Xcel(US:XELB)2025-11-19 22:25Financial Performance - Current quarter net revenue decreased by $0.79 million to $1.12 million from $1.91 million in the prior year quarter, primarily due to lower licensing revenues and the sale of remaining Longaberger inventory in the prior year [159]. - The company reported a net loss of $7.90 million for the current quarter, an improvement from a net loss of $9.21 million in the prior year quarter [167]. - Non-GAAP net loss for the current quarter was approximately $1.34 million, or $(0.34) per diluted share, compared to a non-GAAP net loss of $1.33 million, or $(0.57) per diluted share, in the prior year quarter [168]. - Adjusted EBITDA for the current quarter was approximately $(0.65) million, an improvement from approximately $(1.05) million in the prior year quarter [169]. - For the nine months ended September 30, 2025, net revenue decreased by $3.28 million to $3.77 million from $7.05 million in the prior year nine months, primarily due to the divestiture of the Lori Goldstein brand [177]. - The company recognized a net loss of $14.68 million for the current nine months, compared to a net loss of $15.31 million for the prior year nine months [186]. - Non-GAAP net loss was approximately $3.61 million, or $(1.24) per diluted share, for the current nine months, compared to a non-GAAP net loss of approximately $3.44 million, or $(1.53) per diluted share, for the prior year [187]. Operating Costs and Expenses - Direct operating costs and expenses decreased approximately $0.66 million, from $2.83 million in the prior year quarter to $2.17 million in the current quarter, attributed to restructuring and cost reduction actions [160]. - Direct operating costs and expenses for the nine months decreased approximately $3.56 million, from $9.91 million in the prior year to $6.35 million in the current nine months, due to restructuring and cost reduction actions [178]. - The Company’s direct operating costs have been reduced from approximately $8 million per quarter to less than $2.5 million per quarter, resulting in over $22 million in annualized cost savings compared to 2022 [217]. - The company has reduced its direct operating expenses to an expected run rate of less than $10 million per annum as part of ongoing cost-cutting measures [179]. Cash Flow and Liquidity - Net cash used in operating activities was approximately $5.20 million in the current nine months, compared to approximately $3.31 million in the prior year [198]. - As of September 30, 2025, the company had unrestricted cash and cash equivalents of approximately $1.5 million [189]. - The working capital deficit was approximately $0.89 million as of September 30, 2025, primarily due to the amendment of the term loan debt [192]. - Interest and finance expense increased to approximately $3.42 million for the current nine months, up from approximately $0.44 million in the prior year [184]. - The company incurred a $1.85 million loss on early extinguishment of debt during the current nine months due to refinancing activities [184]. - The Company closed on a public offering and private placement of common stock in August 2025, providing additional net proceeds to improve liquidity [195]. - The total net proceeds from the 2025 Public Offering and Private Placement Transactions amounted to approximately $2.0 million [214]. Debt and Financing - Interest and finance expense increased to approximately $0.52 million for the current quarter, compared to approximately $0.14 million in the prior year quarter, due to higher interest rates [165]. - The Company plans to make a prepayment of $3,250,000 on Term Loan A by February 20, 2026, along with an amendment fee of $450,000 [210]. - The liquid asset covenant requirement was reduced to $1,000,000 following the amendment of the loan agreement on October 7, 2025 [209]. - The Company is currently in compliance with all applicable financial covenants as per the loan agreements [208]. - The restructuring of term debt in April 2025 improved the Company's liquidity position despite higher interest payments over the term of the debt [218]. Strategic Initiatives - The company is focused on building a diversified portfolio of lifestyle consumer products brands through organic growth and strategic acquisitions [158]. - The Company plans to launch three new brands in Q4 2025, including Trust, Respect, Love by Cesar Millan, GemmaMade, and Mesa Mia [216]. Market Conditions - The company recognized losses related to equity investments of approximately $5.49 million in the current quarter, compared to $6.85 million in the prior year quarter [164]. - The Company continues to face headwinds from poor economic conditions, inflation, and rising consumer debt levels, which may negatively impact demand for its products [220].