Xcel(US:XELB)2024-08-14 00:37Financial Performance - Current quarter net revenue decreased approximately $3.8 million to $3.0 million from $6.8 million for the prior year quarter, primarily due to a $4.2 million decrease in net product sales [99]. - Net income for the current quarter was $0.2 million, compared to a net loss of $3.5 million for the prior year quarter [107]. - The company reported a net loss of $6.1 million for the current six months, an improvement from a net loss of $9.1 million in the prior year six months [124]. - Non-GAAP net loss for the current quarter was approximately $0.3 million, or $0.01 per diluted share, compared to a non-GAAP net loss of $2.1 million, or $0.10 per diluted share, for the prior year quarter [108]. - Non-GAAP net loss was approximately $2.1 million, or $0.10 per diluted share, compared to a non-GAAP net loss of $5.6 million, or $0.28 per diluted share, for the prior year six months [125]. Revenue Sources - Net licensing revenue increased approximately $0.4 million to $2.8 million in the current quarter, driven by new licensing agreements and the launch of the TowerHill brand [100]. - Net licensing revenue increased by approximately $0.4 million to $5.0 million in the current six months, driven by new licensing agreements, including the Halston Master License with G-III Apparel Group [116]. - Net product sales dropped from $8.2 million in the prior year six months to $0.1 million in the current six months, attributed to the exit from wholesale apparel and fine jewelry sales operations [115]. Cost Management - Cost of goods sold for the current quarter was less than $0.1 million, compared to $3.8 million for the prior year quarter, reflecting the exit from wholesale and direct-to-consumer operations [101]. - Direct operating costs and expenses decreased approximately $2.1 million to $3.1 million in the current quarter, attributed to the 2023 restructuring and reductions in staffing [102]. - Direct operating costs and expenses decreased by approximately $5.0 million from $12.1 million in the prior year six months to $7.1 million in the current six months, due to restructuring efforts [119]. - The restructuring initiatives are expected to provide approximately $22 million of annualized cost savings compared to the previous operating model [152]. Cash Flow and Liquidity - As of June 30, 2024, unrestricted cash and cash equivalents were $0.9 million, down from $3.0 million as of December 31, 2023 [128]. - The company incurred net cash used in operating activities of approximately $2.9 million for the six months ended June 30, 2024, compared to approximately $1.47 million in the prior year six months [130][135]. - The current six months net cash used in operating activities was $(6.18) million, with non-cash items of approximately $4.10 million and a net change in operating assets and liabilities of approximately $(0.80) million [136]. - Net cash provided by financing activities in the current six months was primarily attributable to $1.90 million of net proceeds from equity issuance transactions [139]. - The Company raised approximately $1.9 million in total net proceeds from the public offering and private placement of 3,579,064 shares of common stock [142]. Strategic Initiatives - The company aims to build a diversified portfolio of lifestyle consumer products brands through organic growth and strategic acquisitions [97]. - The Company plans to diversify its licensed products and distribution channels to reduce dependence on any particular retailer or market sector [149]. - Xcel's brands have generated over $5 billion in retail sales via live streaming and digital channels, reaching over 5 million social media followers [97]. Economic Environment - The Company continues to face headwinds from poor economic conditions, which may negatively impact demand for its products [153]. - The Company has no off-balance sheet arrangements that could materially affect its financial condition or results of operations [155]. Other Financial Matters - The company recognized a $3.80 million gain on the divestiture of the Lori Goldstein Brand, with non-cash consideration received [104]. - The Company has recorded a liability of $6.6 million related to the Lori Goldstein Earn-Out, which was based on royalties earned [146]. - The Company de-recognized approximately $1.03 million of accrued Lori Goldstein Earn-Out payments following the divestiture of the Lori Goldstein Brand [148].