resulted
in
the
retrospective
reclassification
of
$799
as
of
January
2,
2016
in
current
deferred
tax
assets
to
noncurrent
deferred
tax
assets.

Management
does
not
believe
that
any
other
recently
issued,
but
not
yet
effective,
accounting
standards
if
currently
adopted
would
have
a
material
effect
on
the
accompanying
financial
statements.

2.
PROPERTY
AND
EQUIPMENT

Property
and
equipment,
at
cost,
consisted
of
the
following:

Computer-related
Tools,
dies,
prototypes,
and
molds
Building
Other

Less:
accumulated
depreciation
Property
and
equipment,
net

For
the
fiscal
year

ended

December
31,

2016

January
2,

2016

3,861
$
28,342

4,156

6,145

42,504

32,539

9,965
$

6,327

31,052

4,156

5,793

47,328

35,321

12,007

Depreciation/

Amortization
Period
5
years
1
-
5
years
30
years
various

Property
and
equipment
included
amounts
acquired
under
capital
leases
of
approximately
$0
and
$470
at
December
31,
2016
and
January
2,
2016,
respectively,
with
related
accumulated
depreciation
of
approximately
$0
and
$257,
respectively.
Total
depreciation
expense
was
$4,304
and
$4,142
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.

F-13

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

3.
INTANGIBLE
ASSETS

Intangible
assets
consisted
of
the
following:

For
the

fiscal
year
ended

Brand
names
Patents
and
licenses
Customer
relationships
Other
intangibles

Less:
accumulated
amortization
Intangible
assets,
net

December
31,

2016

January
2,

2016
14,812

3,766

6,946

1,882

27,406

(8,894)
18,512

11,819
$
3,766

6,946

1,882

24,413

(9,600)

14,813
$

The
amortization
period
for
the
majority
of
the
intangible
assets
ranges
from
5
to
20
years
for
those
assets
that
have
an
estimated
life;
certain
assets
have
indefinite
lives
(certain
brand
names).
Total
of
intangibles
not
subject
to
amortization
amounted
to
$8,400
and
$12,308
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.

Amortization
expense
amounted
to
$707
and
$2,638
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.
In
the
fourth
quarter
of
the
year
ended
January
2,
2016,
the
Company
recorded
$1,532
of
accelerated
amortization
due
to
the
shortened
estimated
useful
life
on
older
technology
as
we
moved
to
our
next
generation
of
technology
that
was
being
developed
in
our
product
lines.

The
Company
undertook
its
annual
indefinite-lived
intangible
asset
impairment
analysis
and
engaged
a
third
party
to
assist
management
in
valuing
the
infinite
lived
intangible
assets
recorded
on
the
balance
sheet
in
the
fourth
quarter
of
fiscal
2016.
The
Company
determined
that
the
estimated
fair
value
of
that
indefinite
lived
asset
was
lower
than
its
carrying
value,
and
the
Company
recorded
a
non-cash
impairment
charge
of
$2,993
in
fiscal
2016.
In
addition,
the
Company
deemed
the
remaining
value
of
the
indefinite
lived
asset
to
have
a
finite
life
subject
to
amortization
over
its
remaining
useful
life
estimated
to
be
15
years.
This
was
a
change
in
estimate
and
the
financial
impact
was
zero
as
of
December
31,
2016.
The
Company
also
considered
whether
other
long-lived
assets
in
the
asset
group
were
impaired
and
concluded
that
they
were
not.
No
impairment
was
recorded
for
the
fiscal
year
ended
January
2,
2016.

Estimated
amortization
expense
for
the
remaining
indefinite-lived
assets
for
the
next
five
years
is
as
follows:

Fiscal
Year
ending
2017
2018
2019
2020
2021

$ 767

746

738

488

F-14

Table
of
Contents

4.
DEBT

Credit Facilities

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

In
April
2015,
the
Company
and
its
wholly
owned
subsidiary,
Summer
Infant
(USA),
Inc.,
entered
into
an
amended
and
restated
loan
and
security
agreement
with
Bank
of
America,
N.A.,
as
agent,
providing
for
an
asset-based
credit
facility.
The
amended
and
restated
Credit
Facility
replaced
the
Company's
prior
credit
facility
with
Bank
of
America.
The
amended
and
restated
credit
facility
was
subsequently
amended
in
December
2015
and
May
2016
to
(i)
modify
the
interest
rate
under
each
of
the
Revolving
Facility,
FILO
Facility
and
Term
Loan
Facility
(each
as
defined
below),
(ii)
modify
the
maximum
leverage
ratio
financial
covenant;
(iii)
amend
the
definition
of
EBITDA
with
respect
to
certain
fees
and
expenses
included
within
the
definition;
(iv)
modify
certain
reporting
requirements
and
(v)
remove
the
occurrence
of
an
event
having
a
material
adverse
effect
on
the
Company
as
an
event
of
default
(as
amended,
the
"Credit
Facility").

The
scheduled
maturity
date
of
the
loans
under
the
Revolving
Facility
and
the
Term
Loan
Facility
is
April
21,
2020,
and
loans
under
the
FILO
Facility
terminate
April
21,
2018,
subject
in
each
case
to
customary
early
termination
provisions.
Any
termination
of
the
Revolving
Facility
would
require
termination
of
the
Term
Loan
Facility
and
the
FILO
Facility.

All
obligations
under
the
Credit
Facility
are
secured
by
substantially
all
of
the
Company's
assets.
In
addition,
Summer
Infant
Canada
Limited
and
Summer
Infant
Europe
Limited,
subsidiaries
of
the
Company,
are
guarantors
under
the
Credit
Facility.
Proceeds
from
the
loans
were
used
to
(i)
repay
the
Company's
then
outstanding
term
loan,
(ii)
pay
fees
and
transaction
expenses
associated
with
the
closing
of
the
Credit
Facility,
(iii)
pay
obligations
under
the
Credit
Facility,
and
(iv)
pay
for
lawful
corporate
purposes,
including
working
capital.

Borrowings
under
the
Revolving
Facility
bear
interest,
at
the
Company's
option,
at
a
base
rate
or
at
LIBOR,
plus
applicable
margins
based
on
average
quarterly
availability
and
ranging
between
2.0%
and
2.5%
on
LIBOR
borrowings
and
0.5%
and
1.0%
on
base
rate
borrowings.
Loans
under
the
FILO
Facility
and
Term
Loan
Facility
will
bear
interest,
at
the
Company's
option,
at
a
base
rate
or
at
LIBOR,
plus
a
margin
of
4.25%
on
LIBOR
borrowings
and
2.75%
on
base
rate
borrowings.

Beginning
on
July
1,
2015,
the
Company
was
required
to
begin
repaying
the
Term
Loan
Facility
in
quarterly
installments
of
$500.
Beginning
with
the
fiscal
year
ending
January
2,
2016,
the
Company
was
required
to
prepay
the
Term
Loan
Facility
in
an
amount
equal
to
50%
of
the
Company's
"excess
cash
flow,"
as
such
term
is
defined
in
the
Credit
Facility,
at
the
end
of
each
fiscal
year.

F-15

Table
of
Contents

4.
DEBT
(Continued)

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

Under
the
Credit
Facility,
the
Company
must
comply
with
certain
financial
covenants,
including
that
the
Company
(i)
maintain
a
fixed
charge
coverage
ratio
of
at
least
1.0
to
1.0
for
the
twelve
consecutive
fiscal
months
most
recently
ended
and
(ii)
maintain
a
certain
leverage
ratio
at
the
end
of
each
fiscal
quarter.
For
purposes
of
the
financial
covenants,
consolidated
EBITDA
is
defined
as
net
income
before
interest,
taxes,
depreciation
and
amortization,
plus
certain
customary
expenses,
fees,
non-cash
charges
and
up
to
$2,000
of
specified
inventory
dispositions
in
2015,
and
minus
certain
customary
non-cash
items
increasing
net
income
and
other
specified
items.

The
Credit
Facility
contains
customary
affirmative
and
negative
covenants.
Among
other
restrictions,
the
Company
is
restricted
in
its
ability
to
incur
additional
debt,
make
acquisitions
or
investments,
dispose
of
assets,
or
make
distributions
unless
in
each
case
certain
conditions
are
satisfied.
The
Credit
Facility
also
contains
customary
events
of
default,
including
the
occurrence
of
a
change
of
control.
In
the
event
of
a
default,
all
of
the
Company's
obligations
under
the
Credit
Facility
may
be
declared
immediately
due
and
payable.
For
certain
events
of
default
relating
to
insolvency
and
receivership,
all
outstanding
obligations
immediately
become
due
and
payable.

As
of
December
31,
2016,
the
rate
on
base-rate
loans
was
4.75%
and
the
rate
on
LIBOR-rate
loans
was
3.375%.
The
amount
outstanding
on
the
Revolving
Facility
at
December
31,
2016
was
$36,182.
Total
borrowing
capacity
under
the
Revolving
Facility
at
December
31,
2016
was
$47,196
and
borrowing
availability
was
$11,014.
The
amounts
outstanding
on
the
Term
Loan
Facility
and
FILO
Facility
at
December
31,
2016
were
$7,000
and
$3,750,
respectively.

Aggregate
maturities
of
bank
debt
related
to
the
BofA
credit
facility:

Fiscal
Year
ending:
2017
2018
2019
2020
Total

4,500

3,250

2,000

37,182

$ 46,932

Unamortized
debt
issuance
costs
were
$1,226
at
December
31,
2016
and
$1,489
at
January
2,
2016,
and
are
presented
as
a
direct
deduction
of
long-term
debt
on
the
consolidated
balance
sheets.

Subsequent
to
fiscal
year
end,
on
February
17,
2017,
the
Company
amended
the
Credit
Facility
to
provide
additional
flexibility
under
its
covenant
requirements
to
the
Company
during
fiscal
2017.
See
Note
12
for
additional
information
regarding
the
amendment.

Prior Credit Facility and Term Loan

The
Credit
Facility
replaced
the
Company's
prior
credit
facility
with
Bank
of
America
and
the
Company's
prior
term
loan
agreement
with
Salus
Capital
Partners,
LLC.
Prior
to
April
2015,
the
Company
had
a
loan
and
security
agreement
with
Bank
of
America
N.A.
that
provided
for
an
$80,000,
asset-based
revolving
credit
facility,
with
a
$10,000
letter
of
credit
sub-line
facility.

The
Company
evaluated
the
Credit
Facility,
by
lender,
to
determine
the
proper
accounting
treatment
for
the
transaction.
Accordingly,
debt
extinguishment
accounting
was
used
to
account
for
the
pay
off
of
the
prior
term
loan
agreement
with
Salus
Capital
Partners,
LLC
and
for
the
pay
off
of
a

F-16

Table
of
Contents

4.
DEBT
(Continued)

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

member
of
the
prior
credit
facility
with
Bank
of
America
who
did
not
continue
in
the
Credit
Facility
resulting
in
the
write
off
of
$549
in
remaining
unamortized
deferred
financing
costs
and
$135
in
termination
fees.
Debt
modification
accounting
was
used
for
the
remaining
members
of
the
prior
credit
facility
resulting
in
their
remaining
unamortized
deferred
financing
costs
of
$601
and
the
new
financing
costs
of
$1,134
to
be
capitalized
and
amortized
over
the
life
of
the
new
debt
beginning
in
the
second
quarter
of
fiscal
2015.

Sale-Leaseback

On
March
24,
2009,
Summer
Infant
(USA),
Inc.,
the
Company's
wholly
owned
subsidiary
("Summer
USA"),
entered
into
a
definitive
agreement
with
Faith
Realty
II,
LLC,
a
Rhode
Island
limited
liability
company
("Faith
Realty")
(the
members
of
which
are
Jason
Macari,
the
former
Chief
Executive
Officer
of
the
Company
and
current
investor,
and
his
spouse),
pursuant
to
which
Faith
Realty
purchased
the
corporate
headquarters
of
the
Company
located
at
1275
Park
East
Drive,
Woonsocket,
Rhode
Island
(the
"Headquarters"),
for
$4,052
and
subsequently
leased
the
Headquarters
back
to
Summer
USA
for
an
annual
rent
of
$390
during
the
initial
seven
year
term
of
the
lease,
payable
monthly
and
in
advance.
The
original
lease
was
to
expire
on
the
seventh
anniversary
of
its
commencement.
Mr.
Macari
had
given
a
personal
guarantee
to
secure
the
Faith
Realty
debt
on
its
mortgage;
therefore,
due
to
his
continuing
involvement
in
the
building
transaction,
the
transaction
had
been
recorded
as
a
financing
lease,
with
no
gain
recognition.

On
February
25,
2009,
the
Company's
Board
of
Directors
(with
Mr.
Macari
abstaining
from
such
action)
approved
the
sale
leaseback
transaction.
In
connection
therewith,
the
Board
of
Directors
granted
a
potential
waiver,
to
the
extent
necessary,
if
at
all,
of
the
conflict
of
interest
provisions
of
the
Company's
Code
of
Ethics,
effective
upon
execution
of
definitive
agreements
within
the
parameters
approved
by
the
Board.
In
connection
with
granting
such
potential
waiver,
the
Board
of
Directors
engaged
independent
counsel
to
review
the
sale
leaseback
transaction
and
an
independent
appraiser
to
ascertain
(i)
the
value
of
the
Headquarters
and
(ii)
the
market
rent
for
the
Headquarters.
In
reaching
its
conclusion
that
the
sale
leaseback
transaction
is
fair
to
the
Company,
the
Board
of
Directors
considered
a
number
of
factors,
including
Summer
USA's
ability
to
repurchase
the
headquarters
at
110%
of
the
initial
sale
price
at
the
end
of
the
initial
term.
The
Company's
Audit
Committee
approved
the
sale
leaseback
transaction
(as
a
related
party
transaction)
and
the
potential
waiver
and
recommended
the
matter
to
a
vote
of
the
entire
Board
of
Directors
(which
approved
the
transaction).

On
May
13,
2015,
Summer
USA
entered
into
an
amendment
(the
"Amendment")
to
its
lease
dated
March
24,
2009
(the
"Lease")
with
Faith
Realty
(the
"Landlord").
Pursuant
to
the
Amendment,
(i)
the
initial
term
of
the
Lease
was
extended
for
two
additional
years,
such
that
the
initial
term
now
ends
on
March
31,
2018,
and
the
term
of
the
Lease
may
be
extended
at
Summer
USA's
election
for
one
additional
term
of
three
years
(rather
than
five
years)
upon
twelve
months'
prior
notice,
(ii)
the
annual
rent
for
the
last
two
years
of
the
newly
amended
initial
term
was
set
at
$429
and
the
annual
rent
for
the
extension
period,
if
elected,
was
set
at
$468
and
(iii)
the
Landlord
agreed
to
provide
an
aggregate
improvement
allowance
of
not
more
than
$78
for
the
newly
amended
initial
term,
to
be
applied
against
Summer
USA's
monthly
rent,
and
an
additional
improvement
allowance
of
$234
for
the
extension
term,
if
elected,
to
be
applied
against
Summer
USA's
monthly
rent
during
such
extension
term.
The
Amendment
was
reviewed
and
approved
by
the
audit
committee
because
it
was
a
related
party
transaction.

F-17

Table
of
Contents

4.
DEBT
(Continued)

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

At
December
31,
2016,
approximately
$404
of
the
lease
obligation
was
included
in
accrued
expenses,
with
the
balance
of
approximately
$2,429
included
in
other
liabilities,
in
the
accompanying
consolidated
balance
sheet.
This
obligation
is
reduced
each
month
(along
with
a
charge
to
interest
expense)
as
the
rent
payment
is
made
to
Faith
Realty.

Approximate
future
minimum
sale-leaseback
payments
due
under
the
lease
is
as
follows:

Fiscal
Year
Ending:
2017
2018
2019
and
beyond

Total

5.
INCOME
TAXES

The
provision
(benefit)
for
income
taxes
is
summarized
as
follows:

Current:

Federal
Foreign
State
and
local

Total
current
Deferred:
Federal
Foreign
State
and
local

Total
deferred
Total
benefit

F-18

$ 429

107

—

$ 536

Fiscal
2016

Fiscal
2015

—
$
185

191

(406) $
(910)

(49)

(1,365)

(1,174) $

(150)
389

244

(3,386)
175

(457)
(3,668)
(3,424)

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

5.
INCOME
TAXES
(Continued)

The
tax
effects
of
temporary
differences
that
comprise
the
deferred
tax
liabilities
and
assets
are
as
follows:

December
31,

2016

January
2,

2016

Deferred
tax
assets:

Accounts
receivable
Inventory
and
Unicap
reserve
Research
and
development
credit,
foreign
tax
credit
and
net
operating
loss
carry-

forward

Other

Total
deferred
tax
assets
Deferred
tax
liabilities:

Intangible
assets
and
other
Property,
plant
and
equipment

Total
deferred
tax
liabilities
Valuation
allowance
Deferred
tax
liabilities
and
valuation
allowance
Net
deferred
income
tax
asset

17
$
676

689

7,658

102

8,453

(2,595)

(653)

(3,248)

(1,357)

(4,605)

3,848
$

7,183

103

7,982

(3,233)
(748)
(3.981)
(1,518)
(5,499)
2,483

The
following
reconciles
the
benefit
for
income
taxes
at
the
U.S.
federal
income
tax
statutory
rate
to
the
benefit
in
the
consolidated
financial
statements:

Tax
benefit
at
statutory
rate
State
income
taxes,
net
of
U.S.
federal
income
tax
benefit
Adjustment
to
uncertain
tax
position
Stock
options
Foreign
tax
rate
differential
Tax
credits
Non-deductible
expenses
Other
Total
benefit

Fiscal
2016

Fiscal
2015

(1,869) $
(28)

133

(123)

498

131

(1,174) $

(4,093)
(298)
327

289

(150)
438

(29)
(3,424)

The
Company
had
undistributed
earnings
from
certain
foreign
subsidiaries
(Summer
Infant
Asia,
Summer
Infant
Australia,
and
Born
Free
Holdings,
Ltd)
of
approximately
$12,588
at
December
31,
2016,
and
all
of
these
earnings
are
considered
to
be
permanently
reinvested
due
to
the
Company's
plans
to
reinvest
such
earnings
for
future
expansion
in
certain
foreign
jurisdictions.
Earnings
and
profits
from
Summer
Infant
Europe
and
Summer
Infant
Canada
are
not
considered
to
be
permanently
reinvested
due
to
the
bank
refinancing
as
discussed
in
Note
4—Debt.
The
amount
of
taxes
attributable
to
the
permanently
reinvested
undistributed
earnings
is
not
practicably
determinable.

As
of
December
31,
2016,
the
Company
has
approximately
$7,016,000
of
federal
and
state
net
operating
loss
carry
forwards
(or
"NOLs")
to
offset
future
federal
taxable
income.
The
federal
NOL

F-19

Table
of
Contents

5.
INCOME
TAXES
(Continued)

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

will
begin
to
expire
in
2028
and
the
state
NOL
began
to
expire
in
2016.
The
Company
also
has
approximately
$1,839,
$530,
and
$708
of
NOLs
in
Canada,
Australia,
and
the
United
Kingdom,
which
can
be
carried
forward
indefinitely.

Authoritative
guidance
requires
a
valuation
allowance
to
reduce
the
deferred
tax
assets
reported,
if
based
on
the
weight
of
the
evidence,
it
is
more
likely
than
not
that
some
portion
or
all
of
the
deferred
tax
assets
will
not
be
realized.
After
consideration
of
all
evidence,
including
the
Company's
past
earnings
history
and
future
earnings
forecast,
management
has
determined
that
a
valuation
allowance
in
the
amount
of
$1,357
relating
to
certain
state
tax
credits
is
necessary
at
December
31,
2016
and
$1,518
at
January
2,
2016.

A
summary
of
the
Company's
adjustment
to
its
uncertain
tax
positions
in
fiscal
years
ended
December
31,
2016
and
January
2,
2016
are
as
follows:

Balance,
at
beginning
of
the
year

Increase
for
tax
positions
related
to
the
current
year
Increase
for
tax
positions
related
to
prior
years
Increase
for
interest
and
penalties
Decrease
for
lapses
of
statute
of
limitations

Balance,
at
end
of
year

December
31,

2016

January
2,

2016

327
$
—

—

341
$

—

283

—

327

The
unrecognized
tax
benefits
mentioned
above
include
an
aggregate
of
$58
of
accrued
interest
and
penalty
balances
related
to
uncertain
tax
positions.
The
Company
recognizes
interest
and
penalties
related
to
uncertain
tax
positions
in
income
tax
expense.
An
increase
in
accrued
interest
and
penalty
charges
of
approximately
$14,
net
of
federal
tax
expense,
was
recorded
as
a
tax
expense
during
the
current
fiscal
year.
The
Company
does
not
anticipate
that
its
accrual
for
uncertain
tax
positions
will
be
reduced
by
a
material
amount
over
the
next
twelve
month
period,
as
it
does
not
expect
to
settle
any
potential
disputed
items
with
the
appropriate
taxing
authorities
nor
does
it
expect
the
statute
of
limitations
to
expire
for
any
items.

The
Company
is
subject
to
U.S.
federal
income
tax,
as
well
as
to
income
tax
of
multiple
state
and
foreign
tax
jurisdictions.
On
a
global
basis,
the
open
tax
years
subject
to
examination
by
major
taxing
jurisdictions
in
which
the
Company
operates
is
between
two
to
six
years.

6.
SHARE
BASED
COMPENSATION

The
Company
is
authorized
to
issue
up
to
3,000,000
shares
for
equity
awards
under
the
Company's
2006
Performance
Equity
Plan
("2006
Plan")
and
1,700,000
shares
for
equity
awards
under
the
Company's
2012
Incentive
Compensation
Plan
(as
amended,
"2012
Plan").
Periodically,
the
Company
also
provides
equity
awards
outside
of
the
plans.

F-20

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

6.
SHARE
BASED
COMPENSATION
(Continued)

Under
the
2006
Plan
and
2012
Plan,
awards
may
be
granted
to
participants
in
the
form
of
non-qualified
stock
options,
incentive
stock
options,
restricted
stock,
deferred
stock,
restricted
stock
units
and
other
stock-based
awards.
Subject
to
the
provisions
of
the
Plans,
awards
may
be
granted
to
employees,
officers,
directors,
advisors
and
consultants
who
are
deemed
to
have
rendered
or
are
able
to
render
significant
services
to
the
Company
or
its
subsidiaries
and
who
are
deemed
to
have
contributed
or
to
have
the
potential
to
contribute
to
the
Company's
success.
The
Company
accounts
for
options
under
the
fair
value
recognition
standard.
The
application
of
this
standard
resulted
in
share-based
compensation
expense
for
the
twelve
months
ended
December
31,
2016
and
January
2,
2016
of
$482
and
$865,
respectively.
Share
based
compensation
expense
is
included
in
selling,
general
and
administrative
expenses.

As
of
December
31,
2016,
there
are
561,729
shares
available
to
grant
under
the
2006
Plan
and
1,393,797
shares
available
to
grant
under
the
2012
Plan.

Stock Options

The
fair
value
of
each
option
award
is
estimated
on
the
date
of
grant
using
the
Black-Scholes
option
valuation
model
that
uses
the
assumptions
noted
in
the
table
below.
The
Company
uses
the
simplified
method
to
estimate
the
expected
term
of
the
options
for
grants
of
"plain
vanilla"
stock
options
as
prescribed
by
the
Securities
and
Exchange
Commission.
Forfeitures
are
estimated
at
the
time
of
grant
and
revised,
if
necessary,
in
subsequent
periods
if
actual
forfeitures
differ
from
those
estimates.
Share-based
compensation
expense
recognized
in
the
consolidated
financial
statements
in
fiscal
2016
and
2015
is
based
on
awards
that
are
ultimately
expected
to
vest.

The
following
table
summarizes
the
weighted
average
assumptions
used
for
options
granted
during
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016.

Fiscal

2016

Fiscal

2015

Expected
life
(in
years)
Risk-free
interest
rate
Volatility
Dividend
yield
Forfeiture
rate

5.1

1.3%

5.3

1.6%

70.8%
67.4%
0.0%

21.0%
16.5%

0.0%

The
weighted-average
grant
date
fair
value
of
options
granted
during
the
year
ended
December
31,
2016
was
$0.92
per
share
which
totaled
$316
for
the
343,300
options
granted
during
such
period.
During
the
year
ended
January
2,
2016,
the
weighted-average
grant
date
fair
value
of
options
granted
was
$1.58
per
share
which
totaled
$767
for
the
485,750
options
granted
during
the
year.

F-21

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

6.
SHARE
BASED
COMPENSATION
(Continued)

A
summary
of
the
status
of
the
Company's
options
as
of
December
31,
2016
and
changes
during
the
year
then
ended
is
presented
below:

Outstanding
at
beginning
of
year
Granted
Canceled
Outstanding
at
end
of
year
Options
exercisable
at
December
31,
2016

Number
Of

Weighted-Average

Exercise
Price

1,302,213
$
343,300
$
621,688
$

1,023,825
$
515,407
$

3.45

1.56

3.23

2.93

3.88

Outstanding
stock
options
expected
to
vest
as
of
December
31,
2016
is
882,342.
The
intrinsic
value
of
options
exercised
totaled
was
zero
and
$27
for
the
fiscal
years
ended
December
31,
2016
and
January
2,
2016,
respectively.

The
following
table
summarizes
information
about
stock
options
at
December
31,
2016:

Range
of

Exercise
Prices
$1.29
-
$2.00

$2.01
-
$3.00

$3.01
-
$4.00

$4.01
-
$6.00

$6.01
-
$8.00

Number

Outstanding

355,300

310,500

134,000

174,325

49,700

1,023,825

Options
Outstanding

Options
Exercisable

Remaining

Contractual

Life
(years)

Weighted

Average

Exercise

Price

Number

Exercisable

Remaining

Contractual

Life

Weighted

Average

Exercise

Price

8.9

6.3

7.0

1.1

4.0

6.3

$
$
$
$
$
$

1.56

2.36

3.32

5.28

7.04

2.93

50,750

152,630

88,002

174,325

49,700

515,407

7.4

3.7

6.8

1.1

4.0

3.8

$
$
$
$
$
$

1.82

2.25

3.34

5.28

7.04

3.88

The
aggregate
intrinsic
value
of
options
outstanding
and
exercisable
at
December
31,
2016
and
January
2,
2016
are
$9
and
$36,
respectively.
As
of
December
31,
2016,
there
was
approximately
$322
of
unrecognized
compensation
cost
related
to
non-vested
stock
option
awards,
which
is
expected
to
be
recognized
over
a
remaining
weighted-average
vesting
period
of
2.7
years.

Restricted Stock Awards

Restricted
stock
awards
require
no
payment
from
the
grantee.
The
related
compensation
cost
of
each
award
is
calculated
using
the
market
price
on
the
grant
date
and
is
expensed
equally
over
the

F-22

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

6.
SHARE
BASED
COMPENSATION
(Continued)

vesting
period.
A
summary
of
restricted
stock
awards
made
in
the
year
ended
December
31,
2016,
is
as
follows:

Non-vested
restricted
stock
awards
as
of
January
2,
2016
Granted
Vested
Forfeited
Non-vested
restricted
stock
awards
as
of
December
31,
2016

Number
of

Grant
Date

Fair
Value

175,844
$

236,900
$

102,524
$
41,788
$

268,432
$

2.70

1.63

2.39

2.09

1.96

As
of
December
31,
there
was
approximately
$282
of
unrecognized
compensation
cost
related
to
non-vested
stock
compensation
arrangements
granted
under
the
Company's
stock
incentive
plan
for
restricted
stock
awards.
That
cost
is
expected
to
be
recognized
over
the
next
2.6
years.

Restricted Stock Units

In
December
2015,
the
Company's
Board
of
Directors
granted
restricted
stock
units
("RSUs")
to
the
executive
Chairman
of
the
Board.
The
RSUs
represent
the
right
to
receive
shares
of
the
Company's
common
stock
upon
achievement
of
specified
stock
price
performance
metrics,
and
only
vest
if
such
market-based
performance
metrics
are
achieved.
There
was
$26
of
recognized
compensation
cost
for
the
year
ended
December
31,
2016.
The
RSUs
expired
on
August
3,
2016.

On
July
13,
2016,
the
Company
granted
100,000
performance-based
RSUs
to
its
new
Chief
Executive
Officer.
The
RSUs
represent
the
right
to
receive
shares
of
the
Company's
common
stock
upon
achievement
of
specified
performance
metrics,
and
only
vest
if
such
performance
metrics
are
achieved
for
fiscal
year
2017
and
fiscal
year
2018.
The
RSU's
expire
if
the
performance
metrics
are
not
achieved
or
if
employment
is
terminated.
The
fair
value
of
the
RSUs
will
be
recognized
as
it
is
earned
and
when
it
is
probable
that
the
performance
conditions
will
be
met.
The
Company
has
not
recognized
any
compensation
expense
in
2016
related
to
this
award.

7.
CAPITAL
LEASE
OBLIGATIONS

The
Company
leased
certain
equipment
under
capital
leases
which
expired
in
December
2016.
The
capital
lease
liability
balance
of
approximately
$0
and
$71
is
included
in
debt
on
the
consolidated
balance
sheets
as
of
December
31,
2016
and
January
2,
2016,
of
which
approximately
$0
and
$2
is
included
in
long-term
liabilities
as
of
December
31,
2016
and
January
2,
2016,
respectively.

8.
PROFIT
SHARING
PLAN

Summer
Infant
(USA),
Inc.
maintains
a
defined
contribution
salary
deferral
plan
under
Section
401(k)
of
the
Internal
Revenue
Code.
All
employees
who
meet
the
plan's
eligibility
requirements
can
participate.
Employees
may
elect
to
make
contributions
up
to
federal
limitations.
In
2007,
the
Company
adopted
a
matching
plan
which
was
further
amended
in
2013,
and
which
was
funded
throughout
the
year.
For
the
years
ended
December
31,
2016
and
January
2,
2016,
the
Company
recorded
401(k)
matching
expense
of
$356
and
$366,
respectively.

F-23

Table
of
Contents

9.
MAJOR
CUSTOMERS

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

10.
COMMITMENTS
AND
CONTINGENCIES

Royalty Commitments

Summer
Infant
(USA),
Inc.
has
entered
into
various
license
agreements
with
third
parties
for
the
use
of
product
designs,
software
licenses,
and
trade
names
for
the
products
manufactured
by
the
Company.
These
agreements
have
termination
dates
through
December
2017.
Royalty
expense
under
these
licensing
agreements
for
the
years
ended
December
31,
2016
and
January
2,
2016
were
approximately
$315
and
$735,
respectively.

Customer Agreements

The
Company
enters
into
annual
agreements
with
its
customers
in
the
normal
course
of
business.
These
agreements
define
the
terms
of
product
sales
including,
in
some
instances,
cooperative
advertising
costs
and
product
return
privileges
(for
defective
products
only)
or
defective
allowances
(which
are
based
upon
historical
experience).
These
contracts
are
generally
annual
in
nature
and
obligate
the
Company
only
as
to
products
actually
sold
to
the
customer
pursuant
to
a
purchase
order.

Lease Commitments

For
lease
agreements
with
escalation
clauses,
the
Company
records
the
total
rent
to
be
paid
under
the
lease
on
a
straight-line
basis
over
the
term
of
the
lease,
with
the
difference
between
the
expense
recognized
and
the
cash
paid
recorded
as
a
deferred
rent
liability
included
in
accrued
expenses
on
the
balance
sheet
for
amounts
to
be
recognized
within
twelve
months
and
in
other
liabilities
for
amounts
to
be
recognized
after
twelve
months
from
the
balance
sheet
date,
in
the
consolidated
balance
sheets.
Lease
incentives
are
recorded
as
deferred
rent
at
the
beginning
of
the
lease
term
and
recognized
as
a
reduction
of
rent
expense
over
the
term
of
the
lease.

Summer
Infant
Europe
Limited
leases
office
space
under
a
non-cancelable
operating
lease
agreement.
This
lease
is
for
a
five-year
term
through
April
2017,
and
requires
monthly
payments
of
approximately
$6.
In
addition,
Summer
Infant
Europe
Limited
is
required
to
pay
its
proportionate
share
of
property
taxes.

Summer
Infant
Canada,
Ltd.
entered
into
a
five-year
lease
for
office
and
warehouse
space
under
a
non-cancelable
operating
lease
agreement
expiring
June
2018.
The
Company
is
obligated
as
part
of
the
lease
to
pay
maintenance
expenses
as
well
as
property
taxes
and
insurance
costs
as
defined
in
the
agreement.
Monthly
payments
are
approximately
$27
over
the
course
of
the
lease
term.
Summer
Infant
Canada,
Ltd.
has
the
option
to
renew
this
lease
for
one
additional
period
of
five
years
under
similar
terms
and
conditions.

Summer
Infant
(USA)
Inc.
entered
into
a
72
month
lease
in
September
2010
for
warehouse
space
under
a
non-cancelable
operating
lease
agreement.
The
Company
is
obligated
to
pay
certain
common
area
maintenance
charges
including
insurance
and
utilities.
The
lease
was
extended
in
2015
and
now

F-24

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

10.
COMMITMENTS
AND
CONTINGENCIES
(Continued)

expires
in
September
2021.
Monthly
payments
were
$166
in
fiscal
2016
and
escalate
to
$186
over
the
remaining
life
of
the
lease.

During
November
2015,
Summer
Infant
Asia
entered
into
a
two
year
office
lease
which
requires
monthly
payments
of
$10
through
2017.

Approximate
future
minimum
rental
payments
due
under
these
leases
are
as
follows(a):

Fiscal
Year
Ending:
2017
2018
2019
2020
2021
and
beyond

Total

2,415

2,215

2,140

2,185

1,676

$ 10,631

(a)

Amounts
exclude
payments
for
sales-leaseback
transaction
as
described
in
Note
4.

Rent
expense
(excluding
taxes,
fees
and
other
charges)
for
the
years
ended
December
31,
2016
and
January
2,
2016
totaled
approximately
$2,692
and
$1,906,
respectively.

Employment Contracts

In
accordance
with
United
Kingdom
and
EU
law,
Summer
Infant
Europe
Limited
is
required
to
have
employment
contracts
with
all
of
its
employees.
In
connection
with
these
contracts,
Summer
Infant
Europe
Limited
makes
individual
pension
contributions
to
certain
employees
at
varying
rates
from
3-7%
of
the
employee's
annual
salary,
as
part
of
their
total
compensation
package.
These
pension
contributions
are
expensed
as
incurred.
There
are
no
termination
benefit
provisions
in
these
contracts.

Litigation

The
Company
is
a
party
to
routine
litigation
and
administrative
complaints
incidental
to
its
business.
The
Company
does
not
believe
that
the
resolution
of
any
or
all
of
such
routine
litigation
and
administrative
complaints
is
likely
to
have
a
material
adverse
effect
on
the
Company's
financial
condition
or
results
of
operations.

On
May
27,
2015,
the
Company
filed
a
Complaint
against
Carol
E.
Bramson,
Annamaria
Dooley,
Kenneth
N.
Price,
Carson
J.
Darling,
Dulcie
M.
Madden,
and
Bruce
Work
in
the
United
States
District
Court
for
the
District
of
Rhode
Island
(Civil
Action
No.
1:15-CV-00218-5-LDA)
(the
"Complaint").
The
Complaint
alleged
theft
and
misappropriation
of
the
Company's
confidential
and
proprietary
trade
secrets,
intellectual
property,
and
business,
branding
and
marketing
strategies.
Ms.
Bramson
is
a
former
member
of
the
Company's
Board
of
Directors
and
the
Company's
former
Chief
Executive
Officer,
Ms.
Dooley
is
the
Company's
former
Senior
Vice
President
of
Product
Development,
and
Mr.
Price
is
the
former
President
of
Global
Sales
&
Marketing
of
the
Company.
Mr.
Darling
and
Ms.
Madden
are
principals
of
Rest
Devices,
Inc.,
a
former
consultant
to
the
Company
(the
"Rest
Defendants").

On
August
25,
2015,
the
Company
and
the
Rest
Defendants
reached
an
agreement-in-principle
with
regard
to
a
proposed
settlement,
and
the
Company
subsequently
withdrew
its
motion
for
a

F-25

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

10.
COMMITMENTS
AND
CONTINGENCIES
(Continued)

preliminary
injunction.
On
November
1,
2015,
the
Company
and
the
Rest
Defendants
entered
into
a
confidential
settlement
agreement
(the
"Rest
Settlement
Agreement")
pursuant
to
which
the
Company
and
the
Rest
Defendants
mutually
released
claims
against
each
other,
and
the
Company
voluntarily
dismissed
all
claims
in
the
Complaint
against
the
Rest
Defendants.
The
Rest
Settlement
Agreement
did
not
release
any
claims
against
Mmes.
Bramson
or
Dooley
or
Mr.
Price.

In
December
2016,
the
remaining
parties
in
the
action
resolved
their
claims
against
each
other,
and
the
Court
entered
a
Stipulation
and
Order
of
Voluntary
Dismissal
on
January
19,
2017.
There
there
was
no
material
impact
on
the
financial
statements
as
a
result
of
the
settlement.

11.
GEOGRAPHICAL
INFORMATION

The
Company
sells
products
throughout
the
United
States,
Canada,
and
the
United
Kingdom,
and
various
other
parts
of
the
world.
The
Company
does
not
disclose
product
line
revenues
as
it
is
not
practicable
for
the
Company
to
do
so.

The
following
is
a
table
that
presents
net
revenue
by
geographic
area:

For
the
fiscal
year

ended

United
States
All
Other

The
following
is
a
table
that
presents
total
assets
by
geographic
area:

January
2,

2016

December
31,

2016
163,381
$ 171,310

30,947

34,494

194,328
$ 205,804

United
States
All
Other

The
following
is
a
table
that
presents
total
long
lived
assets
by
geographic
area:

December
31,

2016

January
2,

2016
90,890

84,519
$
17,218

22,248

101,737
$ 113,138

United
States
All
Other

12.
SUBSEQUENT
EVENTS

December
31,

2016

January
2,

2016
25,375

7,722

33,097

24,512
$
4,212

28,724
$

The
Company
has
evaluated
all
events
or
transactions
that
occurred
after
December
31,
2016
through
the
date
of
this
Annual
Report.

F-26

Table
of
Contents

SUMMER
INFANT,
INC.
AND
SUBSIDIAIRES

NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)

12.
SUBSEQUENT
EVENTS
(Continued)

On
February
17,
2017,
the
Company
and
its
subsidiaries,
Summer
Infant
(USA),
Inc.,
Summer
Infant
Canada,
Limited
and
Summer
Infant
Europe
Limited,
entered
into
an
amendment
and
waiver
(the
"Loan
Amendment")
to
the
Credit
Facility.
Pursuant
to
the
Loan
Amendment,
the
Lenders
agreed
to
waive
the
existing
delivery
date
by
which
the
Company
must
deliver
projections
for
the
2017
fiscal
year,
and
extended
the
date
to
March
1,
2017.
In
addition,
the
Loan
Amendment
amended
certain
provisions
of
the
Credit
Facility
to
provide
additional
flexibility
to
the
Company
during
fiscal
2017,
including
(i)
amending
the
definitions
of
"Availability,"
"Availability
Reserve"
and
"Eligible
Account";
(ii)
amending
the
definition
of
EBITDA
with
respect
to
bonus
payments
and
certain
fees
and
expenses
that
can
be
added
back
to
the
calculation
of
EBITDA;
and
(iii)
amending
the
definition
of
"Fixed
Charges"
and
revised
the
maximum
leverage
ratio
financial
covenant
to
be
maintained
as
of
the
end
of
each
fiscal
quarter.

F-27

Table
of
Contents

Exhibit

No.

2.1

2.2

2.3

2.4

3.1+

3.2

4.1

10.1

10.2*

10.3

10.4

10.5

Index
to
Exhibits

Description

Agreement
and
Plans
of
Reorganization,
dated
as
of
September
1,
2006,
by
and
among
KBL
Healthcare
Acquisition
Corp.
II,
and
its
wholly
owned
subsidiary,
SII
Acquisition
Inc.,
and
Summer
Infant,
Inc.,
Summer
Infant
Europe
Limited,
Summer
Infant
Asia,
Ltd.
and
their
respective
stockholders
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
September
5,
2006,
SEC
File
No.
000-
51228)

Purchase
and
Sale
Agreement,
dated
March
24,
2009,
between
Summer
Infant
(USA),
Inc.
and
Faith
Realty
II,
LLC
(Incorporated
by
reference
to
Exhibit
2.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q/A
filed
on
August
18,
2009,
SEC
File
No.
001-33346)

Lease
Agreement,
dated
March
24,
2009,
between
Summer
Infant
(USA),
Inc.
and
Faith
Realty
II,
LLC
(Incorporated
by
reference
to
Exhibit
2.2
to
the
Registrant's
Quarterly
Report
on
Form
10-Q/A
filed
on
August
18,
2009,
SEC
File
No.
001-33346)

Stock
Purchase
Agreement,
dated
as
of
March
24,
2011,
by
and
among
the
Registrant,
Summer
Infant
(USA),
Inc.,
Born
Free
Holdings
Ltd.,
and
each
stockholder
of
Born
Free
Holdings
Ltd.
(Incorporated
by
reference
to
Exhibit
2.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
March
28,
2011,
File
No.
001-
33346)

Amended
and
Restated
Certificate
of
Incorporation,
as
amended

Amended
and
Restated
Bylaws,
as
amended
through
May
5,
2016
(Incorporated
by
reference
to
Exhibit
3.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
May
9,
2016)

Specimen
Common
Stock
Certificate
(Incorporated
by
reference
to
Exhibit
4.2
to
the
Registrant's
Form
8-A
filed
on
March
6,
2007,
SEC
File
No.
001-33346)

Registration
Rights
Agreement
by
and
among
the
Registrant,
Jason
Macari
and
Steven
Gibree
(Incorporated
by
reference
to
Exhibit
10.9
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
September
5,
2006,
SEC
File
No.
000-51228)

2006
Performance
Equity
Plan
(Incorporated
by
reference
to
Appendix
A
to
the
Registrant's
Definitive
Proxy
Statement
on
Schedule
14A
filed
on
April
29,
2008,
SEC
File
No.
001-33346)

Amended
and
Restated
Loan
and
Security
Agreement,
dated
as
of
April
21,
2015,
among
Summer
Infant,
Inc.
and
Summer
Infant
(USA),
Inc.
as
Borrowers,
the
Guarantors
from
time
to
time
party
thereto,
Certain
Financial
Institutions
as
Lenders,
Bank
of
America,
N.A.
as
Agent,
and
Merrill
Lynch,
Pierce,
Fenner
&
Smith
Incorporated,
as
Sole
Lead
Arranger
and
Sole
Book
Runner
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
April
22,
2015)

Amendment
to
Amended
and
Restated
Loan
and
Security
Agreement,
dated
as
of
December
10,
2015,
among
Summer
Infant,
Inc.
and
Summer
Infant
(USA),
Inc.,
as
Borrowers,
Summer
Infant
Canada,
Limited
and
Summer
Infant
Europe
Limited,
as
Guarantors,
Certain
Financial
Institutions
as
Lenders
and
Bank
of
America,
N.A.
as
Agent
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
December
14,
2015)

Second
Amendment
to
Amended
and
Restated
Loan
and
Security
Agreement,
dated
as
of
May
24,
2016,
among
Summer
Infant,
Inc.
and
Summer
Infant
(USA),
Inc.,
as
Borrowers,
Summer
Infant
Canada,
Limited
and
Summer
Infant
Europe
Limited,
as
Guarantors,
Certain
Financial
Institutions
as
Lenders
and
Bank
of
America,
N.A.
as
Agent
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filed
on
August
2,
2016)

10.6*

2012
Incentive
Compensation
Plan,
as
amended
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
August
5,
2015)

Table
of
Contents

Exhibit

No.

10.7*

10.8

10.9*

10.10*

10.11*

10.12

10.13*

10.14+

21.1

23.1+

31.1+

31.2+

32.1+

32.2+

Form
of
Change
of
Control
Agreement
with
Chief
Financial
Officer,
Chief
Operating
Officer
and
other
key
employees
(Incorporated
by
reference
to
Exhibit
10.2
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
December
14,
2015)

Description

Separation
Agreement
and
Release,
dated
as
of
January
15,
2014,
by
and
between
the
Registrant
and
Jason
Macari
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
January
17,
2014)

Summer
Infant,
Inc.
Form
of
Indemnification
Agreement
(for
officers
and
directors)
(Incorporated
by
reference
to
Exhibit
10.3
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
January
17,
2014)

Offer
Letter
and
Change
of
Control
Agreement
by
and
between
the
Registrant
and
William
E.
Mote
(Incorporated
by
reference
to
Exhibit
10.19
to
the
Registrant's
Annual
Report
on
Form
10-K
filed
on
March
4,
2015)

Offer
Letter
and
Change
of
Control
Agreement
by
and
between
the
Registrant
and
Robert
Stebenne
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filed
on
May
7,
2015)

Amendment
to
Lease,
dated
May
13,
2015,
by
and
between
Faith
Realty
II,
LLC
and
Summer
Infant
(USA),
Inc.
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
May
19,
2015)

Employment
Agreement,
dated
as
of
June
27,
2016,
by
and
between
the
Registrant
and
Mark
Messner
(Incorporated
by
reference
to
Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
on
June
29,
2016)

Third
Amendment
and
Waiver
to
Amended
and
Restated
Loan
and
Security
Agreement,
dated
as
of
February
17,
2017,
among
Summer
Infant,
Inc.
and
Summer
Infant
(USA),
Inc.,
as
Borrowers,
Summer
Infant
Canada,
Limited
and
Summer
Infant
Europe
Limited,
as
Guarantors,
Certain
Financial
Institutions
as
Lenders
and
Bank
of
America,
N.A.
as
Agent

List
of
Subsidiaries
(Incorporated
by
reference
to
Exhibit
21.1
to
the
Registrant's
Annual
Report
on
Form
10-K
filed
on
March
13,
2013)

Consent
of
Independent
Registered
Public
Accounting
Firm

Certification
of
Chief
Executive
Officer
pursuant
to
Section
302
of
the
Sarbanes-Oxley
Act
of
2002

Certification
of
Chief
Financial
Officer
pursuant
to
Section
302
of
the
Sarbanes-Oxley
Act
of
2002

Certification
of
Chief
Executive
Officer
pursuant
to
18
U.S.C.
Section
1350
(Section
906
of
the
Sarbanes-Oxley
Act
of
2002)

Certification
of
Chief
Financial
Officer
pursuant
to
18
U.S.C.
Section
1350
(Section
906
of
the
Sarbanes-Oxley
Act
of
2002)

101.INS

XBRL
Instance
Document

101.SCH

XBRL
Taxonomy
Extension
Schema
Document

101.CAL

XBRL
Taxonomy
Extension
Calculation
Linkbase
Document

101.DEF

XBRL
Taxonomy
Extension
Definition
Linkbase
Document

101.LAB

XBRL
Taxonomy
Extension
Labels
Linkbase
Document

101.PRE

XBRL
Taxonomy
Extension
Presentation
Linkbase
Document

Management
contract
or
compensatory
plan
or
arrangement.

Filed
herewith.

Exhibit
3.1

AMENDED
AND
RESTATED

CERTIFICATE
OF
INCORPORATION

SUMMER
INFANT,
INC.

(
Conformed
copy
incorporating
all
amendments
through
June
24,
2014
)

Pursuant
to
Section
245
of
the
Delaware
General
Corporation
Law

FIRST:

The
name
of
the
corporation
is
“Summer
Infant,
Inc.”
(hereinafter
sometimes
referred
to
as
the
“Corporation”).

SECOND:
The
registered
office
of
the
Corporation
is
to
be
located
at
615
South
DuPont
Highway,
Kent
County,
Dover,
Delaware.
The
name
of
its

registered
agent
at
that
address
is
National
Corporate
Research,
Ltd.

THIRD:

The
purpose
of
the
Corporation
shall
be
to
engage
in
any
lawful
act
or
activity
for
which
corporations
may
be
organized
under
the
GCL.

FOURTH:

The
total
number
of
shares
of
all
classes
of
capital
stock
which
the
Corporation
shall
have
authority
to
issue
is
50,000,000
of
which
49,000,000
shares
shall
be
Common
Stock,
having
a
par
value
of
$0.0001
per
share,
and
1,000,000
shares
shall
be
Preferred
Stock,
having
a
par
value
of
$0.0001
per
share.

Preferred
Stock
.

The
Board
of
Directors
is
expressly
granted
authority
to
issue
shares
of
the
Preferred
Stock,
in
one
or
more
series,
and
to
fix

for
each
such
series
such
voting
powers,
full
or
limited,
and
such
designations,
preferences
and
relative,
participating,
optional
or
other
special
rights
and
such
qualifications,
limitations
or
restrictions
thereof
as
shall
be
stated
and
expressed
in
the
resolution
or
resolutions
adopted
by
the
Board
of
Directors
providing
for
the
issue
of
such
series
(a
“Preferred
Stock
Designation”)
and
as
may
be
permitted
by
the
GCL.

The
number
of
authorized
shares
of
Preferred
Stock
may
be
increased
or
decreased
(but
not
below
the
number
of
shares
thereof
then
outstanding)
by
the
affirmative
vote
of
the
holders
of
a
majority
of
the
voting
power
of
all
of
the
then
outstanding
shares
of
the
capital
stock
of
the
Corporation
entitled
to
vote
generally
in
the
election
of
directors,
voting
together
as
a
single
class,
without
a
separate
vote
of
the
holders
of
the
Preferred
Stock,
or
any
series
thereof,
unless
a
vote
of
any
such
holders
is
required
pursuant
to
any
Preferred
Stock
Designation.

Common
Stock
.

Except
as
otherwise
required
by
law
or
as
otherwise
provided
in
any
Preferred
Stock
Designation,
the
holders
of
the
Common

Stock
shall
exclusively
possess
all
voting
power
and
each
share
of
Common
Stock
shall
have
one
vote.

FIFTH:

The
name
and
mailing
address
of
the
sole
incorporator
of
the
Corporation
are
as
follows:

Name

Address

Jeffrey
M.
Gallant

Graubard
Miller
The
Chrysler
Building
405
Lexington
Avenue
New
York,
New
York
10174

SIXTH:

The
Board
of
Directors
shall
be
divided
into
three
classes:
Class
A,
Class
B
and
Class
C.

The
number
of
directors
in
each
class
shall
be
as
nearly
equal
as
possible.

The
directors
in
Class
A
shall
be
elected
for
a
term
expiring
at
the
first
Annual
Meeting
of
Stockholders,
the
directors
in
Class
B
shall
be
elected
for
a
term
expiring
at
the
second
Annual
Meeting
of
Stockholders
and
the
directors
in
Class
C
shall
be
elected
for
a
term
expiring
at
the
third
Annual
Meeting
of
Stockholders.
Commencing
at
the
first
Annual
Meeting
of
Stockholders,
and
at
each
annual
meeting
thereafter,
directors
elected
to
succeed
those
directors
whose
terms
expire
shall
be
elected
for
a
term
of
office
to
expire
at
the
third
succeeding
annual
meeting
of
stockholders
after
their
election.

Notwithstanding
and
irrespective
of
the
provisions
set
forth
in
the
first
four
sentences
of
this
Article
Sixth,
at
each
annual
election
of
the
Corporation’s
directors
commencing
with
and
at
the
2014
Annual
Meeting
of
Stockholders,
the
successors
to
the
class
of
the
Corporation’s
directors
whose
term
of
office
expires
at
such
time
shall
be
elected
to
hold
office
for
a
term
of
one
year
(and
not
three
years),
and
commencing
with
and
at
the
2016
Annual
Meeting
of
Stockholders,
the
division
of
the
Board
of
Directors
into
three
classes
as
nearly
equal
in
size
as
possible
shall
terminate,
and
thereupon
and
continuing
indefinitely
thereafter,
at
each
annual
election
of
directors,
all
directors
of
the
Corporation
shall
be
constituted
of
one
class
and
all
such
directors
shall
be
elected
on
an
annual
basis.

Except
as
the
GCL
may
otherwise
require,
in
the
interim
between
annual
meetings
of
stockholders
or
special
meetings
of
stockholders
called
for
the
election
of
directors
and/or
the
removal
of
one
or
more
directors
and
the
filling
of
any
vacancy
in
that
connection,
newly
created
directorships
and
any
vacancies
in
the
Board
of
Directors,
including
unfilled
vacancies
resulting
from
the
removal
of
directors
for
cause,
may
be
filled
by
the
vote
of
a
majority
of
the
remaining
directors
then
in
office,
although
less
than
a
quorum
(as
defined
in
the
Corporation’s
Bylaws),
or
by
the
sole
remaining
director.

All
directors
shall
hold
office
until
the
expiration
of
their
respective
terms
of
office
and
until
their
successors
shall
have
been
elected
and
qualified.

A
director
elected
to
fill
a
vacancy
resulting
from
the
death,
resignation
or
removal
of
a
director
shall
serve
for
the
remainder
of
the
full
term
of
the
director
whose
death,
resignation
or
removal
shall
have
created
such
vacancy
and
until
his
successor
shall
have
been
elected
and
qualified.

SEVENTH:

The
following
provisions
are
inserted
for
the
management
of
the
business
and
for
the
conduct
of
the
affairs
of
the
Corporation,
and
for

further
definition,
limitation
and
regulation
of
the
powers
of
the
Corporation
and
of
its
directors
and
stockholders:

Election
of
directors
need
not
be
by
ballot
unless
the
by-laws
of
the
Corporation
so
provide.

The
Board
of
Directors
shall
have
the
power,
without
the
assent
or
vote
of
the
stockholders,
to
make,
alter,
amend,
change,
add
to
or
repeal
the

by-laws
of
the
Corporation
as
provided
in
the
by-laws
of
the
Corporation.

The
directors
in
their
discretion
may
submit
any
contract
or
act
for
approval
or
ratification
at
any
annual
meeting
of
the
stockholders
or
at
any

meeting
of
the
stockholders
called
for
the
purpose
of
considering
any
such
act
or
contract,
and
any
contract
or
act
that
shall
be
approved
or
be
ratified
by
the
vote
of
the
holders
of
a
majority
of
the
stock
of
the
Corporation
which
is
represented
in
person
or
by
proxy
at
such
meeting
and
entitled
to
vote
thereat
(provided
that
a
lawful
quorum
of
stockholders
be
there
represented
in
person
or
by
proxy)
shall
be
as
valid
and
binding
upon
the
Corporation
and
upon
all
the
stockholders
as
though
it
had
been
approved
or
ratified
by
every
stockholder
of
the
Corporation,
whether
or
not
the
contract
or
act
would
otherwise
be
open
to
legal
attack
because
of
directors’
interests,
or
for
any
other
reason.

In
addition
to
the
powers
and
authorities
hereinbefore
or
by
statute
expressly
conferred
upon
them,
the
directors
are
hereby
empowered
to

exercise
all
such
powers
and
do
all
such
acts
and
things
as
may
be
exercised
or
done
by
the
Corporation;
subject,
nevertheless,
to
the
provisions
of
the
statutes
of
Delaware,
of
this
Certificate
of
Incorporation,
and
to
any
by-laws
from
time
to
time
made
by
the
stockholders;
provided,
however,
that
no
by-law
so
made
shall
invalidate
any
prior
act
of
the
directors
which
would
have
been
valid
if
such
by-law
had
not
been
made.

EIGHTH:

A
director
of
the
Corporation
shall
not
be
personally
liable
to
the
Corporation
or
its
stockholders
for
monetary
damages
for

breach
of
fiduciary
duty
as
a
director,
except
for
liability
(i)
for
any
breach
of
the
director’s
duty
of
loyalty
to
the
Corporation
or
its
stockholders,
(ii)
for
acts
or
omissions
not
in
good
faith
or
which
involve
intentional
misconduct
or
a
knowing
violation
of
law,
(iii)
under
Section
174
of
the
GCL,
or
(iv)
for
any
transaction
from
which
the
director
derived
an
improper
personal
benefit.

If
the
GCL
is
amended
to
authorize
corporate
action
further
eliminating
or
limiting
the
personal
liability
of
directors,
then
the
liability
of
a
director
of
the
Corporation
shall
be
eliminated
or
limited
to
the
fullest
extent
permitted
by
the
GCL,
as
so
amended.

Any
repeal
or
modification
of
this
paragraph
A
by
the
stockholders
of
the
Corporation
shall
not
adversely
affect
any
right
or
protection
of
a
director
of
the
Corporation
with
respect
to
events
occurring
prior
to
the
time
of
such
repeal
or
modification.

The
Corporation,
to
the
full
extent
permitted
by
Section
145
of
the
GCL,
as
amended
from
time
to
time,
shall
indemnify
all

persons
whom
it
may
indemnify
pursuant
thereto.

Expenses
(including
attorneys’
fees)
incurred
by
an
officer
or
director
in
defending
any
civil,
criminal,
administrative,
or
investigative
action,
suit
or
proceeding
for
which
such
officer
or
director
may
be
entitled
to
indemnification
hereunder
shall
be
paid
by
the
Corporation
in
advance
of
the
final
disposition
of
such
action,
suit
or
proceeding
upon
receipt
of
an
undertaking
by
or
on
behalf
of
such
director
or
officer
to
repay
such
amount
if
it
shall
ultimately
be
determined
that
he
is
not
entitled
to
be
indemnified
by
the
Corporation
as
authorized
hereby.

NINTH:
Whenever
a
compromise
or
arrangement
is
proposed
between
this
Corporation
and
its
creditors
or
any
class
of
them
and/or
between
this
Corporation
and
its
stockholders
or
any
class
of
them,
any
court
of
equitable
jurisdiction
within
the
State
of
Delaware
may,
on
the
application
in
a
summary
way
of
this
Corporation
or
of
any
creditor
or
stockholder
thereof
or
on
the
application
of
any
receiver
or
receivers
appointed
for
this
Corporation
under
Section
291
of
Title
8
of
the
Delaware
Code
or
on
the
application
of
trustees
in
dissolution
or
of
any
receiver
or
receivers
appointed
for
this
Corporation
under
Section
279
of
Title
8
of
the
Delaware
Code
order
a
meeting
of
the
creditors
or
class
of
creditors,
and/or
of
the
stockholders
or
class
of
stockholders
of
this
Corporation,
as
the
case
may
be,
to
be
summoned
in
such
manner
as
the
said
court
directs.

If
a
majority
in
number
representing
three
fourths
in
value
of
the
creditors
or
class
of
creditors,
and/or
of
the
stockholders
or
class
of
stockholders
of
this
Corporation,
as
the
case
may
be,
agree
to
any
compromise
or
arrangement
and
to
any
reorganization
of
this
Corporation
as
a
consequence
of
such
compromise
or
arrangement,
the
said
compromise
or
arrangement
and
the
said
reorganization
shall,
if
sanctioned
by
the
court
to
which
the
said
application
has
been
made,
be
binding
on
all
the
creditors
or
class
of
creditors,
and/or
on
all
the
stockholders
or
class
of
stockholders,
of
this
Corporation,
as
the
case
may
be,
and
also
on
this
Corporation.

THIRD
AMENDMENT
AND
WAIVER
TO
AMENDED
AND
RESTATED
LOAN
AND
SECURITY
AGREEMENT

Exhibit
10.14

This
THIRD
AMENDMENT
AND
WAIVER
TO
AMENDED
AND
RESTATED
LOAN
AND
SECURITY
AGREEMENT
(this
“
Amendment
”)
is

dated
as
of
February
17,
2017
by
and
among
SUMMER
INFANT,
INC.
and
SUMMER
INFANT
(USA),
INC.,
as
“Borrowers”
under
the
Loan
Agreement
referenced
below
(“
Borrowers
”),
SUMMER
INFANT
CANADA,
LIMITED
and
SUMMER
INFANT
EUROPE
LIMITED,
as
“Guarantors”
under
the
Loan
Agreement
referenced
below
(“
Guarantors
”
and
together
with
the
Borrowers,
the
“
Obligors
”),
the
“Lenders”
party
to
the
Loan
Agreement
referenced
below
(“
Lenders
”),
and
BANK
OF
AMERICA,
N.A.,
in
its
capacity
as
“Agent”
for
the
Lenders
under
the
Loan
Agreement
referenced
below
(“
Agent
”).

WHEREAS,
Borrowers,
Guarantors,
Lenders
and
Agent
are
parties
to
that
certain
Amended
and
Restated
Loan
and
Security
Agreement
dated
as
of

April
21,
2015,
as
amended
by
that
certain
Amendment
to
Amended
and
Restated
Loan
and
Security
Agreement
dated
as
of
December
10,
2015,
and
as
further
amended
by
that
certain
Second
Amendment
to
Amended
and
Restated
Loan
and
Security
Agreement
dated
as
of
May
24,
2016
(as
the
same
may
be
amended,
restated,
supplemented
or
otherwise
modified
from
time
to
time,
the
“
Loan
Agreement
”);

WHEREAS,
Obligors
have
previously
advised
Agent
that
Obligors
require
additional
time
to
deliver
the
projections
of
Borrowers’
consolidated
balance

sheets,
results
of
operations,
cash
flow
and
Availability
for
Fiscal
Year
2017
(the
“
2017
Projections
”);
and

WHEREAS,
Borrowers,
Guarantors,
Lenders
and
Agent
desire
to
amend
certain
provisions
of
the
Loan
Agreement,
all
as
more
fully
described
herein.

NOW,
THEREFORE,
in
consideration
of
the
foregoing
and
the
agreements
contained
herein,
the
parties
agree
that
the
Loan
Agreement
is
hereby

amended
as
follows:

Capitalized
Terms
.

Capitalized
terms
used
herein
which
are
defined
in
the
Loan
Agreement
have
the
same
meanings
herein
as
therein,
except

to
the
extent
such
terms
are
amended
hereby.

Agreement
to
Extend
Delivery
Date
for
2017
Projections
.

Subject
to
the
satisfaction
of
the
terms
and
conditions
set
forth
in
this
Amendment,
the
Agent
and
Lenders
hereby
(a)
waive
the
requirements
pursuant
to
clause
(f)
of
Section
10.1.2
of
the
Loan
Agreement
that
Obligors
deliver
the
2017
Projections
no
later
than
30
days
prior
to
the
end
of
Fiscal
Year
2016,
and
(b)
agree
that
the
date
for
delivery
by
Obligors
of
the
2017
Projections
shall
be
extended
to
March
1,
2017.

Obligors
hereby
expressly
acknowledge
and
agree
that
(i)
not
later
than
March
1,
2017,
the
Obligors
shall
cause
to
be
delivered
to
the
Agent
the
2017
Projections
and
(ii)
in
the
event
the
Agent
fails
to
receive
the
2017
Projections
on
or
before
March
1,
2017,
such
failure
shall
constitute
an
Event
of
Default
under
the
Loan
Agreement.

The
parties
agree
that
(a)
the
foregoing
waiver
is
limited
solely
to
the
Obligors’
obligation
pursuant
to
clause
(f)
of
Section
10.1.2
of
the
Loan
Agreement
to
deliver
the
2017
Projections
no
later
than
30
days
prior
to
the
end
of
Fiscal
Year
2016
and
(b)
that
nothing
herein
shall
be
construed
as
a
waiver
of
any
other
provision
of
the
Loan
Agreement.

Amendments
to
Section
1.1
of
the
Loan
Agreement
.

Section
1.1
of
the
Loan
Agreement
is
hereby
amended
as
follows:

(a)

The
definition
of
“Availability”
is
hereby
amended
and
restated
in
its
entirety,
as
follows:

“
Availability
:
at
any
time,
(a)
the
lesser
of
(i)
the
aggregate
Revolver
Commitments
at
such
time
and
(ii)
the
Revolver
Borrowing
Base,
at
such
time
minus
(b)
the
Revolver
Exposure
at
such
time.

Notwithstanding
the
foregoing,
solely
for
purposes
of
determining
whether
a
Cash
Dominion
Period
is
in
effect,
Availability
shall
be
increased
by
the
amount
of
the
FILO
Reserve
in
effect
at
such
time.”

(b)

The
definition
of
“Availability
Reserve”
is
hereby
amended
by
deleting
the
word
“and”
following
the
end
of
clause
(i),
relabeling

clause
“(j)”
as
clause
“(k)”,
and
inserting
a
new
clause
(j)
as
follows:

“(j)
the
FILO
Reserve;
and”

(c)

The
definition
of
“Eligible
Account”
is
hereby
amended
by
deleting
clause
(e)
of
such
definition
in
its
entirety
and
replacing
such

clause
with
the
following:

“(e)
with
respect
to
any
Account
owing
by
the
Amazon
Companies,
when
aggregated
with
other
Accounts
owing
by
Amazon.com,
Inc.,
it
exceeds
35%
of
the
aggregate
Eligible
Accounts,
provided
,
however
,
that
if,
at
any
time,
the
corporate
credit
rating
of
Amazon.com,
Inc.
falls
below
“BBB-”
(by
S&P
or
Fitch)
or
“Baa3”
(by
Moody’s),
the
Agent
shall
have
the
right,
in
its
sole
discretion
to
decrease
such
maximum
percentage
(
provided
further
,
that
only
the
amount
of
Accounts
in
excess
of
the
percentage
set
forth
in
this
clause
(e)
(or
such
lower
percentage
as
shall
be
specified
by
Agent
in
accordance
with
the
foregoing
proviso)
shall
be
deemed
ineligible
under
this
clause
(e));”

(d)

The
definition
of
“Eligible
Account”
is
hereby
amended
by
deleting
clause
(i)
of
such
definition
in
its
entirety
and
replacing
such

clause
with
the
following:

“(i)
it
is
owing
by
a
creditor
or
supplier,
or
is
otherwise
subject
to
a
potential
offset,
counterclaim,
dispute,
deduction,
discount,
recoupment,
reserve,
defense,
chargeback,
credit
or
allowance
(but
ineligibility
shall
be
limited
to
the
amount
thereof),
provided
,
that,
the
foregoing
ineligibility
shall
not
apply
to
the
Permitted
Contra
Accounts
in
an
amount
up
to
the
Permitted
Contra
Amount;”

(e)

The
definition
of
“EBITDA”
is
hereby
amended
by
deleting
clause
(b)(xii)
of
such
definition
in
its
entirety
and
replacing
such
clause

with
the
following:

“(xii)
(1)
solely
with
respect
to
the
calculation
of
the
Fixed
Charge
Coverage
Ratio
and
the
Leverage
Ratio
pursuant
to
Section
10.3.1
and
10.3.2,
respectively,
hereof,
fees
and
expenses
of
advisors
and
independent
consultants
retained
by
Obligors
in
connection
with
the
Former
Management
Litigation;
provided
,
that
the
aggregate
amount
of
such
fees
and
expenses
added
back
to
EBITDA
pursuant
to
this
clause
(b)(xii)
shall
not
exceed
(A)
$3,500,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
October
1,
2016,
(B)
$2,500,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
December
31,
2016,
and
(C)
$1,250,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
April
1,
2017;
and
(2)
without
duplication
to
the
foregoing
clause
(1),
fees
and
expenses
of
advisors
and
independent
consultants
retained
by
Obligors
and
approved
by
Agent
in
its
Permitted
Discretion,
provided
,
that
the
aggregate
amount
of
such
fees
and
expenses
added
back
to
EBITDA
pursuant
to
this
clause
(2)
shall
not
exceed
$250,000
during
any
Fiscal
Quarter;”

(f)

The
definition
of
“EBITDA”
is
hereby
amended
by
deleting
the
word
“and”
following
the
end
of
clause
(b)(xvii),
relabeling
clause
“(b)

(xviii)”
as
clause
“(b)(xx)”,
and
inserting
new
clauses
(b)(xviii)
and
(b)(xix)
as
follows:

“(xviii)
solely
with
respect
to
the
calculation
of
the
Fixed
Charge
Coverage
Ratio
and
the
Leverage
Ratio
pursuant
to
Section
10.3.1
and
10.3.2,
respectively,
hereof,
charges
incurred
in
connection
with
Borrower
exiting
certain
“Born
Free”
product
lines
during
the
2016
Fiscal
Year;
provided
,
that
the
aggregate
amount
of
such
charges
added
back
to
EBITDA
pursuant
to
this
clause
(b)(xviii)
shall
not
exceed
(A)
$795,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
April
1,
2017,
(B)
$445,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
July
1,
2017,
(C)
$236,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
September
30,
2017,
and
(D)
zero
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
December
30,
2017;

(xix)
solely
with
respect
to
the
calculation
of
the
Fixed
Charge
Coverage
Ratio
and
the
Leverage
Ratio
pursuant
to
Section
10.3.1
and
10.3.2,
respectively,
hereof,
cash
payments
of
bonus
compensation
made
to
officers
and/or
employees
of
the
Obligors;
provided
,
that
the
aggregate
amount
of
such
bonus
payments
added
back
to
EBITDA
pursuant
to
this
clause
(b)(xix)
shall
not
exceed
$550,000
in
the
aggregate
for
the
period
of
four
consecutive
Fiscal
Quarters
ending
December
30,
2017;
and”

(g)

The
definition
of
“Fixed
Charges”
is
hereby
amended
and
restated
in
its
entirety,
as
follows:

“
Fixed
Charges
:
the
sum
of
interest
expense
(other
than
payment-in-kind),
principal
payments
made
on
Borrowed
Money
(including,
without
limitation,
the
Term
Loans,
but
excluding
the
Revolver
Loans
unless
such
principal
payment
of
the
Revolver
Loans
is
accompanied
by
a
permanent
reduction
in
the
Revolver
Commitments
and
excluding
the
FILO
Loans
unless
such
principal
payment
of
the
FILO
Loans
is
accompanied
by
a
permanent
reduction
in
the
FILO
Commitments),
and
Distributions
made.

Notwithstanding
the
foregoing,
any
principal
payments
made
in
connection
with
the
first
three
(3)
scheduled
reductions
to
the
Aggregate
FILO
Commitment
Amount
as
provided
for
in
the
definition
of
“Aggregate
FILO
Commitment
Amount”
in
Section
1.1
shall
not
constitute
“Fixed
Charges”
for
purposes
hereof.”

(h)

The
following
new
defined
terms
are
hereby
inserted
in
Section
1.1
of
the
Loan
Agreement
in
the
appropriate
alphabetical
order:

“
FILO
Reserve
:
$1,250,000,
provided
,
that
such
amount
shall
be
reduced
to
zero
at
such
time
as
the
principal
payment
in
connection
with
the

scheduled
permanent
reduction
to
the
Aggregate
FILO
Commitment
Amount
to
occur
on
October
21,
2017
is
made.

Permitted
Contra
Accounts
:
any
Accounts
owing
from
ANA
Global
or
Norco
Plastics.

Permitted
Contra
Amount
:
with
respect
to
any
Permitted
Contra
Accounts,
an
aggregate
amount
equal
to
$500,000
with
respect
to
all
such

Accounts,
provided
,
that
,
the
Permitted
Contra
Amount
shall
be
reduced
to
zero
on
June
30,
2017.”

Amendments
to
Section
10.1.2(j)
of
the
Loan
Agreement
.

Section
10.1.2(j)
of
the
Loan
Agreement
is
hereby
amended
and
restated
in
its

entirety,
as
follows:

“(j)

Reserved
.”

Amendment
to
Section
10.3.2
of
the
Loan
Agreement
.

Section
10.3.2
of
the
Loan
Agreement
is
hereby
amended
and
restated
in
its
entirety,

as
follows:

“10.3.2

Maximum
Leverage
Ratio
.

As
of
the
end
of
each
Fiscal
Quarter,
maintain
a
Leverage
Ratio
of
not
greater
than
the
ratio
set
forth
below

opposite
such
Fiscal
Quarter:

Four
Fiscal
Quarters
Ending

December
31,
2016
April
1,
2017
July
1,
2017
September
30,
2017
December
30,
2017
April
1,
2018
and
thereafter

Maximum
Leverage
Ratio
5.25
to
1.00
5.50
to
1.00
5.50
to
1.00
5.50
to
1.00
5.00
to
1.00
3.75
to
1.00

No
Default;
Representations
and
Warranties,
Etc.

Obligors
hereby
represent,
warrant
and
confirm
that:
(a)
all
representations
and
warranties
of
Obligors
in
the
Loan
Agreement
and
the
other
Loan
Documents
are
true
and
correct
in
all
material
respects
(without
duplication
of
any
materiality
qualifier
contained
therein)
on
and
as
of
the
date
hereof
as
if
made
on
such
date
(except
to
the
extent
that
such
representations
and
warranties
expressly
relate
to
or
are
stated
to
have
been
made
as
of
an
earlier
date,
in
which
case,
such
representations
and
warranties
shall
be
true
and
correct
in
all
material
respects
(without
duplication
of
any
materiality
qualifier
contained
therein)
as
of
such
earlier
date);
(b)
after
giving
effect
to
this
Amendment,
no
Default
or
Event
of
Default
has
occurred
and
is
continuing;
and
(c)
the
execution,
delivery
and
performance
by
Obligors
of
this
Amendment
and
all
other
documents,
instruments
and
agreements
executed
and
delivered
in
connection
herewith
or
therewith
(i)
have
been
duly
authorized
by
all
necessary
action
on
the
part
of
Obligors
(including
any
necessary
shareholder
consents
or
approvals),
(ii)
do
not
violate,
conflict
with
or
result
in
a
default
under
and
will
not
violate
or
conflict
with
or
result
in
a
default
under
any
applicable
law
or
regulation,
any
term
or
provision
of
the
organizational
documents
of
any
Obligor
or
any
term
or
provision
of
any
material
indenture,
agreement
or
other
instrument
binding
on
any
Obligor
or
any
of
its
assets,
and
(iii)
do
not
require
the
consent
of
any
Person
which
has
not
been
obtained.

Ratification
and
Confirmation
.

Obligors
hereby
ratify
and
confirm
all
of
the
terms
and
provisions
of
the
Loan
Agreement
and
the
other
Loan

Documents
and
agree
that
all
of
such
terms
and
provisions,
as
amended
hereby,
remain
in
full
force
and
effect.

Without
limiting
the
generality
of
the
foregoing,
Obligors
hereby
acknowledge
and
confirm
that
all
of
the
“Obligations”
under
and
as
defined
in
the
Loan
Agreement
are
valid
and
enforceable
and
are
secured
by
and
entitled
to
the
benefits
of
the
Loan
Agreement
and
the
other
Loan
Documents,
and
Obligors
hereby
ratify
and
confirm
the
grant
of
the
liens
and
security
interests
in
the
Collateral
in
favor
of
Agent,
for
the
benefit
of
itself
and
Lenders,
pursuant
to
the
Loan
Agreement
and
the
other
Loan
Documents,
as
security
for
the
Obligations.

Conditions
to
Effectiveness
of
Amendment
.

This
Amendment
shall
become
effective
as
of
the
date
when,
and
only
when,
each
of
the

following
conditions
precedent
shall
have
been
satisfied
or
waived
in
writing
by
Agent:

(a)

Agent
shall
have
received
counterparts
to
this
Amendment,
duly
executed
by
Agent,
Lenders
and
Obligors.

(b)

Borrowers
shall
have
paid
to
Agent,
for
the
account
of
each
Lender
(including
Bank
of
America,
N.A.,
in
its
capacity
as
a
Lender)
that

executes
and
delivers
to
Agent
by
3:00
p.m.
New
York
City
time
on
February

,
2017
a
counterpart
to
this
Amendment
(each
such
Lender,
an
“
Approving
Lender
”),
an
amendment
fee
in
an
amount
equal
to
12.5
basis
points
multiplied
by
such
Approving
Lender’s
Commitment.

(c)

Borrowers
shall
have
paid
all
other
fees
and
amounts
due
and
payable
to
Agent
and
its
legal
counsel
in
connection
with
the
Loan

Agreement,
this
Amendment
and
the
other
Loan
Documents,
including,
(i)
the
fees
payable
pursuant
to
that
certain
Amendment
Fee
Letter
dated
as
of
the
date
hereof
between
Borrowers
and
Agent,
and
(ii)
to
the
extent
invoiced,
all
out-of-pocket
expenses
required
to
be
reimbursed
or
paid
by
Borrowers
under
the
Loan
Agreement.

Miscellaneous
.

(a)

Except
to
the
extent
specifically
amended
hereby,
the
Loan
Agreement,
the
other
Loan
Documents
and
all
related
documents
shall

remain
in
full
force
and
effect.

(b)

This
Amendment
may
be
executed
in
any
number
of
counterparts,
each
of
which,
when
executed
and
delivered,
shall
be
an
original,

but
all
counterparts
shall
together
constitute
one
instrument.

(c)

Borrowers
shall
reimburse
Agent
for,
or
pay
directly,
all
reasonable
out-of-pocket
costs
and
expenses
of
Agent
(including,
without

limitation,
the
reasonable
fees
and
expenses
of
Agent’s
legal
counsel)
in
connection
with
the
preparation,
negotiation,
execution
and
delivery
of
this
Amendment
and
the
other
Loan
Documents,
within
30
days
of
Borrowers’
receipt
of
invoices
(in
reasonably
sufficient
detail)
setting
forth
such
costs
and
expenses.

(d)

This
Amendment
shall
be
governed
by
the
laws
of
the
State
of
New
York
and
shall
be
binding
upon
and
inure
to
the
benefit
of
the

parties
hereto
and
their
respective
successors
and
assigns.

{Remainder
of
page
intentionally
left
blank;
signatures
begin
on
the
following
page]

IN
WITNESS
WHEREOF,
the
parties
hereto
have
executed
this
Amendment
which
shall
be
deemed
to
be
a
sealed
instrument
as
of
the
date
first
above

written.

BORROWERS

SUMMER
INFANT,
INC.

/s/
Mark
Messner

By:
Name: Mark
Messner
CEO
Title:

SUMMER
INFANT
(USA),
INC.

/s/
Mark
Messner

By:
Name: Mark
Messner
CEO
Title:

GUARANTORS

SUMMER
INFANT
CANADA,
LIMITED

/s/
Mark
Messner

By:
Name: Mark
Messner
CEO
Title:

SUMMER
INFANT
EUROPE
LIMITED

/s/
Mark
Messner

By:
Name: Mark
Messner
CEO
Title:

[
Signature
Page
to
Third
Amendment
and
Waiver
to
Amended
and
Restated
Loan
and
Security
Agreement
]

AGENT

BANK
OF
AMERICA,
N.A.,
as
Agent

/s/
Cynthia
G.
Stannard

By
Name:
Cynthia
G.
Stannard
Title:
Senior
Vice
President

[
Signature
Page
to
Third
Amendment
and
Waiver
to
Amended
and
Restated
Loan
and
Security
Agreement
]

LENDER

BANK
OF
AMERICA,
N.A.,
as
Lender

/s/
Cynthia
G.
Stannard

By
Name:
Cynthia
G.
Stannard
Title:
Senior
Vice
President

[
Signature
Page
to
Third
Amendment
and
Waiver
to
Amended
and
Restated
Loan
and
Security
Agreement
]

LENDER

CITIZENS
BUSINESS
CAPITAL,
A
DIVISION
OF
CITIZENS
ASSET
FINANCE,
INC.,
as
Lender

/s/
Peter
Velle

By
Name:
Peter
Velle
Title:
VP

[
Signature
Page
to
Third
Amendment
and
Waiver
to
Amended
and
Restated
Loan
and
Security
Agreement
]

LENDER

KEYBANK
NATIONAL
ASSOCIATION,
as
Lender

/s/
Peter
Drooff,
VP

By
Name:
Peter
Drooff
Title:
Vice
President

[
Signature
Page
to
Third
Amendment
and
Waiver
to
Amended
and
Restated
Loan
and
Security
Agreement
]

QuickLinks
--
Click
here
to
rapidly
navigate
through
this
document

Consent
of
Independent
Registered
Public
Accounting
Firm

Exhibit
23.1

We
consent
to
the
incorporation
by
reference
in
the
Registration
Statements
(Nos.
333-156725;
333-191405;
333-206682;
333-206683;
and
333-212947)
on
Form
S-8
and
(Nos.
333-164241
and
333-198315)
on
Form
S-3
of
Summer
Infant,
Inc.
and
Subsidiaries
of
our
report
dated
February
22,
2017,
relating
to
the
consolidated
financial
statements
of
Summer
Infant,
Inc.
and
Subsidiaries
appearing
in
this
Annual
Report
on
Form
10-K
of
Summer
Infant,
Inc.
and
Subsidiaries
for
the
year
ended
December
31,
2016.

/s/
RSM
US
LLP

RSM
US
LLP

Boston,
MA

February
22,
2017

QuickLinks

Exhibit
23.1

Consent
of
Independent
Registered
Public
Accounting
Firm

QuickLinks
--
Click
here
to
rapidly
navigate
through
this
document

Exhibit
31.1

I,
Mark
Messner,
certify
that:

I
have
reviewed
this
Annual
Report
on
Form
10-K
of
Summer
Infant,
Inc.;

CERTIFICATION
OF
CHIEF
EXECUTIVE
OFFICER

Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
the
statements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;

Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;

The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
Exchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
the
registrant
and
have:

(a)

Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
to
ensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,
particularly
during
the
period
in
which
this
report
is
being
prepared;

(b)

Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
our
supervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles;

(c)

Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
the
effectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and

(d)

Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent
fiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
the
registrant's
internal
control
over
financial
reporting;
and

The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
the
registrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):

(a)

All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonably
likely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and

(b)

Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
control
over
financial
reporting.

Date:
February
22,
2017

/s/
MARK
MESSNER

Mark
Messner

Chief Executive Officer

QuickLinks

Exhibit
31.1

CERTIFICATION
OF
CHIEF
EXECUTIVE
OFFICER

QuickLinks
--
Click
here
to
rapidly
navigate
through
this
document

Exhibit
31.2

I,
William
E.
Mote,
Jr.
certify
that:

I
have
reviewed
this
Annual
Report
on
Form
10-K
of
Summer
Infant,
Inc.;

CERTIFICATION
OF
CHIEF
FINANCIAL
OFFICER

(a)

(b)

(c)

(d)

Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent
fiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
the
registrant's
internal
control
over
financial
reporting;
and

(a)

(b)

Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
control
over
financial
reporting.

Date:
February
22,
2017

/s/
WILLIAM
E.
MOTE,
JR.

William
E.
Mote,
Jr.

Chief Financial Officer

QuickLinks

Exhibit
31.2

CERTIFICATION
OF
CHIEF
FINANCIAL
OFFICER

QuickLinks
--
Click
here
to
rapidly
navigate
through
this
document

SECTION
1350
CERTIFICATION

Exhibit
32.1

In
connection
with
the
Annual
Report
on
Form
10-K
of
Summer
Infant,
Inc.
(the
"Company")
for
the
year
ended
December
31,
2016
(the
"Report"),
as
filed
with
the
Securities
and
Exchange
Commission
on
the
date
hereof,
I,
Mark
Messner,
Chief
Executive
Officer
of
the
Company,
certify
pursuant
to
18
U.S.C.
Section
1350,
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-Oxley
Act
of
2002,
that:

The
Report
fully
complies
with
the
requirements
of
section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
(15
U.S.C.
78m(a)
or
78o(d));
and

The
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
the
Company.

Date:
February
22,
2017

/s/
MARK
MESSNER

Mark
Messner

Chief Executive Officer

QuickLinks

Exhibit
32.1

SECTION
1350
CERTIFICATION

QuickLinks
--
Click
here
to
rapidly
navigate
through
this
document

SECTION
1350
CERTIFICATION

Exhibit
32.2

In
connection
with
the
Annual
Report
on
Form
10-K
of
Summer
Infant,
Inc.
(the
"Company")
for
the
year
ended
December
31,
2016
(the
"Report"),
as
filed
with
the
Securities
and
Exchange
Commission
on
the
date
hereof,
I,
William
E.
Mote,
Jr.,
Chief
Financial
Officer
of
the
Company,
certify
pursuant
to
18
U.S.C.
Section
1350,
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-Oxley
Act
of
2002,
that:

The
Report
fully
complies
with
the
requirements
of
section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
(15
U.S.C.
78m(a)
or
78o(d));
and

The
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
the
Company.

Date:
February
22,
2017

/s/
WILLIAM
E.
MOTE,
JR.

William
E.
Mote,
Jr.

Chief Financial Officer

QuickLinks

Exhibit
32.2

SECTION
1350
CERTIFICATION