Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 30, 2021 | Jun. 30, 2020 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity Registrant Name | XCel Brands, Inc. | ||
Entity Filer Category | Non-accelerated Filer | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | XELB | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Security Exchange Name | NASDAQ | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 10,967,000 | ||
Entity Common Stock, Shares Outstanding | 19,260,862 | ||
Entity Central Index Key | 0001083220 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 4,957 | $ 4,641 |
Accounts receivable, net of allowances of $1,151 and $155, respectively | 8,889 | 10,622 |
Inventory | 1,216 | 899 |
Prepaid expenses and other current assets | 1,085 | 1,404 |
Total current assets | 16,147 | 17,566 |
Property and equipment, net | 3,367 | 3,666 |
Operating lease right-of-use assets | 8,668 | 9,250 |
Trademarks and other intangibles, net | 93,535 | 111,095 |
Restricted cash | 1,109 | 1,109 |
Other assets | 228 | 505 |
Total non-current assets | 106,907 | 125,625 |
Total Assets | 123,054 | 143,191 |
Current Liabilities: | ||
Accounts payable, accrued expenses and other current liabilities | 4,442 | 4,391 |
Accrued payroll | 973 | 1,444 |
Current portion of operating lease obligation | 2,101 | 1,752 |
Current portion of long-term debt | 2,800 | 2,250 |
Total current liabilities | 10,316 | 9,837 |
Long-Term Liabilities: | ||
Long-term portion of operating lease obligation | 8,469 | 9,773 |
Long-term debt, less current portion | 13,838 | 16,571 |
Contingent obligation | 900 | 900 |
Deferred tax liabilities, net | 3,052 | 7,434 |
Other long-term liabilities | 224 | 224 |
Total long-term liabilities | 26,483 | 34,902 |
Total Liabilities | 36,799 | 44,739 |
Commitments and Contingencies | ||
Equity: | ||
Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued and outstanding | ||
Common stock, $.001 par value, 50,000,000 shares authorized, and 19,260,862 and 18,866,417 shares issued and outstanding at December 31, 2020 and 2019, respectively | 19 | 19 |
Paid-in capital | 102,324 | 101,736 |
Accumulated deficit | (16,595) | (3,659) |
Total Xcel Brands, Inc. stockholders' equity | 85,748 | 98,096 |
Noncontrolling interest | 507 | 356 |
Total Equity | 86,255 | 98,452 |
Total Liabilities and Equity | $ 123,054 | $ 143,191 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts Receivable, Allowance for Credit Loss, Current | $ 1,151 | $ 155 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 19,260,862 | 18,866,417 |
Common stock, shares outstanding (in shares) | 19,260,862 | 18,866,417 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | ||
Net revenue | $ 29,448,000 | $ 41,727,000 |
Cost of goods sold (sales) | 5,456,000 | 10,272,000 |
Gross profit | 23,992,000 | 31,455,000 |
Operating costs and expenses | ||
Salaries, benefits and employment taxes | 13,061,000 | 15,834,000 |
Other design and marketing costs | 3,334,000 | 3,164,000 |
Other selling, general and administrative expenses | 6,567,000 | 5,552,000 |
(Recovery of) costs in connection with potential acquisitions | (158,000) | 1,290,000 |
Stock-based compensation | 850,000 | 976,000 |
Depreciation and amortization | 5,497,000 | 3,902,000 |
Government assistance - Paycheck Protection Program and other | (1,816,000) | |
Asset impairment charges | 13,113,000 | 6,200,000 |
Total operating costs and expenses | 40,448,000 | 36,918,000 |
Other income | 46,000 | 2,850,000 |
Operating loss | (16,410,000) | (2,613,000) |
Interest and finance expense | ||
Interest expense and other finance charges | 1,193,000 | 1,285,000 |
Loss on extinguishment of debt | 189,000 | |
Total interest and finance expense | 1,193,000 | 1,474,000 |
Loss before income taxes | (17,603,000) | (4,087,000) |
Income tax benefit | (4,518,000) | (642,000) |
Net loss | (13,085,000) | (3,445,000) |
Less: Net loss attributable to noncontrolling interest | (149,000) | (19,000) |
Net loss attributable to Xcel Brands, Inc. stockholders | $ (12,936,000) | $ (3,426,000) |
Loss per share attributable to Xcel Brands, Inc. common stockholders: | ||
Basic net loss per share: | $ (0.68) | $ (0.18) |
Diluted net loss per share: | $ (0.68) | $ (0.18) |
Weighted average number of common shares outstanding: | ||
Basic weighted average common shares outstanding | 19,117,460 | 18,857,657 |
Diluted weighted average common shares outstanding | 19,117,460 | 18,857,657 |
Net licensing revenue | ||
Revenues | ||
Net revenue | $ 20,255,000 | $ 26,435,000 |
Net sales revenue | ||
Revenues | ||
Net revenue | $ 9,193,000 | $ 15,292,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common StockSenior Management | Common StockEmployees | Common Stock | Paid-In Capital [Member]Senior Management | Paid-In Capital [Member]Employees | Paid-In Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Noncontrolling Interest [Member] | Senior Management | Employees | Total |
Balances at Dec. 31, 2018 | $ 18 | $ 100,097 | $ (233) | $ 99,882 | |||||||
Balances (in shares) at Dec. 31, 2018 | 18,138,616 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Issuance of common stock in connection with the acquisition of Halston Heritage | $ 1 | 1,057 | 1,058 | ||||||||
Issuance of common stock in connection with the acquisition of Halston Heritage (in shares) | 777,778 | ||||||||||
Compensation expense in connection with stock options and restricted stock | 756 | 756 | |||||||||
Shares issued to employees in connection with stock grants (in shares) | 60,000 | ||||||||||
Shares issued on exercise of stock options, net | 5,185 | ||||||||||
Shares repurchased from executives and employees in exchange for withholding taxes | (174) | (174) | |||||||||
Shares repurchased from executives and employees in exchange for withholding taxes (in shares) | (115,162) | ||||||||||
Consolidation of Longaberger Licensing, LLC variable interest entity | $ 375 | 375 | |||||||||
Net loss | (3,426) | (19) | (3,445) | ||||||||
Balances at Dec. 31, 2019 | $ 19 | 101,736 | (3,659) | 356 | 98,452 | ||||||
Balances (in shares) at Dec. 31, 2019 | 18,866,417 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Compensation expense in connection with stock options and restricted stock | 257 | 257 | |||||||||
Shares issued to employees in connection with stock grants | $ 220 | $ 220 | |||||||||
Shares issued to executive in connection with stock grants for bonus payments (Shares) | 336,700 | ||||||||||
Shares issued to employees in connection with stock grants | $ 301 | $ 301 | |||||||||
Shares issued to other employees in connection with stock grants (in shares) | 303,028 | ||||||||||
Shares repurchased from executives and employees in exchange for withholding taxes | (190) | (190) | |||||||||
Shares repurchased from executives and employees in exchange for withholding taxes (in shares) | (245,283) | ||||||||||
Additional investment in Longaberger Licensing, LLC by non-controlling interest | 300 | 300 | |||||||||
Net loss | (12,936) | (149) | (13,085) | ||||||||
Balances at Dec. 31, 2020 | $ 19 | $ 102,324 | $ (16,595) | $ 507 | $ 86,255 | ||||||
Balances (in shares) at Dec. 31, 2020 | 19,260,862 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (13,085) | $ (3,445) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization expense | 5,497 | 3,902 |
Asset Impairment Charges | 13,113 | 6,200 |
Amortization of deferred finance costs | 95 | 146 |
Stock-based compensation | 850 | 976 |
Amortization of note discount | 16 | |
Allowance for doubtful accounts | 1,042 | (50) |
Loss on extinguishment of debt | 189 | |
Deferred income tax benefit | (4,382) | (705) |
Net gain on sale of assets | (46) | |
Gain on reduction of contingent obligation | (2,850) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 691 | 438 |
Inventory | (317) | 1,089 |
Prepaid expenses and other assets | 597 | (59) |
Accounts payable, accrued expenses and other current liabilities | (496) | (1,720) |
Cash paid in excess of rent expense | (374) | (431) |
Other liabilities | (196) | |
Net cash provided by operating activities | 3,185 | 3,500 |
Cash flows from investing activities | ||
Cash consideration for acquisition of Halston Heritage assets | (8,830) | |
Net proceeds from sale of assets | 46 | |
Investment in Longaberger Licensing, LLC | (375) | |
Purchase of property and equipment | (748) | (1,133) |
Net cash used in investing activities | (702) | (10,338) |
Cash flows from financing activities | ||
Shares repurchased including vested restricted stock in exchange for withholding taxes | (190) | (174) |
Cash contribution from non-controlling interest | 300 | |
Payment of deferred finance costs | (27) | (315) |
Proceeds from long-term debt | 7,500 | |
Payment of long-term debt | (2,250) | (4,742) |
Net cash (used in) provided by financing activities | (2,167) | 2,269 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 316 | (4,569) |
Cash, cash equivalents, and restricted cash at beginning of period | 5,750 | 10,319 |
Cash, cash equivalents, and restricted cash at end of period | 6,066 | 5,750 |
Reconciliation to amounts on consolidated balance sheets: | ||
Cash and cash equivalents | 4,957 | 4,641 |
Restricted cash | 1,109 | 1,109 |
Total cash, cash equivalents, and restricted cash | 6,066 | 5,750 |
Supplemental disclosure of non-cash activities: | ||
Operating lease right-of-use asset | 797 | 10,409 |
Operating lease obligation | 797 | 13,210 |
Accrued rent offset to operating lease right-of-use assets | 2,801 | |
Settlement of seller note through offset to receivable | 600 | |
Settlement of contingent obligation through offset to note receivable | 100 | |
Issuance of common stock in connection with Halston Heritage assets acquisition | 1,058 | |
Contingent obligation related to acquisition of Halston Heritage assets at fair value | 900 | |
Liability for equity-based bonuses | 71 | 220 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for income taxes | 58 | 136 |
Cash paid during the period for interest | $ 1,128 | $ 1,176 |
Nature of Operations, Backgroun
Nature of Operations, Background, and Basis of Presentation | 12 Months Ended |
Dec. 31, 2020 | |
Nature of Operations, Background, and Basis of Presentation [Abstract] | |
Nature of Operations, Background, and Basis of Presentation | 1. Nature of Operations, Background, and Basis of Presentation Xcel Brands, Inc. (“Xcel” and, together with its subsidiaries, the “Company”) is a media and consumer products company engaged in the design, production, marketing, live streaming, wholesale distribution, and direct-to-consumer sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Currently, the Company’s brand portfolio consists of the Isaac Mizrahi brands (the "Isaac Mizrahi Brand"), the Judith Ripka brands (the "Ripka Brand"), the Halston brands (the "Halston Brand"), the C Wonder brands (the "C Wonder Brand"), and other proprietary brands. The Company also manages the Longaberger brand (the “Longaberger Brand”) through its 50% ownership interest in Longaberger Licensing, LLC. The Company designs, produces, markets, and distributes products, and in certain cases, licenses its brands to third parties, and generates licensing and other revenues through contractual arrangements with manufacturers and retailers. This includes licensing its own brands for promotion and distribution through a ubiquitous-channel retail sales strategy, which includes distribution through interactive television, the internet, and traditional brick-and-mortar retail channels. The Company’s wholesale and e-commerce operations are presented as "Net sales" and "Cost of goods sold (sales)" in the Consolidated Statements of Operations, separately from the Company’s licensing revenues. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Xcel, its wholly owned subsidiaries, and entities in which Xcel has a controlling financial interest as of and for the years ended December 31, 2020 (the "Current Year") and 2019 (the "Prior Year"). The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the accounting rules under Regulation S-X, as promulgated by the Securities and Exchange Commission (“SEC”). All significant intercompany accounts and transactions have been eliminated in consolidation. and net earnings have been adjusted by the portion of operating results of consolidated entities attributable to noncontrolling interests. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates. The Company deems the following items to require significant estimates from management: · Allowance for doubtful accounts; · Useful lives of trademarks; · Assumptions used in the valuation of intangible assets, including cash flow estimates for impairment analysis; · Black-Scholes option pricing model assumptions for stock option values; · Incremental borrowing rate; · Inventory reserves; and · Valuation allowances and effective tax rate for tax purposes. Reclassifications Certain reclassifications have been made to Prior Year financial statements to conform to classifications used in the Current Year – specifically, the aggregation of interest expense with other finance charges, the latter of which was not material in Current Year or Prior Year. This reclassification had no impact on net income, stockholders’ equity, or cash flows as previously reported. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Accounts Receivable Accounts receivable are reported net of the allowance for doubtful accounts. The allowance for doubtful accounts is based on the Company’s ongoing discussions with its licensees, wholesale and digital customers, and its evaluation of each customer’s payment history, account aging, and financial position. As of December 31, 2020 and 2019, the Company had $8.9 million and $10.6 million, respectively, of accounts receivable, net of allowances for doubtful accounts of $1.2 million and $0.2 million, respectively. The Company recognized bad debt expense of $1.1 million for the Current Year and a recovery of $(0.1) million for the Prior Year. Included within these amounts, the Current Year reflects $1.0 million of bad debt expense related to the bankruptcy of several retail customers due to the novel coronavirus disease pandemic. The total allowance of $1.0 million against such customers’ outstanding receivable balances of $1.2 million at December 31, 2020 represents management’s best estimate of collectibility, based on information currently available. There is no earned revenue that has been accrued but not billed as of December 31, 2020 and 2019. Inventory Inventory is recorded at the lower of cost or net realizable value, with cost determined on a weighted average basis. The Company holds finished goods inventory for its e-commerce jewelry operations. Apparel and jewelry finished goods inventory is purchased to satisfy orders received from its wholesale operations. The Company periodically reviews the composition of its inventories in order to identify obsolete, slow-moving or otherwise non-saleable items. If non-saleable items are observed and there are no alternate uses for the inventories, the Company will record a write-down to net realizable value in the period that the decline in value is first recognized. Reserves for inventory shrinkage, representing the risk of physical loss of inventory, are estimated based on historical experience and are adjusted based upon physical inventory counts. Property and Equipment Furniture, equipment, and software are stated at cost less accumulated depreciation and amortization, and are depreciated using the straight-line method over their estimated useful lives, generally three (3) to seven (7) years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the leases. Betterments and improvements are capitalized, while repairs and maintenance are expensed as incurred. Costs to develop or acquire software for internal use incurred during the preliminary project stage and the post implementation stage are expensed, while internal and external costs to acquire or develop software for internal use incurred during the application development stage – including design, configuration, coding, testing, and installation – are generally capitalized. As a result of the bankruptcy of Lord & Taylor in the Current Year, the Company recognized a $0.1 million impairment related to certain furniture and fixture assets physically located in Lord & Taylor’s stores. Trademarks and Other Intangible Assets The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other.” Under this standard, goodwill and indefinite-lived intangible assets are not amortized, but are required to be assessed for impairment at least annually (the Company utilizes December 31 as its testing date) and when events occur or circumstances change that would more likely than not reduce the fair value of the asset below its carrying amount. Indefinite-Lived Intangible Assets The Company tests its indefinite-lived intangible assets for recovery in accordance with ASC‑820‑10‑55‑3F, which states that the income approach (“Income Approach”) converts future amounts (for example cash flows) to a single current (that is, discounted) amount. When the Income Approach is used, fair value measurement reflects current market expectations about those future amounts. The Income Approach is based on the present value of future earnings expected to be generated by a business or asset. Income projections for a future period are discounted at a rate commensurate with the degree of risk associated with future proceeds. A residual or terminal value is also added to the present value of the income to quantify the value of the business beyond the projection period. As such, recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to its expected future discounted net cash flows. If the carrying amount of such assets is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the recoverable amount of the assets. The Company performed its annual impairment testing as described above for the year ended December 31, 2020, and concluded that there was no impairment of its indefinite-lived intangible assets. As a result of performing its annual impairment testing as described above for the year ended December 31, 2019, the Company recorded a $6.2 million impairment related to the Ripka Brand trademarks, driven by the timing of the continued transition from a licensing model to a wholesale and direct-to-consumer model. No other impairment charges were recorded for the year ended December 31, 2019. Finite-Lived Intangible Assets The Company’s finite-lived intangible assets, including Trademarks, are reviewed for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. An impairment loss is recognized if the carrying amount of a finite-lived intangible asset is not recoverable and its carrying amount exceeds its fair value. With reference to finite-lived intangible assets impairment testing, the Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on undiscounted cash flows analysis or appraisals. The inputs utilized in the finite-lived intangible assets impairment analysis are classified as Level 3 inputs within the fair value hierarchy as defined in ASC Topic 820, “Fair Value Measurement.” As a result of performing its annual impairment testing as described above for the year ended December 31, 2020, the Company recorded a $13.0 million impairment related to the Ripka Brand trademarks, driven by delays and uncertainty in implementing the brick-and-mortar retail store strategy for a portion of the brand, primarily as a result of the novel coronavirus disease pandemic. No other impairment charges were recorded for the year ended December 31, 2020. No impairment charges were recorded related to finite-lived intangible assets for the year ended December 31, 2019. The Company’s finite-lived intangible assets are amortized over their estimated useful lives of seven (7) to eighteen (18) years. Restricted Cash Restricted cash was $1.1 million as of December 31, 2020 and 2019, respectively. This balance consisted of $1.1 million of cash deposited with Bank Hapoalim B.M. (“BHI”) as collateral for an irrevocable standby letter of credit associated with the lease of the Company’s current corporate office and operating facility at 1333 Broadway, New York City. Investment in Unconsolidated Affiliate The Company holds a limited partner ownership interest in an unconsolidated affiliate, which was entered into in 2016. This investment is accounted for in accordance with Accounting Standards Update (“ASU”) No. 2016‑01, "Financial Instruments – Overall (Subtopic 825‑10): "Recognition and Measurement of Financial Assets and Financial Liabilities," and is included within other assets on the Company’s consolidated balance sheets at December 31, 2020 and 2019. As of December 31, 2020 and 2019, the carrying value of this investment was $0.1 million. This investment does not have a readily determinable fair value and in accordance with ASC 820‑10‑35‑59, the investment is valued at cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer. Note Receivable The Company previously entered into a promissory note receivable from a certain key employee in the amount of $0.9 million. This note receivable bore interest at 5.1%, was due and payable in full on April 1, 2019, and was fully collateralized by various assets of the employee in which the Company had been granted a security interest. The note receivable was satisfied on March 31, 2019, and as of December 31, 2019, there were no amounts remaining outstanding under the note. Deferred Finance Costs The Company incurred costs (primarily professional fees and lender underwriting fees) in connection with borrowings under the senior secured term loans. These costs have been deferred on the consolidated balance sheets as a reduction to the carrying value of the associated borrowings. Such costs are amortized as interest expense using the effective interest method. Contingent Obligations When accounting for asset acquisitions, if any contingent obligations exist and the fair value of the assets acquired is greater than the consideration paid, any contingent obligations are recognized and recorded as the positive difference between the fair value of the assets acquired and the consideration paid for the acquired assets. When accounting for asset acquisitions, if any contingent obligations exist and the fair value of the assets acquired are equal to the consideration paid, any contingent obligations are recognized based upon the Company’s best estimate of the amount that will be paid to settle the liability. The Company recorded contingent obligations in connection with the acquisition of the Judith Ripka Trademarks in 2014, the C Wonder Trademarks in 2015, and the Halston Heritage Trademarks in 2019. See Note 6 and Note 10 for additional information related to contingent obligations. Under the applicable accounting guidance, the Company is required to carry such contingent liability balances on its consolidated balance sheet until the measurement period of the earn-out expires and all related contingencies have been resolved. Revenue Recognition The Company applies the guidance in ASC Topic 606, “Revenue from Contracts with Customers” to recognize revenue. Licensing The Company recognizes revenue continuously over time as it satisfies its continuous obligation of granting access to its licensed intellectual properties, which are deemed symbolic intellectual properties under the applicable revenue accounting guidance. Payments are typically due after sales have occurred and have been reported by the licensees or, where applicable, in accordance with minimum guaranteed payment provisions. The timing of performance obligations is typically consistent with the timing of payments, though there may be differences if contracts provide for advances or significant escalations of contractually guaranteed minimum payments. There were no such differences that would have a material impact on the Company’s consolidated balance sheets at December 31, 2020 and 2019. In accordance with ASC 606‑10‑55‑65, the Company recognizes revenue at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied (in whole or in part). More specifically, the Company separately identifies: (i) Contracts for which, based on experience, royalties are expected to exceed any applicable minimum guaranteed payments, and to which an output-based measure of progress based on the “right to invoice” practical expedient is applied because the royalties due for each period correlate directly with the value to the customer of the Company’s performance in each period (this approach is identified as “View A” by the FASB Revenue Recognition Transition Resource Group, “TRG”); and (ii) Contracts for which revenue is recognized based on minimum guaranteed payments using an appropriate measure of progress, in which minimum guaranteed payments are straight-lined over the term of the contract and recognized ratably based on the passage of time, and to which the royalty recognition constraint to the sales-based royalties in excess of minimum guaranteed is applied and such sales-based royalties are recognized to distinct period only when the minimum guaranteed is exceeded on a cumulative basis (this approach is identified as “View C” by the TRG). The Company does not typically perform by transferring goods or services to customers before the customer pays consideration or before payment is due, thus the amounts of contract assets as defined by ASC 606‑10‑45‑3 were not material as of December 31, 2020 and 2019. The Company’s unconditional right to receive consideration based on the terms and conditions of licensing contracts is presented as accounts receivable on the accompanying consolidated balance. The Company typically does not receive consideration in advance of performance and, consequently, amounts of contract liabilities as defined by ASC 606‑10‑45‑2 were not material as of December 31, 2020 and 2019. The Company does not disclose the amount attributable to unsatisfied or partially satisfied performance obligations for variable revenue contracts (identified under “View A” above) in accordance with the optional exemption allowed under ASC 606. The Company did not have any revenue recognized in the reporting period from performance obligations satisfied, or partially satisfied, in previous periods. Remaining minimum guaranteed payments for active contracts as of December 31, 2020 are expected to be recognized ratably in accordance with View C over the remaining term of each contract based on the passage of time and through December 2023. Wholesale Sales The Company generates revenue through the design, sourcing, and sale of branded jewelry and apparel to both domestic and international customers who, in turn, sell the products to the consumer. The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which occurs upon the transfer of control of the merchandise in accordance with the contractual terms and conditions of the sale. Direct to Consumer Sales The Company’s revenue associated with its e-commerce businesses is recognized at a point in time when product is shipped to the customer. Advertising Costs All costs associated with production for the Company’s advertising, marketing, and promotion are expensed during the periods when the activities take place. All other advertising costs, such as print and online media, are expensed when the advertisement occurs. The Company incurred $0.9 million in advertising and marketing costs for each of the years ended December 31, 2020 and December 31, 2019. Leases The Company determines if an arrangement is a lease at inception. The Company generally recognizes a right-of-use (“ROU”) asset, representing its right to use the underlying leased asset for the lease term, and a liability for its obligation to make future lease payments (the lease liability) at commencement date based on the present value of lease payments over the lease term. The Company does not recognize ROU assets and lease liabilities for lease terms of 12 months or less, but recognizes such lease payments in net income on a straight-line basis over the lease terms. As the Company’s leases typically do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For real estate leases of office space, the Company accounts for the lease and non-lease components as a single lease component. Variable lease payments that do not depend on an index or rate (such as real estate taxes and building insurance and lessee’s shares thereof), if any, are excluded from lease payments at lease commencement date for initial measurement. Subsequent to initial measurement, these variable payments are recognized when the event determining the amount of variable consideration to be paid occurs. Lease expense for operating lease payments related to office leases is recognized on a straight-line basis over the lease term. Lease expense for operating lease payments related to retail leases is recognized on a straight-line basis over the period of operation, as this is representative of the pattern in which benefit is derived from the lease. The Company recognizes income from subleases (in which the Company is the sublessor) on a straight-line basis over the term of the sublease, as a reduction to lease expense. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation - Stock Compensation,” by recognizing the fair value of stock-based compensation as an operating expense over the service period of the award or term of the corresponding contract, as applicable. The fair value of stock options and warrants is estimated on the date of grant using the Black-Scholes option pricing model. The valuation determined by the Black-Scholes option pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The risk-free rate is based on the U.S. Treasury rate for the expected life at the time of grant, volatility is based on the average long-term implied volatilities of peer companies, and expected life is based on the estimated average life of options and warrants using the simplified method. The Company utilizes the simplified method to determine the expected life of the options and warrants due to insufficient exercise activity during recent years as a basis from which to estimate future exercise patterns. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. Restricted stock awards are valued using the fair value of the Company’s stock at the date of grant. The Company accounts for non-employee awards in accordance with ASU 2018-07, “Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting.” Such awards are measured at the grant date fair value of the equity instruments to be issued, and the Company recognizes compensation cost for grants to non-employees on a straight-line basis over the period of the grant. The Company accounts for forfeitures as a reduction of compensation cost in the period when such forfeitures occur. For stock option awards for which vesting is contingent upon the achievement of certain performance targets, the timing and amount of compensation expense recognized is based upon the Company’s projections and estimates of the relevant performance metric(s) until the time the performance obligation is satisfied. Income Taxes Current income taxes are based on the respective period’s taxable income for federal and state income tax reporting purposes. Deferred tax liabilities and assets are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is required if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company applies the FASB guidance on accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also addresses derecognition, classification, interest, and penalties related to uncertain tax positions. The Company has no unrecognized tax benefits as of December 31, 2020 and 2019. Interest and penalties related to uncertain tax positions, if any, are recorded in income tax expense. Tax years that remain open for assessment for federal and state tax purposes include the years ended December 31, 2017 through December 31, 2020. The income tax effects of changes in tax laws are recognized in the period when enacted. Fair Value ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value and establishes a framework for measuring fair value under U.S. GAAP. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of the Company’s assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, and accounts payable, the carrying amounts approximate fair value due to the short-term maturities of these instruments. The carrying value of term loan debt approximates fair value because the fixed interest rate approximates current market rates and in the instances it does not, the impact is not material. When debt interest rates are below market rates, the Company considers the discounted value of the difference of actual interest rates and its internal borrowing against the scheduled debt payments. The fair value of the Company’s cost method investment does not have a readily determinable fair value and in accordance with ASC 820‑10‑35‑59, the investment is valued at cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, accounts receivable, and notes receivable. The Company limits its credit risk with respect to cash by maintaining cash, cash equivalents, and restricted cash balances with high quality financial institutions. At times, the Company’s cash, cash equivalents, and restricted cash may exceed federally insured limits. Concentrations of credit risk with respect to accounts receivable are minimal due to the collection history and due to the nature of the Company’s royalty revenues. Generally, the Company does not require collateral or other security to support accounts receivable. Earnings Per Share Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon the exercise of stock options and warrants using the treasury stock method. The difference between basic and diluted weighted-average common shares results from the assumption that all dilutive stock options and warrants outstanding were exercised into common stock if the effect is not anti-dilutive. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes certain exceptions to the general principles in Topic 740, including, but not limited to, intraperiod tax allocations and interim period tax calculations. The ASU also provides additional clarification and guidance related to recognition of franchise taxes and changes in tax laws. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption of this new guidance in 2021 will not have any significant impact on the Company’s results of operations, cash flows, and financial condition. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which was subsequently amended in November 2018 through ASU No. 2018-19. This ASU will require entities to estimate lifetime expected credit losses for financial instruments, including trade and other receivables, which will result in earlier recognition of credit losses. In November 2019, the FASB issued ASU No. 2019-10, which, among other things, deferred the application of the new guidance on credit losses for smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows, and financial condition. Recently Adopted Accounting Pronouncements The Company adopted ASU No. 2018‑13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” effective January 1, 2020. This ASU adds, modifies, and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” The adoption of this new guidance did not have any impact on the Company’s results of operations, cash flows, and financial condition. The Company adopted ASU No. 2016-02, “Leases,” effective January 1, 2019, by applying the new guidance under the additional and alternative transition method allowed by ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” As of January 1, 2019, the adoption resulted in the recognition of operating lease right-of-use ("ROU") assets of approximately $10.4 million, lease liabilities of approximately $13.2 million, and a decrease of approximately $2.8 million in accrued rent. The adoption of the new lease accounting guidance did not have an impact on the Company’s consolidated statement of operations, and had no impact on cash provided by or used in operating, financing, or investing activities in the Company's consolidated statement of cash flows. The Company elected the available practical expedients under ASC 842-10-15-37 (thereby not separating lease components from non-lease components and instead accounting for all components as a single lease component) and ASC 842-10-65-1 (thereby, among other things, not reassessing lease classification), and implemented changes to its processes and methodologies related to leases to enable the preparation of financial information upon adoption and to allow for the correct identification, classification, and measurement of leases in accordance with the new guidance going forward. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2020 | |
Asset Acquisitions [Abstract] | |
Acquisitions | 3. Acquisitions Acquisition of Halston Heritage Trademarks On February 11, 2019 (the “Closing Date”), the Company and its wholly owned subsidiary, H Heritage Licensing, LLC, entered into an asset purchase agreement (the "Heritage Asset Purchase Agreement") with the H Company IP, LLC (the "Seller" or "HIP") and its parent, House of Halston LLC ("HOH"), pursuant to which the Company acquired certain assets of HIP, including the "Halston", "Halston Heritage", and "Roy Frowick" trademarks (collectively, the "Halston Heritage Trademarks") and other intellectual property rights relating thereto. Benjamin Malka, who was a director of the Company, is a 25% equity holder of HOH and former Chief Executive Officer of HOH. Pursuant to the Heritage Asset Purchase Agreement, at closing, the Company delivered in escrow for HIP or its designees (collectively, the “Sellers”) an aggregate of $8.4 million in cash and 777,778 shares of the Company’s common stock valued at $1.1 million (the “Xcel Shares”), subject to a voting agreement and a lock-up agreement relating to the Xcel Shares and a consent and waiver agreement each in form satisfactory to Xcel within three months from the date of the Heritage Asset Purchase Agreement. Such agreements were executed and delivered to Xcel, and the Xcel Shares were issued and delivered to the Sellers. In addition to the closing considerations, HIP is eligible to earn up to an aggregate of $6.0 million (the “Earn-Out Value”) through December 31, 2022 based on Excess Net Royalties. “Excess Net Royalties” during any calendar year for 2019 through 2022 (each, a “Royalty Target Year”) is equal to (a) the positive amount, if any, of the Net Royalties as calculated for such Royalty Target Year, less the greater of (i) One Million Five Hundred Thousand Dollars ($1.5 million), or (ii) the maximum Net Royalties for any previous Royalty Target Year. “Applicable Percentage” means (a) 50% of the first $10.0 million of Excess Net Royalties during the Earn-Out Period, (b) 20% of aggregate Excess Net Royalties during the Earn-Out Period greater than $10.0 million and up to $15.0 million and (c) 0% of aggregate Excess Net Royalties during the Earn-Out Period in excess of $15.0 million. The Earn-Out Consideration shall be payable in common stock of Xcel (the “Earn-Out Shares”); provided, however, that if the number of Earn-Out Shares, when combined with the number of Xcel Shares issued at the Closing Date, will exceed 4.99% of the aggregate number of shares of Xcel common stock outstanding as of the Closing Date (calculated in accordance with Nasdaq Rule 5635(a)) (the “Xcel Share Limit”), then Xcel may, in its sole and unfettered discretion, elect to (x) pay cash for the Earn-Out Value attributable to the Earn-Out Shares that would exceed the Xcel Share Limit; (y) solicit stockholder approval for the issuance of Earn-Out Shares in excess of the Xcel Share Limit in accordance with Nasdaq Rule 5635(a)(2) and, if such stockholder approval is obtained, issue such Earn-Out Shares to HIP; or (z) solicit stockholder approval for the issuance of Shares in excess of the Xcel Share Limit in accordance with Nasdaq Rule 5635(a)(2) and, if such stockholder approval is obtained, pay the applicable Earn-Out Consideration with a combination of cash and Earn-Out Shares. The Halston Heritage Trademark acquisition was accounted for as an asset purchase. The aggregate purchase price has been allocated to the following assets based on the fair value of the assets on the date of acquisition: ($ in thousands) Allocated to: Trademarks $ 10,588 Halston archives 200 Total acquisition price $ 10,788 The Halston Heritage Trademarks have been determined by management to have a finite useful life, and accordingly, amortization is recorded in the Company’s consolidated statements of operations. The Halston Heritage Trademarks and archives are amortized on a straight-line basis over their expected useful lives of eighteen and seven years, respectively. The following represents the aggregate purchase price of $10.8 million: ($ in thousands, except share amounts) Cash $ 8,350 Fair value of Common Stock issued (777,778 shares) 1,058 Total direct initial consideration 9,408 Direct transaction expenses 480 Contingent obligation 900 Total consideration $ 10,788 Consolidation of Longaberger Licensing, LLC Variable Interest Entity and Acquisition of Longaberger Trademarks On November 12, 2019, the Company entered into a limited liability company agreement (the “LLC Agreement”) with a subsidiary of Hilco Global for Longaberger Licensing, LLC (“LL”). Hilco Global became the sole Class A Member of LL, and Xcel became the sole Class B Member of LL. Each member committed to an initial capital contribution of $425,000 in return for a 50% equity ownership interest in LL, with each member actually contributing $375,000 upon execution of the LLC Agreement. Simultaneously on November 12, 2019, Longaberger Licensing, LLC completed the acquisition of the Longaberger trademarks and other intellectual property rights relating thereto from the trustee for the Longaberger Company. The total purchase price for such assets was $750,000. No other assets or liabilities were acquired as part of this transaction, and the acquisition was accounted for as an asset purchase. Based on an analysis of the contractual terms and rights contained in the related agreements, the Company determined that under the applicable accounting standards, LL is a variable interest entity and the Company has effective control over the entity. Therefore, as the primary beneficiary, the Company has consolidated LL as of November 12, 2019. Upon consolidation, the Company recognized $750,000 of intangible assets and a noncontrolling interest of $375,000. The Longaberger trademarks have been determined by management to have a finite useful life, and accordingly, amortization is recorded in the Company’s consolidated statements of operations. The Longaberger trademarks are amortized on a straight-line basis over their expected useful life of fifteen (15) years. During the Current Year, Hilco Global and Xcel each contributed $300,000 to LL in order to fund LL’s working capital requirements, which resulted in an increase of $300,000 to the carrying value of Hilco Global’s non-controlling interest. |
Trademarks and Other Intangible
Trademarks and Other Intangibles | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Trademarks and Other Intangibles | 4. Trademarks and Other Intangibles Trademarks and other intangibles, net consist of the following: Weighted Average December 31, 2020 Amortization Gross Carrying Accumulated Net Carrying ($ in thousands) Period Amount Amortization Amount Trademarks (indefinite-lived) n/a $ 44,500 $ — $ 44,500 Trademarks (finite-lived) 15 years 21,613 6,867 14,746 Trademarks (finite-lived) 18 years 38,194 4,192 34,002 Other intellectual property 7 years 762 537 225 Copyrights and other intellectual property 10 years 190 128 62 Total $ 105,259 $ 11,724 $ 93,535 Weighted Average December 31, 2019 Amortization Gross Carrying Accumulated Net Carrying ($ in thousands) Period Amount Amortization Amount Trademarks (indefinite-lived) n/a $ 62,900 $ — $ 62,900 Trademarks (finite-lived) 15 years 16,213 4,560 11,653 Trademarks (finite-lived) 18 years 38,194 2,067 36,127 Other intellectual property 7 years 762 428 334 Copyrights and other intellectual property 10 years 190 109 81 Total $ 118,259 $ 7,164 $ 111,095 During the year ended December 31, 2020, the Company recorded a non-cash impairment charge of $13.0 million related to the Ripka Brand trademarks, driven by delays and uncertainty in implementing the brick-and-mortar retail store strategy for a portion of the brand, primarily as a result of the novel coronavirus disease pandemic. During the year ended December 31, 2019, the Company recorded a non-cash impairment charge of $6.2 million related to the Ripka Brand trademarks, driven by the timing of the continued transition from a licensing model to a wholesale and direct-to-consumer model. No other intangible asset impairment charges were recorded for the years ended December 31, 2020 and 2019. Amortization expense for intangible assets for the years ended December 31, 2020 and 2019 was approximately $4.6 million and $3.2 million, respectively. Effective January 1, 2020, the Company determined that the Ripka Brand, inclusive of all its trademarks, has a finite life of 15 years, and is amortized on a straight-line basis accordingly. Prior to January 1, 2020, the Ripka Brand trademarks were considered indefinite-lived assets. The trademarks of the Isaac Mizrahi Brand have been determined to have indefinite useful lives and accordingly, no amortization has been recorded for those intangible assets. Estimated future amortization expense related to finite-lived intangible assets over the remaining useful lives is as follows: ($ in thousands) Amortization Year Ending December 31, Expense 2021 $ 3,632 2022 3,632 2023 3,632 2024 3,617 2025 3,613 Thereafter 30,909 Total $ 49,035 |
Significant Contracts
Significant Contracts | 12 Months Ended |
Dec. 31, 2020 | |
Significant Contracts [Abstract] | |
Significant Contracts | 5. Significant Contracts QVC Agreements Through its wholly owned subsidiaries, the Company has direct-to-retail license agreements with Qurate Retail Group (“Qurate”), pursuant to which the Company designs, and Qurate sources and sells, various products under the IsaacMizrahiLIVE brand, the Judith Ripka brand, the H by Halston brand, and the Longaberger brand. These agreements include, respectively, the IM QVC Agreement, the Ripka QVC Agreement, the H QVC Agreement, and the Longaberger QVC Agreement (collectively, the “QVC Agreements”). Qurate owns the rights to all designs produced under the QVC Agreements, and the QVC Agreements include the sale of products across various categories through Qurate’s television media and related internet sites. Pursuant to the agreements, the Company has granted to Qurate and its affiliates the exclusive, worldwide right to promote the Company’s branded products, and the right to use and publish the related trademarks, service marks, copyrights, designs, logos, and other intellectual property rights owned, used, licensed, and/or developed by the Company, for varying terms as set forth below. The QVC Agreements include automatic renewal periods as detailed below unless terminated by either party. Current Term Automatic Xcel Commenced QVC Product Agreement Expiry Renewal Brand with QVC Launch IM QVC Agreement September 30, 2021 one-year period September 2011 2010 Ripka QVC Agreement March 31, 2022 one-year period April 2014 1999 H QVC Agreement December 31, 2022 three-year period January 2015 2015 Longaberger QVC Agreement October 31, 2021 two-year period November 2019 2019 In connection with the foregoing and during the same periods, Qurate and its subsidiaries have the exclusive, worldwide right to use the names, likenesses, images, voices, and performances of the Company’s spokespersons to promote the respective products. Under the IM QVC Agreement, IM Brands has also granted to Qurate and its affiliates, during the same period, exclusive, worldwide rights to promote third-party vendor co-branded products that, in addition to bearing and being marketed in connection with the trademarks and logos of such third-party vendors, also bear or are marketed in connection with the IsaacMizrahiLIVE trademark and related logo. Under the QVC Agreements, Qurate is obligated to make payments to the Company on a quarterly basis, based primarily upon a percentage of the net retail sales of the specified branded products. Net retail sales are defined as the aggregate amount of all revenue generated through the sale of the specified branded products by Qurate and its subsidiaries under the QVC Agreements, excluding freight, shipping and handling charges, customer returns, and sales, use, or other taxes. Also, under the QVC Agreements, except for the Longaberger QVC Agreement, the Company will pay a royalty participation fee to Qurate on revenue earned from the sale, license, consignment, or any other form of distribution of any products, bearing, marketed in connection with, or otherwise associated with the specified trademarks and brands. Net revenue from Qurate totaled $17.61 million and $22.24 million for the Current Year and Prior Year, respectively, representing approximately 60% and 53% of the Company’s total revenues, respectively. As of December 31, 2020 and 2019, the Company had receivables from Qurate of $4.46 million and $4.36 million, representing approximately 50% and 41% of the Company’s accounts receivable, respectively. The December 31, 2020 and 2019 Qurate receivables did not include any earned revenue accrued but not yet billed as of the respective balance sheet dates. |
Debt and Other Long-term Liabil
Debt and Other Long-term Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Other Long-term Liabilities | 6. Debt and Other Long-term Liabilities Debt The Company’s net carrying amount of debt is comprised of the following: December 31, December 31, ($ in thousands) 2020 2019 Term loan debt $ 16,750 $ 19,000 Unamortized deferred finance costs related to term loan (112) (179) Total 16,638 18,821 Current portion of long-term debt 2,800 2,250 Long-term debt $ 13,838 $ 16,571 Term Loan Debt On February 26, 2016, the Company and its wholly owned subsidiaries, IM Brands, LLC, JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, IMNY Retail Management, LLC, and IMNY E-Store, USA, LLC (each a “Guarantor” and collectively, the “Guarantors”), as Guarantors, entered into an amended and restated loan and security agreement with Bank Hapoalim B.M. as agent, and the financial institutions party thereto as lenders. On February 11, 2019, concurrent with the Closing Date of the acquisition of the Halston Heritage Brands (see Note 3), the Company entered into an amended loan agreement with BHI (the “Loan Agreement”), which amended and restated the prior term loan. Immediately prior to February 11, 2019, the aggregate principal amount of the prior term loan was $14.5 million. Pursuant to the Loan Agreement, the Lenders have extended to Xcel an additional term loan in the amount of $7.5 million, such that, as of February 11, 2019, the aggregate outstanding balance of all the term loans extended by BHI to Xcel was $22.0 million, which amount has been divided under the Loan Agreement into two term loans: (1) a term loan in the amount of $7.3 million (“Term Loan A”) and (2) a term loan in the amount of $14.7 million (“Term Loan B” and, together with Term Loan A, the “Term Loans”). The proceeds of the additional term loan were used to finance the Halston Heritage Brands acquisition described in Note 3. The terms and conditions of the Loan Agreement resulted in significantly different debt service payment requirements, compared with the prior term loan, including an increase of $7.5 million in the principal balance, and related changes to the timing and amount of principal payments, as well as changes in the interest rate. Management assessed and determined that this amendment resulted in an extinguishment of debt and recognized a loss of $0.2 million (consisting of unamortized deferred finance costs) during the year ended December 31, 2019. The Loan Agreement also allows that BHI and any other lender party to the Loan Agreement (collectively, the “Lenders”) can provide to Xcel a revolving loan facility and a letter of credit facility, the terms of each of which shall be agreed to by Xcel and the Lenders. Amounts advanced under the revolving loan facility (the “Revolving Loans”) will be used for the purpose of consummating acquisitions by Xcel or its subsidiaries that are or become parties to the Loan Agreement. Xcel will have the right to convert Revolving Loans to incremental term loans (the “Incremental Term Loans”) in minimum amounts of $5.0 million. The Company has not drawn down any funds under either the revolving loan facility or letter of credit facility. On April 13, 2020, the Company and BHI amended the Loan Agreement. Under this amendment, the quarterly installment payment due March 31, 2020 was deferred, and the amounts of the quarterly installment payments due throughout the remainder of 2020 were reduced, while the amount of principal to be repaid through variable payments based on excess cash flow was increased. In addition, there were multiple changes and waivers to the various financial covenants. Further, this amendment permitted Xcel to incur unsecured debt through the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and excludes any associated PPP debt and debt service from the covenant calculations. See Note 7 for details regarding the Company’s accounting for the PPP. There were no changes to the total principal balance, interest rate, or maturity date. On August 18, 2020, the Company and BHI further amended its Loan Agreement. Under this amendment, the amounts of the quarterly installment payments due throughout 2021 were reduced, and the amount of principal to be repaid through variable payments based on excess cash flow was increased. In addition, there were multiple changes and waivers to the various financial covenants. There were no changes to the total principal balance, interest rate, or maturity date. Management assessed and determined that the Current Year amendments represented debt modifications and, accordingly, no gain or loss was recorded. In connection with the Current Year amendments, the Company incurred fees to or on behalf of BHI of approximately $27,000; these fees, along with deferred finance costs related to financing transactions that took place in prior years, have been deferred on the consolidated balance sheets as a reduction to the carrying value of the term loan debt, and are being amortized to interest expense over the term of the Loan Agreement using the effective interest method. The Term Loans mature on December 31, 2023, Incremental Term Loans shall mature on the date set forth in the applicable term note, and Revolving Loans and the letter of credit facility shall mature on such date as agreed upon by Xcel and the Lenders. Any letter of credit issued under Loan Agreement shall terminate no later than one year following the date of issuance thereof. The remaining principal balance of the Term Loans, as amended, outstanding at December 31, 2020 is payable in fixed installments as set forth in the following table, plus the variable payments as described below: ($ in thousands) Installment Payment Dates Amount March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 $ 700 March 31, 2022, June 30, 2022, September 30, 2022, and December 31, 2022 $ 1,125 March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 $ 1,250 In addition to the fixed installments outlined above, commencing with the fiscal quarter ending March 31, 2021, the Company is required to repay a portion of the Term Loans in an amount equal to 50% of the excess cash flow for the fiscal quarter, provided that no early termination fee shall be payable with respect to any such payment. Excess cash flow means, for any period, cash flow from operations (before certain permitted distributions) less (i) capital expenditures not made through the incurrence of indebtedness, (ii) all cash principal paid or payable during such period, and (iii) all dividends declared and paid (or which could have been declared and paid) during such period to equity holders of any credit party treated as a disregarded entity for tax purposes. To the extent that the cumulative amount of such variable repayments made is less than $4.45 million as of March 31, 2022, any such shortfall must be repaid at that date. Thus, the aggregate remaining annual principal payments under the Term Loans at December 31, 2020 were as follows: Amount of ($ in thousands) Principal Year Ending December 31, Payment 2021 $ 2,800 2022 8,950 2023 5,000 Total $ 16,750 Xcel has the right to prepay the Term Loans, Incremental Term Loans, Revolving Loans, and obligations with respect to letters of credit and accrued and unpaid interest thereon and to terminate the Lenders’ obligations to make Revolving Loans and issue letters of credit; provided that any prepayment of less than all of the outstanding balances of the Term Loans and Incremental Term Loans shall be applied to the remaining amounts due in inverse order of maturity. If any Term Loan or any Incremental Term Loan is prepaid on or prior to the third anniversary of the Closing Date (including as a result of an event of default), Xcel shall pay an early termination fee as follows: an amount equal to the principal amount of the Term Loan or Incremental Term Loan, as applicable, being prepaid, multiplied by: (i) two percent (2.00%) if any of Term Loan B or any Incremental Term Loan is prepaid on or before the second anniversary of the later of the Closing Date or the date such Incremental Term Loan was made, as applicable; (ii) one percent (1.00%) if any of Term Loan A is prepaid on or before the second anniversary of the Closing Date; (iii) one percent (1.00%) if any of Term Loan B or any Incremental Term Loan is prepaid after the second anniversary of the later of the Closing Date or such Incremental Term Loan was made, as applicable, but on or before the third anniversary of such date; (iv) one-half of one percent (0.50%) if any of Term Loan A is prepaid after the second anniversary of the Closing Date, but on or before the third anniversary of such date; or (v) zero percent (0.00%) if any Term Loan or any Incremental Term Loan is prepaid after the third anniversary of the later of the Closing Date or the date such Incremental Term Loan was made, as applicable. Xcel’s obligations under the Loan Agreement are guaranteed by and secured by all of the assets of Xcel and its wholly owned subsidiaries, as well as any subsidiary formed or acquired that becomes a credit party to the Term Loans (the “Guarantors”) and, subject to certain limitations contained in the Term Loans, equity interests of the Guarantors. Xcel also granted the Lenders a right of first offer to finance any acquisition for which the consideration will be paid other than by cash of Xcel or by the issuance of equity interest of Xcel. The Loan Agreement contains customary covenants, including reporting requirements, trademark preservation, and the following financial covenants of the Company (on a consolidated basis with the Guarantors under the Loan Agreement): · net worth of at least $90.0 million at the end of each fiscal quarter; · liquid assets of at least $3.0 million through December 31, 2020, at least $2.5 million for the fiscal quarters ending March 31, 2021 through September 30, 2021, at least $3.0 million for the fiscal quarter ending December 31, 2021, and at least $5.0 million thereafter; · the fixed charge coverage ratio for the twelve fiscal month period ending at the end of each fiscal quarter shall not be less than the ratio set forth below: Fiscal Quarter End Fixed Charge Coverage Ratio December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 1.25 to 1.00 March 31, 2022, and thereafter 1.10 to 1.00 · capital expenditures (excluding any capitalized compensation costs) shall not exceed $1.6 million for the fiscal year ending December 31, 2020, and $0.7 million for any fiscal year beginning after December 31, 2020; and · the leverage ratio for the twelve fiscal month period ending at the end of each fiscal period set forth below shall not exceed the ratio set forth below: Fiscal Period Maximum Leverage Ratio December 31, 2020 3.50 to 1.00 March 31, 2021 3.15 to 1.00 June 30, 2021 3.00 to 1.00 September 30, 2021 2.75 to 1.00 December 31, 2021 2.50 to 1.00 March 31, 2022 and each Fiscal Quarter end thereafter 1.50 to 1.00 The Company was in compliance with all applicable covenants under the Loan Agreement as of and for the fiscal year ended December 31, 2020. In connection with the February 11, 2019 refinancing transaction and subsequent amendments, the Company incurred fees to or on behalf of BHI of approximately $0.3 million during the Prior Year and $0.03 million during the Current Year. These fees have been deferred on the consolidated balance sheets as a reduction to the carrying value of the Term Loans, and are being amortized to interest expense over the term of the Term Loans using the effective interest method. The effective interest rate on the Loan Agreement was approximately 6.6% and 6.7% for the Current Year and Prior Year, respectively. Interest on Term Loan A accrues at a fixed rate of 5.1% per annum and is payable on each day on which the scheduled principal payments on Term Loans are required to be made. Interest on Term Loan B accrues at a fixed rate of 6.25% per annum and is payable on each day on which the scheduled principal payments on Term Loans are required to be made. Interest on the Revolving Loans will accrue at either the Base Rate or LIBOR, as elected by Xcel, plus a margin to be agreed to by Xcel and the Lenders and will be payable on the first day of each month. Base Rate is defined in the Loan Agreement as the greater of (a) BHI’s stated prime rate or (b) 2.00% per annum plus the overnight federal funds rate published by the Federal Reserve Bank of New York. Interest on the Incremental Term Loans will accrue at rates to be agreed to by Xcel and the Lenders and will be payable on each day on which the scheduled principal payments under the applicable note are required to be made. For the Current Year and Prior Year, the Company incurred interest expense of approximately $1.1 million and $1.2 million, respectively, related to term loan debt. On April 14, 2021, the Company and its wholly owned subsidiaries entered into a new loan and security agreement with BHI and First Eagle Alternative Credit, LLC (“FEAC”), which resulted in the extinguishment of the term loan debt which existed as of December 31, 2020. See Note 13 for additional details. IM Seller Note On September 29, 2011, as part of the consideration for the purchase of the Isaac Mizrahi business, the Company issued to IM Ready-Made, LLC a promissory note in the principal amount of $7.4 million (the “IM Seller Note”). The IM Seller Note was subsequently amended in 2013 and 2016. On March 31, 2019, the Company paid the final installment of $750,000 under the IM Seller Note, and no amounts remained outstanding under the IM Seller Note as of December 31, 2019. For the year ended December 31, 2019, the Company incurred interest expense of approximately $4,000 under the IM Seller Note, which consisted solely of amortization of the discount on the IM Seller Note. Ripka Seller Notes As of January 1, 2019, the Company had a note payable of approximately $0.58 million relating to the acquisition of the Judith Ripka assets (the "Ripka Seller Note"). Separately, the Company held a promissory note receivable due from the sellers of the Judith Ripka assets (the "Ripka Sellers") with a maturity date of March 31, 2019. On March 31, 2019, the Company agreed to net its note receivable due from the Ripka Sellers of approximately $0.9 million against the Ripka Seller Note of $0.6 million and the remaining Ripka Earn-Out of $0.1 million (see below). As of December 31, 2019, there were no amounts remaining outstanding under the Ripka Seller Note. For the year ended December 31, 2019, the Company incurred interest expense of approximately $16,000, which consisted solely of amortization of the discount on the Ripka Seller Note. Other Long-term Liabilities Other long-term liabilities consist of the Company’s obligation to a subtenant for its security deposit under a sublease arrangement, which was $0.2 million as of both December 31, 2020 and 2019. |
Government assistance
Government assistance | 12 Months Ended |
Dec. 31, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Government assistance | 7. Government assistance Paycheck Protection Program (PPP) On April 20, 2020, the Company executed a promissory note (the “Promissory Note”) with Bank of America, N.A., which provided for an unsecured loan in the amount of $1.806 million, pursuant to the PPP under the CARES Act. The loan has a two-year term and bears interest at a fixed rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default and other provisions customary for a loan of this type. The loan was funded on April 23, 2020. The PPP also provides that this loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act, and later amended by the Paycheck Protection Program Flexibility Act (the "Flexibility Act") signed into law on June 5, 2020. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. While management believes that it is probable that the loan will be forgiven in full, no definite assurance can be provided that forgiveness for any portion of the loan will be obtained. Management's determination that full forgiveness is probable is based on qualification under the Flexibility Act. Management evaluated the legal and contractual terms associated with the loan, and concluded that, although the legal form of the loan is debt, it represents in substance a government grant that is expected to be forgiven. Given the lack of definitive authoritative guidance under GAAP for accounting for government grants, the Company analogized to accounting guidance under International Accounting Standard No. 20, “Accounting for Government Grants and Disclosure of Government Assistance.” Under such guidance, once it is probable that the conditions attached to the assistance will be met, the earnings impact of government grants is recorded on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. Accordingly, the Company recognized $1.806 million as a reduction to operating expenses in the Current Year. No interest expense related to the loan has been recorded in the Company’s consolidated financial statements. Economic Incentive Disaster Loan (EIDL) Concurrently with the PPP loan, in May 2020 the Company also received a $10,000 Economic Incentive Disaster Loan (“EIDL”) Advance through the U.S. Small Business Administration. The EIDL Advance represents a grant that does not have to be repaid, and as such, the Company has recognized $10,000 as a reduction to operating expenses in the Current Year. In total between the PPP and EIDL, the Company recognized $1,816,000 as a reduction to operating expenses in the Current Year. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity The Company has authority to issue up to 51,000,000 shares, consisting of 50,000,000 shares of common stock and 1,000,000 shares of preferred stock. 2011 Equity Incentive Plan The Company’s 2011 Equity Incentive Plan, as amended and restated (the “Plan”), is designed and utilized to enable the Company to provide its employees, officers, directors, consultants and others whose past, present and/or potential contributions to the Company have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. A total of 13,000,000 shares of common stock are eligible for issuance under the Plan. The Plan provides for the grant of any or all of the following types of awards: stock options, restricted stock, deferred stock, stock appreciation rights, and other stock-based awards. The Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board. Stock Options Options granted under the Plan expire at various times – either five, seven, or ten years from the date of grant, depending on the particular grant. A summary of the Company’s stock option activity for the Current Year is as follows: Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Options Price (in Years) Value Outstanding at January 1, 2020 7,222,625 $ 3.33 5.82 $ — Granted 531,250 1.40 Canceled — — Exercised — — Expired/Forfeited (574,500) 3.94 Outstanding at December 31, 2020, and expected to vest 7,179,375 $ 3.14 4.93 $ — Exercisable at December 31, 2020 3,063,208 $ 4.91 1.22 $ — Current Year stock option grants were as follows: On January 1, 2020, the Company granted options to purchase 5,000 shares of common stock to a board observer. The exercise price of the options is $4.00 per share, and 50% of the options vest on each of January 1, 2021 and January 1, 2022. On January 31, 2020, the Company granted options to purchase 75,000 shares of common stock to a consultant. The exercise price of the options is $1.57 per share, and all options vested immediately on the date of grant. On February 28, 2020, the Company granted options to purchase 50,000 shares of common stock to an employee. The exercise price is $1.40 per share, and the vesting of such options is dependent upon the Company achieving certain 12-month sales targets through December 31, 2021. On March 13, 2020, the Company granted options to purchase 50,000 shares of common stock to a certain key employee. The exercise price of the options is $5.50 per share, and all options vested immediately on the date of grant. On March 31, 2020, the Company granted options to purchase 50,000 shares of common stock to an employee. The exercise price of the options is $0.61 per share, and one-third of the options shall vest on each of March 31, 2021, March 31, 2021, and March 31, 2022. On April 1, 2020, the Company granted options to purchase an aggregate of 200,000 shares of common stock to non-management directors. The exercise price of the options is $0.50 per share, and 50% of the options shall vest on each of April 1, 2021 and April 1, 2022. On April 15, 2020, the Company granted options to purchase 13,500 shares of common stock to a consultant. The exercise price of the options is $3.00 per share. One-third of the options vested on each of June 30, 2020, September 30, 2020, and December 31, 2020. On August 21, 2020, the Company granted options to purchase 22,750 shares of common stock to a consultant. The exercise price of the options is $1.00 per share, and all options vested on December 31, 2020. On September 28, 2020, the Company granted options to purchase 15,000 shares of common stock to an employee. The exercise price of the options is $0.71 per share, and one-third of the options shall vest on each of September 28, 2021, September 28, 2022, and September 28, 2023. On December 21, 2020, the Company granted options to purchase an aggregate of 50,000 shares of common stock to two employees. The exercise price of the options is $1.09 per share, and 50% of the options shall vest on each of December 21, 2021 and December 21, 2022. Prior Year stock option grants were as follows: On January 1, 2019, the Company granted options to purchase 250,000 shares of common stock to a certain key employee. The exercise price is $3.00 per share, and the vesting of such options is dependent upon the Company achieving certain 12-month sales targets through December 31, 2021. As of December 31, 2020, 100,000 of these options have vested. On February 27, 2019, the Company granted options to purchase 2,578,947 shares of common stock to Robert W. D’Loren, the Company’s Chief Executive Officer. The exercise price is $1.70 per share, and the vesting of such options is dependent upon the Company’s common stock achieving certain stock trading prices for a minimum of ten (10) trading days (the "Target Prices"). The vesting of 736,842 shares occur if the Target Prices are equal to or greater than $3.00 per share; 626,316 shares vest if the Target Price is equal to or greater than $5.00 per share; 515,789 shares vest if the Target Price is equal to or greater than $7.00 per share; 405,263 shares vest if the Target Price is equal to or greater than $9.00 per share; and 294,737 shares vest if the Target Price is equal to or greater than $11.00 per share. The options are exercisable until February 27, 2029. As of December 31, 2020, none of the aforementioned Target Price thresholds have been met, and therefore, none of these options have vested. On February 27, 2019, the Company granted options to purchase 552,632 shares of common stock to James F. Haran, the Company’s Chief Financial Officer. The exercise price is $1.70 per share, and the vesting of such options is dependent upon the Company’s common stock achieving certain stock trading prices for a minimum of ten (10) trading days (the "Target Prices"). The vesting of 157,895 shares occur if the Target Prices are equal to or greater than $3.00 per share; 134,211 shares vest if the Target Price is equal to or greater than $5.00 per share; 110,526 shares vest if the Target Price is equal to or greater than $7.00 per share; 86,842 shares vest if the Target Price is equal to or greater than $9.00 per share; and 63,158 shares vest if the Target Price is equal to or greater than $11.00 per share. The options are exercisable until February 27, 2029. As of December 31, 2020, none of the aforementioned Target Price thresholds have been met, and therefore, none of these options have vested. On February 27, 2019, the Company granted options to purchase 368,421 shares of common stock to Seth Burroughs, an officer of the Company. The exercise price is $1.70 per share, and the vesting of such options is dependent upon the Company’s common stock achieving certain stock trading prices for a minimum of ten (10) trading days (the "Target Prices"). The vesting of 105,263 shares occur if the Target Prices are equal to or greater than $3.00 per share; 89,474 shares vest if the Target Price is equal to or greater than $5.00 per share; 73,684 shares vest if the Target Price is equal to or greater than $7.00 per share; 57,895 shares vest if the Target Price is equal to or greater than $9.00; and 42,105 shares vest if the Target Price is equal to or greater than $11.00 per share. The options are exercisable until February 27, 2029. As of December 31, 2020, none of the aforementioned Target Price thresholds have been met, and therefore, none of these options have vested. On March 13, 2019, the Company granted options to purchase an aggregate of 154,000 shares of common stock to various employees. The exercise price of the options is $1.73 per share, and all options vested immediately on the date of grant. On March 15, 2019, the Company granted options to purchase 50,000 shares of common stock to a certain key employee. The exercise price of the options is $5.50 per share, and all options vested immediately on the date of grant. On April 1, 2019, the Company granted options to purchase an aggregate of 150,000 shares of common stock to non-management directors. The exercise price of the options is $1.70 per share, and 50% of the options vest on each of April 1, 2020 and April 1, 2021. On April 15, 2019, the Company granted options to purchase an aggregate of 24,000 shares of common stock to certain employees. The exercise price of the options is $1.40 per share, and 50% of the options vest on each of April 15, 2020 and April 15, 2021. On May 1, 2019, the Company granted options to purchase 10,000 shares of common stock to an employee. The exercise price of the options is $1.38 per share, and 50% of the options vest on each of May 1, 2020 and May 1, 2021. On September 1, 2019, the Company granted options to purchase 15,000 shares of common stock to an employee. The exercise price of the options is $1.59 per share, and one-third of the options vest on each of September 1, 2020, September 1, 2021, and September 1, 2022. On October 1, 2019, the Company granted options to purchase 100,000 shares of common stock to an employee. The exercise price of the options is $1.77 per share, and one-third of the options vest on each of October 1, 2020, October 1, 2021, and October 1, 2022. On October 31, 2019, the Company granted options to purchase 10,000 shares of common stock to an employee. The exercise price of the options is $1.72 per share, and one-third of the options vest on each of October 31, 2020, October 31, 2021, and October 31, 2022. The fair value of the options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2020 2019 Expected Volatility 24.26 – 28.79 20.69 – 26.21 Expected Dividend Yield — % — % Expected Life (Term, in years) 2.5 – 3.5 2.5 – 3.5 Risk-Free Interest Rate 0.16 – 1.60 % 1.51 – 2.48 % Compensation expense related to stock options for the Current Year and Prior Year was approximately $0.2 million and $0.5 million, respectively. Total unrecognized compensation expense related to unvested stock options at December 31, 2020 amounts to approximately $0.2 million and is expected to be recognized over a weighted average period of 1.06 years. The following table summarizes the Company’s stock option activity for non-vested options for the current year: Weighted Average Number of Grant Date Options Fair Value Balance at January 1, 2020 4,551,500 $ 0.18 Granted 531,250 0.14 Vested (444,083) 0.58 Forfeited or Canceled (522,500) 0.65 Balance at December 31, 2020 4,116,167 $ 0.08 Warrants Warrants granted by the Company expire at various times – either five, seven, or ten years from the date of grant, depending on the particular grant. A summary of the Company’s warrant activity for the Current Year is as follows: Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Warrants Price (in Years) Value Outstanding and exercisable at January 1, 2020 579,815 $ 4.63 2.32 $ — Granted — — Canceled — — Exercised — — Expired/Forfeited — — Outstanding and exercisable at December 31, 2020 579,815 $ 4.63 1.32 $ — The Company did not grant any warrants to purchase shares of common stock during the Current Year. On July 18, 2019, the Company granted warrants to purchase an aggregate of 115,000 shares of common stock. The exercise price of the warrants is $3.17 per share, and one-third of the options vested on each of July 25, 2019, August 24, 2019, and September 23, 2019. No compensation expense was recorded in the Current Year related to warrants. Compensation expense related to warrants was approximately $14,000 in the Prior Year. Stock Awards A summary of the Company’s restricted stock activity for the Current Year is as follows: Weighted Number of Average Restricted Grant Date Shares Fair Value Outstanding at January 1, 2020 1,230,623 $ 4.33 Granted 639,728 0.82 Canceled — — Vested (1,089,518) 2.43 Expired/Forfeited — — Outstanding at December 31, 2020 780,833 $ 4.09 On March 30, 2020, the Company issued 336,700 shares of common stock to a member of senior management as payment for a performance bonus earned in the Prior Year. These shares vested immediately. The Company recognized compensation expense of approximately $0.2 million in the Prior Year to accrue for this performance bonus. The Company also recognized approximately $0.3 million of compensation expense in the Current Year related to similar senior management bonuses payable in common stock in 2021. On May 20, 2020, the Company issued an aggregate of 270,728 shares of common stock to various employees. These shares vested immediately. The Company recognized approximately $0.3 million of compensation expense in the Current Year related to this grant. On December 24, 2020, the Company issued an aggregate of 32,300 shares of common stock to various employees. These shares vested immediately. The Company recognized approximately $0.04 million of compensation expense in the Current Year related to this grant. Prior Year stock award grants were as follows: On February 27, 2019, the Company entered into a two-year employment agreement with a key employee, which includes a performance stock bonus of up to $90,000 for each of the years ended December 31, 2019 and 2020. The performance stock bonus is earned upon the Company achieving certain sales targets. On April 1, 2019, the Company issued an aggregate of 60,000 shares of stock to certain non-management directors, which vest evenly over two years, whereby 50% vested on April 1, 2020, and 50% shall vest on April 1, 2021. Notwithstanding the foregoing, each grantee may extend the first anniversary of all or a portion of the restricted stock by six months and, thereafter one or more times may further extend such date with respect to all or a portion of the restricted stock until the next following date exactly six months thereafter, by providing written notice of such election to extend such date with respect to all or a portion of the restricted stock prior to such date. Total compensation expense related to stock awards for the Current Year and Prior Year (inclusive of the amounts detailed above) was approximately $0.6 million and $0.5 million, respectively. Total unrecognized compensation expense related to unvested restricted stock grants at December 31, 2020 amounts to $0.01 million and is expected to be recognized over a weighted average period of 0.25 years. The following table provides information with respect to restricted stock purchased and retired by the Company during the Current Year and Prior Year: Number of Shares Purchased as Part of Total Number Actual Publicly Fair value of of Shares Price Paid Announced Re-Purchased Date Purchased per Share Plan Shares March 30, 2020 (i) 155,556 $ 0.65 — $ 102,000 May 20, 2020 (i) 87,249 0.98 — 85,000 December 24, 2020 (i) 2,478 1.14 — 3,000 Total 2020 245,283 $ 0.77 — $ 190,000 September 30, 2019 (i) 18,147 $ 1.34 — $ 25,000 October 31, 2019 (i) 29,189 1.75 — 51,000 November 30, 2019 (i) 57,980 1.45 — 84,000 December 31, 2019 (i) 9,846 1.45 — 14,000 Total 2019 115,162 $ 1.51 — $ 174,000 (i) The shares were exchanged from employees and directors in connection with the income tax withholding obligations on behalf of such employees and directors from the vesting of restricted stock. All of the shares of restricted stock in the preceding table were originally granted to employees and directors as restricted stock awards pursuant to the Plan. Shares Available Under the Company’s 2011 Equity Incentive Plan At December 31, 2020, there were 1,549,598 shares of common stock available for issuance under the Plan. Shares Reserved for Issuance At December 31, 2020, there were 9,308,788 shares of common stock reserved for issuance pursuant to unexercised warrants and stock options, or available for issuance under the Plan. Dividends The Company has not paid any dividends to date. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 9. Earnings Per Share Shares used in calculating basic and diluted earnings per share are as follows: Year Ended December 31, 2020 2019 Basic 19,117,460 18,857,657 Effect of exercise of warrants — — Effect of exercise of stock options — — Diluted 19,117,460 18,857,657 As a result of the net loss presented for the Current Year and Prior Year, the Company calculated diluted earnings per share using basic weighted-average shares outstanding for such period, as utilizing diluted shares would be anti-dilutive to loss per share. The computation of basic and diluted earnings per share excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive: Year Ended December 31, 2020 2019 Stock options and warrants 7,759,190 7,802,440 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Leases The Company has operating leases for its current office, former office, and a planned retail store location, as well as certain equipment with a term of 12 months or less. The Company is currently not a party to any finance leases. The Company's real estate leases have remaining lease terms between approximately 1 year to 8 years. As of December 31, 2020, the weighted average remaining lease term was 6.3 years and the weighted average discount rate was 6.25%. · The Company leases office space under an operating lease agreement related to the Company’s main headquarters located in New York City. This lease commenced on March 1, 2016 and expires on October 30, 2027. In connection with this lease, the Company obtained an Irrevocable Standby Letter of Credit from BHI for a sum not exceeding $1.1 million. The Company has deposited this amount with BHI as collateral for the letter of credit and recorded the amount as restricted cash in the consolidated balance sheets as of December 31, 2020 and December 31, 2019. · The Company also leases office space under an operating lease agreement at another location in New York City, representing the Company’s former corporate offices and operations facility. This lease shall expire on February 28, 2022. This office space is currently subleased to a third-party subtenant through February 27, 2022. The aforementioned office leases require the Company to pay additional rents related to increases in certain taxes and other costs on the properties. The Company also leases approximately 1,300 square feet of retail space for a planned future retail store location in Westchester, New York. For the years ended December 31, 2020 and 2019, total lease expense included in selling, general and administrative expenses on the Company's consolidated statements of operations was approximately $1.5 million and $1.6 million, respectively. The Company’s total lease costs for the years ended December 31, 2020 and 2019 were comprised of the following: ($ in thousands) 2020 2019 Operating lease cost $ 1,986 $ 1,925 Short-term lease cost 81 76 Variable lease cost 98 105 Sublease income (618) (488) Total lease cost $ 1,547 $ 1,618 Cash paid for amounts included in the measurement of operating lease liabilities was $1.9 million and $2.4 million in the Current Year and Prior Year, respectively. Cash received from subleasing was $0.7 million and $0.3 million in the Current Year and Prior Year, respectively. As of December 31, 2020, the maturities of lease liabilities were as follows: ($ in thousands) 2021 $ 2022 2023 2024 2025 After 2025 Total lease payments Less: Discount Present value of lease liabilities Current portion of lease liabilities Non-current portion of lease liabilities $ Employment Agreements The Company has contracts with certain executives and key employees. The future minimum payments under these contracts are as follows: Employment ($ in thousands) Contract Year Ended December 31, Payments 2021 $ 4,595 2022 2,100 Thereafter — Total future minimum employment contract payments $ 6,695 In addition to the employment contract payments stated above, the Company’s employment contracts with certain executives and key employees contain performance-based bonus provisions. These provisions include bonuses based on the Company achieving revenues in excess of established targets and/or on operating results. Certain of the employment agreements contain severance and/or change in control provisions. Aggregate potential severance compensation amounted to approximately $8.1 million as of December 31, 2020. Contingent Obligation – HH Seller (Halston Heritage Earn-Out) In connection with the February 11, 2019 purchase of the Halston Heritage Trademarks from HIP, the Company agreed to pay HIP additional consideration (the “Halston Heritage Earn-Out”) of up to an aggregate of $6.0 million, based on royalties earned through December 31, 2022 (see Note 3). The Halston Heritage Earn-Out of $0.9 million is recorded as a long-term liability as of December 31, 2019 in the accompanying consolidated balance sheets, based on the difference between the fair value of the acquired assets of the Halston Heritage Trademarks and the total consideration paid. In accordance with ASC Topic 480, the Halston Heritage Earn-Out obligation is treated as a liability in the accompanying consolidated balance sheets because of the variable number of shares payable under the agreement. Contingent Obligation – CW Seller (C Wonder Earn-Out) In connection with the asset purchase of the C Wonder Brand in 2015, the Company agreed to pay the seller additional consideration, which would be payable, if at all, in cash or shares of common stock of the Company, at the Company’s sole discretion, after June 30, 2019. Under the applicable accounting guidance, the Company was required to carry such contingent liability balance on its consolidated balance sheet until the measurement period of the earn-out expired and all related contingencies had been resolved. The seller ultimately did not earn any additional consideration based on the criteria and terms set forth in the asset purchase agreement. As such, during the year ended December 31, 2019, the Company recorded a $2.85 million gain on the reduction of contingent obligations in the accompanying consolidated statements of operations. As of December 31, 2019, there were no amounts remaining under the C Wonder Earn-Out. Contingent Obligation – JR Seller (Ripka Earn-Out) In connection with the asset purchase of the Ripka Brand in 2014, the Company agreed to pay the sellers of the Ripka Brand certain additional consideration. As of January 1, 2019, the remaining balance of the Ripka Earn-Out was $0.1 million. On March 31, 2019, the Company satisfied the remaining Ripka Earn-Out balance of $0.1 million by off-setting the amount against the aforementioned promissory note receivable. As of December 31, 2019, there were no amounts remaining outstanding under the Ripka Earn-Out. Coronavirus Pandemic In March 2020, the World Health Organization declared the outbreak of a novel coronavirus disease (“COVID-19”) as a pandemic, which continues to spread throughout the U.S. COVID-19 is having an unprecedented impact on the U.S. economy as federal, state, and local governments react to this public health crisis. The impacts of the current COVID-19 pandemic are broad reaching and are having an impact on the Company’s licensing and wholesale businesses. The COVID-19 pandemic is impacting the Company’s supply chain as most of the Company’s products are manufactured in China, Thailand, and other places around the world affected by this event. Temporary factory closures and the pace of workers returning to work have impacted contract manufacturers’ ability to source certain raw materials and to produce finished goods in a timely manner. The outbreak is also impacting distribution and logistics providers' ability to operate in the normal course of business. Further, the pandemic has resulted in a sudden and continuing decrease in sales for many of the Company’s products, resulting in order cancellations, and a decrease in accounts receivable collections, as the Company recorded approximately $1 million of additional allowance for doubtful accounts for the year ended December 31, 2020 for retailers that have filed for bankruptcy. Due to the COVID-19 outbreak, there is significant uncertainty surrounding the potential impact on the Company’s future results of operations and cash flows. Continued impacts of the pandemic could materially adversely affect the Company’s near-term and long-term revenues, earnings, liquidity, and cash flows as the Company’s customers and/or licensees may request temporary relief, delay, or not make scheduled payments. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, management reviews both positive and negative evidence pursuant to the requirements of ASC Topic 740, including current and historical results of operations, future income projections, and the overall prospects of the Company’s business. The income tax (benefit) provision for federal and state and local income taxes in the consolidated statements of operations consists of the following: Years Ended December 31, ($ in thousands) 2020 2019 Current: Federal $ (202) $ — State and local 66 63 Total current (136) 63 Deferred: Federal (3,538) (354) State and local (844) (351) Total deferred (4,382) (705) Total benefit $ (4,518) $ (642) The reconciliation of income tax (benefit) provision computed at the federal and state and local statutory rates to the Company’s loss before taxes is as follows: Years Ended December 31, 2020 2019 U.S. statutory federal rate 21.00 % 21.00 % State and local rate, net of federal tax 4.54 7.40 Stock compensation (1.94) (7.01) Excess compensation deduction (0.51) (5.08) Foreign tax credits 0.11 0.45 Life insurance (0.04) (0.81) Net operating loss carryback 0.56 — Paycheck Protection Program addback 2.18 — Other permanent differences (0.01) (0.16) Income tax benefit 25.89 % 15.79 % The significant components of net deferred tax liabilities of the Company consist of the following: December 31, ($ in thousands) 2020 2019 Deferred tax assets Stock-based compensation $ 2,440 $ 2,774 Federal, state and local net operating loss carryforwards 2,907 1,207 Accrued compensation and other accrued expenses 664 846 Allowance for doubtful accounts 329 43 Basis difference arising from discounted note payable 11 316 Foreign tax credit 219 148 Charitable contribution carryover 63 60 Property and equipment 321 180 Total deferred tax assets 6,954 5,574 Deferred tax liabilities Basis difference arising from intangible assets of acquisition (10,006) (13,008) Total deferred tax liabilities (10,006) (13,008) Net deferred tax liabilities $ (3,052) $ (7,434) As of December 31, 2020 and 2019, the Company had approximately $10.1 million and $4.0 million, respectively, of federal net operating loss carryforwards ("NOLs") available to offset future taxable income. The NOL as of December 31, 2017 of $0.3 million has an expiration period through 2037. The NOL generated during tax years beginning after December 31, 2017 of $9.8 million has an indefinite life and does not expire. On March 27, 2020, the CARES Act was enacted and signed into law. The CARES Act includes certain provisions impacting businesses’ income taxes related to 2018, 2019, and 2020. Some of the significant tax law changes are to increase the limitation on deductible business interest expense for 2019 and 2020, allow for the five-year carryback of net operating losses for 2018-2020, suspend the 80% limitation of taxable income for net operating loss carryforwards for 2018-2020, provide for the acceleration of depreciation expense from 2018 and forward on qualified improvement property, and accelerate the ability to claim refunds of AMT credit carryforwards. The Company is required to recognize the effect of tax law changes on its financial statements in the period in which the law was enacted. At this time, the Company may avail itself of the ability to carry back net operating losses generated in 2018 and 2019 tax years for five years, which would result in an estimated income statement benefit of $0.1 million and tax refund receivable of $0.2 million. As of December 31, 2020 and 2019, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its consolidated financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its consolidated financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions Benjamin Malka Benjamin Malka was a director of the Company from June 2014 through September 2019. Mr. Malka is also a 25% equity holder of HOH, and is the former Chief Executive Officer of HOH. HOH is the parent company of HIP. On February 11, 2019, pursuant to the Heritage Asset Purchase Agreement and the acquisition of the Halston Heritage Trademarks (see Note 3), the Company delivered in escrow for HIP or its designees an aggregate of $8.4 million in cash and 777,778 shares of the Company’s common stock valued at $1.1 million, subject to a voting agreement and a lock-up agreement relating to such shares and a consent and waiver agreement each in form satisfactory to Xcel within three months from the date of the Heritage Asset Purchase Agreement. Such agreements were executed and delivered to Xcel, and the Xcel Shares were issued and delivered to the Sellers. In addition to the closing considerations, HIP is eligible to earn up to an aggregate of $6.0 million (the “Earn-Out Value”) through December 31, 2022 based on Excess Net Royalties. “Excess Net Royalties” during any calendar year for 2019 through 2022 (each, a “Royalty Target Year”) is equal to (a) the positive amount, if any, of the Net Royalties as calculated for such Royalty Target Year, less the greater of (i) One Million Five Hundred Thousand Dollars ($1.5 million), or (ii) the maximum Net Royalties for any previous Royalty Target Year. “Applicable Percentage” means (a) 50% of the first $10.0 million of Excess Net Royalties during the Earn-Out Period, (b) 20% of aggregate Excess Net Royalties during the Earn-Out Period greater than $10.0 million and up to $15.0 million and (c) 0% of aggregate Excess Net Royalties during the Earn-Out Period in excess of $15.0 million. The Earn-Out Consideration shall be payable in common stock of Xcel (the “Earn-Out Shares”); provided, however, that if the number of Earn-Out Shares, when combined with the number of Xcel Shares issued at the Closing Date, will exceed 4.99% of the aggregate number of shares of Xcel common stock outstanding as of the Closing Date (calculated in accordance with Nasdaq Rule 5635(a)) (the “Xcel Share Limit”), then Xcel may, in its sole and unfettered discretion, elect to (x) pay cash for the Earn-Out Value attributable to the Earn-Out Shares that would exceed the Xcel Share Limit; (y) solicit stockholder approval for the issuance of Earn-Out Shares in excess of the Xcel Share Limit in accordance with Nasdaq Rule 5635(a)(2) and, if such stockholder approval is obtained, issue such Earn-Out Shares to HIP; or (z) solicit stockholder approval for the issuance of Shares in excess of the Xcel Share Limit in accordance with Nasdaq Rule 5635(a)(2) and, if such stockholder approval is obtained, pay the applicable Earn-Out Consideration with a combination of cash and Earn-Out Shares. Hilco Trading, LLC Hilco Trading, LLC ("Hilco") directly and indirectly owns greater than 5% of the Company's common stock, and its affiliate Hilco Global owns 50% of the equity of Longaberger Licensing, LLC. During the year ended December 31, 2020, the Company sold certain apparel products to an affiliate of Hilco, and recognized $0.15 million of revenue from this transaction. Additionally, during the year ended December 31, 2020, the Company sold certain intangible assets of Longaberger Licensing, LLC to a third party; an affiliate of Hilco earned and was paid a commission of $0.05 million related to the sale of these assets. Robert W. D’Loren Jennifer D’Loren is the wife of Robert W. D’Loren, the Company’s Chief Executive Officer and Chairman of the Board, and is employed by the Company. Mrs. D’Loren brings vast experience in project management and implementation of financial IT solutions. During the past two years, Mrs. D’Loren has worked on the implementation of the Company’s ERP system. Mrs. D’Loren received compensation of $0.14 million and $0.17 million for the years ended December 31, 2020 and 2019, respectively . Isaac Mizrahi On February 24, 2020, the Company entered into an employment agreement with Isaac Mizrahi, a principal stockholder of the Company, for Mr. Mizrahi to continue to serve as Chief Design Officer of the Isaac Mizrahi Brand. The term of the employment agreement expires on December 31, 2022, subject to earlier termination, and may be extended, at the Company’s option, for two successive one-year terms (each, a “Renewal Period”). Mr. Mizrahi’s base salary shall be $1.8 million, $2.0 million, and $2.1 million per annum during the term of the agreement and $2.25 million and $2.4 million during 2023 and 2024 if the term is extended, in each case, subject to adjustment in the event Mr. Mizrahi does not make a specified number of appearances on the QVC channel. Mr. Mizrahi shall be eligible to receive an annual cash bonus (the “Bonus”) up to an amount equal to $2.5 million less base salary for 2020 and $3.0 million less base salary for 2021, 2022, and any year during the Renewal Period. The Bonus shall consist of the DRT Revenue, Bonus, the Brick-and-Mortar Bonus, the Endorsement Bonus and the Monday Bonus, if any, as determined in accordance with the below: · “DRT Bonus” means for any calendar year an amount equal to 10% of the aggregate net revenue related to sales of Isaac Mizrahi Brand products through direct response television. The DRT Revenue Bonus shall be reduced by the amount of the Monday Bonus. · “Brick-and-Mortar Bonus” means for any calendar year an amount equal to 10% of the net revenues from sales of products under the Isaac Mizrahi Brand, excluding DRT revenue and endorsement revenues. · “Endorsement Bonus” means for any calendar year an amount equal to 40% of revenues derived from projects undertaken by the Company with one or more third parties solely for Mr. Mizrahi to endorse the third party’s products through the use of Mr. Mizrahi’s name, likeness, and/or image, and neither the Company nor Mr. Mizrahi provides licensing or design. · “Monday Bonus” means $10,000 for each appearance by Mr. Mizrahi on the QVC channel on Mondays (subject to certain expectations) up to a maximum of 40 such appearances in a calendar year. Mr. Mizrahi is required to devote his full business time and attention to the business and affairs of the Company and its subsidiaries; however, Mr. Mizrahi is the principal of IM Ready-Made, LLC and Laugh Club, Inc. (“Laugh Club”), and accordingly, he may undertake promotional activities related thereto (including the promotion of his name, image, and likeness) through television, video, and other media (and retain any compensation he receives for such activities) (referred to as “Retained Media Rights”) so long as such activities (i) do not utilize the IM Trademarks, (ii) do not have a mutually negative impact upon or materially conflict with Mr. Mizrahi’s duties under the employment agreement, or (iii) are consented to by the Company. The Company believes that it benefits from Mr. Mizrahi’s independent promotional activities by increased brand awareness of IM Brands and the IM Trademarks. Severance. If Mr. Mizrahi’s employment is terminated by the Company without “cause,” or if Mr. Mizrahi resigns with “good reason,” then Mr. Mizrahi will be entitled to receive his unpaid base salary and cash bonuses through the termination date and an amount equal to his base salary in effect on the termination date for the longer of six months and the remainder of the then-current term, but in no event exceeding 18 months. If Mr. Mizrahi’s employment is terminated by the Company without “cause” or if Mr. Mizrahi resigns with “good reason,” within six months following a change of control (as defined in the employment agreement), Mr. Mizrahi shall be eligible to receive a lump-sum payment equal to two times the sum of (i) his base salary (at an average rate that would have been in effect for such two year period following termination) plus (ii) the bonus paid or due to Mr. Mizrahi in the year prior to the change in control. Non-Competition and Non-Solicitation. During the term of his employment by the Company and for a one-year period after the termination of such employment (unless Mr. Mizrahi’s employment was terminated without “cause” or was terminated by him for “good reason”), Mr. Mizrahi may not permit his name to be used by or to participate in any business or enterprise (other than the mere passive ownership of not more than 3% of the outstanding stock of any class of a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market) that engages or proposes to engage in the Company’s business anywhere in the world other than the Company and its subsidiaries. Also during his employment and for a one-year period after the termination of such employment, Mr. Mizrahi may not, directly or indirectly, solicit, induce, or attempt to induce any customer, supplier, licensee, or other business relation of the Company or any of its subsidiaries to cease doing business with the Company or any or its subsidiaries; or solicit, induce, or attempt to induce any person who is, or was during the then-most recent 12-month period, a corporate officer, general manager, or other employee of the Company or any of its subsidiaries, to terminate such employee’s employment with the Company or any of its subsidiaries; or hire any such person unless such person’s employment was terminated by the Company or any of its subsidiaries; or in any way interfere with the relationship between any such customer, supplier, licensee, employee, or business relation and the Company or any of its subsidiaries. On February 24, 2020 the Company entered into a services agreement with Laugh Club, an entity wholly-owned by Mr. Mizrahi, pursuant to which Laugh Club shall provide services to Mr. Mizrahi necessary for Mr. Mizrahi to perform his services pursuant to the employment agreement. The Company will pay Laugh Club an annual fee of $0.72 million for such services. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events Acquisition of Lori Goldstein Brand On April 1, 2021, the Company and its wholly-owned subsidiary, Gold Licensing, LLC, acquired the “Lori Goldstein” trademarks and other intellectual property rights related thereto, from Lori Goldstein, Ltd. (the “Seller”), in exchange for initial cash consideration of $3.6 million, plus additional cash earn-out consideration of up to $12.5 million based on the future performance of the brand. Concurrent with the acquisition, the Company also entered into a 10-year employment agreement with the shareholder of the Seller to serve as brand’s Chief Creative Officer and Spokesperson, with a base salary rate of $1.2 million per annum, and the opportunity to earn additional incentives based on the future net royalties related to the brand. Additionally, the Company concurrently entered into a consulting agreement with the Seller to provide creative advice and consultation, for a fee of 0.8 million per annum. Upon the consummation of the acquisition of the Lori Goldstein Brand described above, the Company incurred cash bonuses totaling $175,000 to certain members of the Company’s senior management (including $100,000 to the Chief Executive Officer, and $25,000 each to the Chief Financial Officer, President and Chief Operating Officer, and Executive Vice President of Business Development and Treasury), such bonuses having been approved by the Board of Directors on March 18, 2021. Debt Refinancing Transaction On April 14, 2021, the Company and its wholly owned subsidiaries entered into a new loan and security agreement with BHI and FEAC, which resulted in the extinguishment of the term loan debt that existed as of December 31, 2020. Under this transaction, the Company’s term loan debt obligation increased to $25.0 million, payable in 16 equal quarterly installments of $625,000, commencing June 30, 2021 and ending on March 31, 2025, with a final payment of $15.0 million payable on the maturity date of April 14, 2025. The new term loan debt bears interest at a weighted average rate of LIBOR plus 6.2% per annum. In addition, the facility provides for up to $25 million of future acquisition financing, subject to lender approval on a deal-by-deal basis. The Company’s obligations under the new loan and security agreement are secured by all of the assets of the Company and, subject to certain limitations, equity interests of the Company’s wholly owned subsidiaries. The new loan and security agreement contains customary covenants, including reporting requirements, trademark preservation, and financial covenants. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Xcel, its wholly owned subsidiaries, and entities in which Xcel has a controlling financial interest as of and for the years ended December 31, 2020 (the "Current Year") and 2019 (the "Prior Year"). The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the accounting rules under Regulation S-X, as promulgated by the Securities and Exchange Commission (“SEC”). All significant intercompany accounts and transactions have been eliminated in consolidation. and net earnings have been adjusted by the portion of operating results of consolidated entities attributable to noncontrolling interests. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates. The Company deems the following items to require significant estimates from management: · Allowance for doubtful accounts; · Useful lives of trademarks; · Assumptions used in the valuation of intangible assets, including cash flow estimates for impairment analysis; · Black-Scholes option pricing model assumptions for stock option values; · Incremental borrowing rate; · Inventory reserves; and · Valuation allowances and effective tax rate for tax purposes. |
Reclassifications | Reclassifications Certain reclassifications have been made to Prior Year financial statements to conform to classifications used in the Current Year – specifically, the aggregation of interest expense with other finance charges, the latter of which was not material in Current Year or Prior Year. This reclassification had no impact on net income, stockholders’ equity, or cash flows as previously reported. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable are reported net of the allowance for doubtful accounts. The allowance for doubtful accounts is based on the Company’s ongoing discussions with its licensees, wholesale and digital customers, and its evaluation of each customer’s payment history, account aging, and financial position. As of December 31, 2020 and 2019, the Company had $8.9 million and $10.6 million, respectively, of accounts receivable, net of allowances for doubtful accounts of $1.2 million and $0.2 million, respectively. The Company recognized bad debt expense of $1.1 million for the Current Year and a recovery of $(0.1) million for the Prior Year. Included within these amounts, the Current Year reflects $1.0 million of bad debt expense related to the bankruptcy of several retail customers due to the novel coronavirus disease pandemic. The total allowance of $1.0 million against such customers’ outstanding receivable balances of $1.2 million at December 31, 2020 represents management’s best estimate of collectibility, based on information currently available. There is no earned revenue that has been accrued but not billed as of December 31, 2020 and 2019. |
Inventory | Inventory Inventory is recorded at the lower of cost or net realizable value, with cost determined on a weighted average basis. The Company holds finished goods inventory for its e-commerce jewelry operations. Apparel and jewelry finished goods inventory is purchased to satisfy orders received from its wholesale operations. The Company periodically reviews the composition of its inventories in order to identify obsolete, slow-moving or otherwise non-saleable items. If non-saleable items are observed and there are no alternate uses for the inventories, the Company will record a write-down to net realizable value in the period that the decline in value is first recognized. Reserves for inventory shrinkage, representing the risk of physical loss of inventory, are estimated based on historical experience and are adjusted based upon physical inventory counts. |
Property and Equipment | Property and Equipment Furniture, equipment, and software are stated at cost less accumulated depreciation and amortization, and are depreciated using the straight-line method over their estimated useful lives, generally three (3) to seven (7) years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the leases. Betterments and improvements are capitalized, while repairs and maintenance are expensed as incurred. Costs to develop or acquire software for internal use incurred during the preliminary project stage and the post implementation stage are expensed, while internal and external costs to acquire or develop software for internal use incurred during the application development stage – including design, configuration, coding, testing, and installation – are generally capitalized. As a result of the bankruptcy of Lord & Taylor in the Current Year, the Company recognized a $0.1 million impairment related to certain furniture and fixture assets physically located in Lord & Taylor’s stores. |
Trademarks and Other Intangible Assets | Trademarks and Other Intangible Assets The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other.” Under this standard, goodwill and indefinite-lived intangible assets are not amortized, but are required to be assessed for impairment at least annually (the Company utilizes December 31 as its testing date) and when events occur or circumstances change that would more likely than not reduce the fair value of the asset below its carrying amount. Indefinite-Lived Intangible Assets The Company tests its indefinite-lived intangible assets for recovery in accordance with ASC‑820‑10‑55‑3F, which states that the income approach (“Income Approach”) converts future amounts (for example cash flows) to a single current (that is, discounted) amount. When the Income Approach is used, fair value measurement reflects current market expectations about those future amounts. The Income Approach is based on the present value of future earnings expected to be generated by a business or asset. Income projections for a future period are discounted at a rate commensurate with the degree of risk associated with future proceeds. A residual or terminal value is also added to the present value of the income to quantify the value of the business beyond the projection period. As such, recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to its expected future discounted net cash flows. If the carrying amount of such assets is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the recoverable amount of the assets. The Company performed its annual impairment testing as described above for the year ended December 31, 2020, and concluded that there was no impairment of its indefinite-lived intangible assets. As a result of performing its annual impairment testing as described above for the year ended December 31, 2019, the Company recorded a $6.2 million impairment related to the Ripka Brand trademarks, driven by the timing of the continued transition from a licensing model to a wholesale and direct-to-consumer model. No other impairment charges were recorded for the year ended December 31, 2019. Finite-Lived Intangible Assets The Company’s finite-lived intangible assets, including Trademarks, are reviewed for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. An impairment loss is recognized if the carrying amount of a finite-lived intangible asset is not recoverable and its carrying amount exceeds its fair value. With reference to finite-lived intangible assets impairment testing, the Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on undiscounted cash flows analysis or appraisals. The inputs utilized in the finite-lived intangible assets impairment analysis are classified as Level 3 inputs within the fair value hierarchy as defined in ASC Topic 820, “Fair Value Measurement.” As a result of performing its annual impairment testing as described above for the year ended December 31, 2020, the Company recorded a $13.0 million impairment related to the Ripka Brand trademarks, driven by delays and uncertainty in implementing the brick-and-mortar retail store strategy for a portion of the brand, primarily as a result of the novel coronavirus disease pandemic. No other impairment charges were recorded for the year ended December 31, 2020. No impairment charges were recorded related to finite-lived intangible assets for the year ended December 31, 2019. The Company’s finite-lived intangible assets are amortized over their estimated useful lives of seven (7) to eighteen (18) years. |
Restricted Cash | Restricted Cash Restricted cash was $1.1 million as of December 31, 2020 and 2019, respectively. This balance consisted of $1.1 million of cash deposited with Bank Hapoalim B.M. (“BHI”) as collateral for an irrevocable standby letter of credit associated with the lease of the Company’s current corporate office and operating facility at 1333 Broadway, New York City. |
Investment in Unconsolidated Affiliate | Investment in Unconsolidated Affiliate The Company holds a limited partner ownership interest in an unconsolidated affiliate, which was entered into in 2016. This investment is accounted for in accordance with Accounting Standards Update (“ASU”) No. 2016‑01, "Financial Instruments – Overall (Subtopic 825‑10): "Recognition and Measurement of Financial Assets and Financial Liabilities," and is included within other assets on the Company’s consolidated balance sheets at December 31, 2020 and 2019. As of December 31, 2020 and 2019, the carrying value of this investment was $0.1 million. This investment does not have a readily determinable fair value and in accordance with ASC 820‑10‑35‑59, the investment is valued at cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer. |
Note Receivable | Note Receivable The Company previously entered into a promissory note receivable from a certain key employee in the amount of $0.9 million. This note receivable bore interest at 5.1%, was due and payable in full on April 1, 2019, and was fully collateralized by various assets of the employee in which the Company had been granted a security interest. The note receivable was satisfied on March 31, 2019, and as of December 31, 2019, there were no amounts remaining outstanding under the note. |
Deferred Finance Costs | Deferred Finance Costs The Company incurred costs (primarily professional fees and lender underwriting fees) in connection with borrowings under the senior secured term loans. These costs have been deferred on the consolidated balance sheets as a reduction to the carrying value of the associated borrowings. Such costs are amortized as interest expense using the effective interest method. |
Contingent Obligations | Contingent Obligations When accounting for asset acquisitions, if any contingent obligations exist and the fair value of the assets acquired is greater than the consideration paid, any contingent obligations are recognized and recorded as the positive difference between the fair value of the assets acquired and the consideration paid for the acquired assets. When accounting for asset acquisitions, if any contingent obligations exist and the fair value of the assets acquired are equal to the consideration paid, any contingent obligations are recognized based upon the Company’s best estimate of the amount that will be paid to settle the liability. The Company recorded contingent obligations in connection with the acquisition of the Judith Ripka Trademarks in 2014, the C Wonder Trademarks in 2015, and the Halston Heritage Trademarks in 2019. See Note 6 and Note 10 for additional information related to contingent obligations. Under the applicable accounting guidance, the Company is required to carry such contingent liability balances on its consolidated balance sheet until the measurement period of the earn-out expires and all related contingencies have been resolved. |
Revenue Recognition | Revenue Recognition The Company applies the guidance in ASC Topic 606, “Revenue from Contracts with Customers” to recognize revenue. Licensing The Company recognizes revenue continuously over time as it satisfies its continuous obligation of granting access to its licensed intellectual properties, which are deemed symbolic intellectual properties under the applicable revenue accounting guidance. Payments are typically due after sales have occurred and have been reported by the licensees or, where applicable, in accordance with minimum guaranteed payment provisions. The timing of performance obligations is typically consistent with the timing of payments, though there may be differences if contracts provide for advances or significant escalations of contractually guaranteed minimum payments. There were no such differences that would have a material impact on the Company’s consolidated balance sheets at December 31, 2020 and 2019. In accordance with ASC 606‑10‑55‑65, the Company recognizes revenue at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied (in whole or in part). More specifically, the Company separately identifies: (i) Contracts for which, based on experience, royalties are expected to exceed any applicable minimum guaranteed payments, and to which an output-based measure of progress based on the “right to invoice” practical expedient is applied because the royalties due for each period correlate directly with the value to the customer of the Company’s performance in each period (this approach is identified as “View A” by the FASB Revenue Recognition Transition Resource Group, “TRG”); and (ii) Contracts for which revenue is recognized based on minimum guaranteed payments using an appropriate measure of progress, in which minimum guaranteed payments are straight-lined over the term of the contract and recognized ratably based on the passage of time, and to which the royalty recognition constraint to the sales-based royalties in excess of minimum guaranteed is applied and such sales-based royalties are recognized to distinct period only when the minimum guaranteed is exceeded on a cumulative basis (this approach is identified as “View C” by the TRG). The Company does not typically perform by transferring goods or services to customers before the customer pays consideration or before payment is due, thus the amounts of contract assets as defined by ASC 606‑10‑45‑3 were not material as of December 31, 2020 and 2019. The Company’s unconditional right to receive consideration based on the terms and conditions of licensing contracts is presented as accounts receivable on the accompanying consolidated balance. The Company typically does not receive consideration in advance of performance and, consequently, amounts of contract liabilities as defined by ASC 606‑10‑45‑2 were not material as of December 31, 2020 and 2019. The Company does not disclose the amount attributable to unsatisfied or partially satisfied performance obligations for variable revenue contracts (identified under “View A” above) in accordance with the optional exemption allowed under ASC 606. The Company did not have any revenue recognized in the reporting period from performance obligations satisfied, or partially satisfied, in previous periods. Remaining minimum guaranteed payments for active contracts as of December 31, 2020 are expected to be recognized ratably in accordance with View C over the remaining term of each contract based on the passage of time and through December 2023. Wholesale Sales The Company generates revenue through the design, sourcing, and sale of branded jewelry and apparel to both domestic and international customers who, in turn, sell the products to the consumer. The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which occurs upon the transfer of control of the merchandise in accordance with the contractual terms and conditions of the sale. Direct to Consumer Sales The Company’s revenue associated with its e-commerce businesses is recognized at a point in time when product is shipped to the customer. |
Advertising Costs | Advertising Costs All costs associated with production for the Company’s advertising, marketing, and promotion are expensed during the periods when the activities take place. All other advertising costs, such as print and online media, are expensed when the advertisement occurs. The Company incurred $0.9 million in advertising and marketing costs for each of the years ended December 31, 2020 and December 31, 2019. |
Leases | Leases The Company determines if an arrangement is a lease at inception. The Company generally recognizes a right-of-use (“ROU”) asset, representing its right to use the underlying leased asset for the lease term, and a liability for its obligation to make future lease payments (the lease liability) at commencement date based on the present value of lease payments over the lease term. The Company does not recognize ROU assets and lease liabilities for lease terms of 12 months or less, but recognizes such lease payments in net income on a straight-line basis over the lease terms. As the Company’s leases typically do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For real estate leases of office space, the Company accounts for the lease and non-lease components as a single lease component. Variable lease payments that do not depend on an index or rate (such as real estate taxes and building insurance and lessee’s shares thereof), if any, are excluded from lease payments at lease commencement date for initial measurement. Subsequent to initial measurement, these variable payments are recognized when the event determining the amount of variable consideration to be paid occurs. Lease expense for operating lease payments related to office leases is recognized on a straight-line basis over the lease term. Lease expense for operating lease payments related to retail leases is recognized on a straight-line basis over the period of operation, as this is representative of the pattern in which benefit is derived from the lease. The Company recognizes income from subleases (in which the Company is the sublessor) on a straight-line basis over the term of the sublease, as a reduction to lease expense. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation - Stock Compensation,” by recognizing the fair value of stock-based compensation as an operating expense over the service period of the award or term of the corresponding contract, as applicable. The fair value of stock options and warrants is estimated on the date of grant using the Black-Scholes option pricing model. The valuation determined by the Black-Scholes option pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The risk-free rate is based on the U.S. Treasury rate for the expected life at the time of grant, volatility is based on the average long-term implied volatilities of peer companies, and expected life is based on the estimated average life of options and warrants using the simplified method. The Company utilizes the simplified method to determine the expected life of the options and warrants due to insufficient exercise activity during recent years as a basis from which to estimate future exercise patterns. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. Restricted stock awards are valued using the fair value of the Company’s stock at the date of grant. The Company accounts for non-employee awards in accordance with ASU 2018-07, “Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting.” Such awards are measured at the grant date fair value of the equity instruments to be issued, and the Company recognizes compensation cost for grants to non-employees on a straight-line basis over the period of the grant. The Company accounts for forfeitures as a reduction of compensation cost in the period when such forfeitures occur. For stock option awards for which vesting is contingent upon the achievement of certain performance targets, the timing and amount of compensation expense recognized is based upon the Company’s projections and estimates of the relevant performance metric(s) until the time the performance obligation is satisfied. |
Income Taxes | Income Taxes Current income taxes are based on the respective period’s taxable income for federal and state income tax reporting purposes. Deferred tax liabilities and assets are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is required if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company applies the FASB guidance on accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also addresses derecognition, classification, interest, and penalties related to uncertain tax positions. The Company has no unrecognized tax benefits as of December 31, 2020 and 2019. Interest and penalties related to uncertain tax positions, if any, are recorded in income tax expense. Tax years that remain open for assessment for federal and state tax purposes include the years ended December 31, 2017 through December 31, 2020. The income tax effects of changes in tax laws are recognized in the period when enacted. |
Fair Value | Fair Value ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value and establishes a framework for measuring fair value under U.S. GAAP. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of the Company’s assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, and accounts payable, the carrying amounts approximate fair value due to the short-term maturities of these instruments. The carrying value of term loan debt approximates fair value because the fixed interest rate approximates current market rates and in the instances it does not, the impact is not material. When debt interest rates are below market rates, the Company considers the discounted value of the difference of actual interest rates and its internal borrowing against the scheduled debt payments. The fair value of the Company’s cost method investment does not have a readily determinable fair value and in accordance with ASC 820‑10‑35‑59, the investment is valued at cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, accounts receivable, and notes receivable. The Company limits its credit risk with respect to cash by maintaining cash, cash equivalents, and restricted cash balances with high quality financial institutions. At times, the Company’s cash, cash equivalents, and restricted cash may exceed federally insured limits. Concentrations of credit risk with respect to accounts receivable are minimal due to the collection history and due to the nature of the Company’s royalty revenues. Generally, the Company does not require collateral or other security to support accounts receivable. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon the exercise of stock options and warrants using the treasury stock method. The difference between basic and diluted weighted-average common shares results from the assumption that all dilutive stock options and warrants outstanding were exercised into common stock if the effect is not anti-dilutive. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes certain exceptions to the general principles in Topic 740, including, but not limited to, intraperiod tax allocations and interim period tax calculations. The ASU also provides additional clarification and guidance related to recognition of franchise taxes and changes in tax laws. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption of this new guidance in 2021 will not have any significant impact on the Company’s results of operations, cash flows, and financial condition. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which was subsequently amended in November 2018 through ASU No. 2018-19. This ASU will require entities to estimate lifetime expected credit losses for financial instruments, including trade and other receivables, which will result in earlier recognition of credit losses. In November 2019, the FASB issued ASU No. 2019-10, which, among other things, deferred the application of the new guidance on credit losses for smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows, and financial condition. Recently Adopted Accounting Pronouncements The Company adopted ASU No. 2018‑13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” effective January 1, 2020. This ASU adds, modifies, and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” The adoption of this new guidance did not have any impact on the Company’s results of operations, cash flows, and financial condition. The Company adopted ASU No. 2016-02, “Leases,” effective January 1, 2019, by applying the new guidance under the additional and alternative transition method allowed by ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” As of January 1, 2019, the adoption resulted in the recognition of operating lease right-of-use ("ROU") assets of approximately $10.4 million, lease liabilities of approximately $13.2 million, and a decrease of approximately $2.8 million in accrued rent. The adoption of the new lease accounting guidance did not have an impact on the Company’s consolidated statement of operations, and had no impact on cash provided by or used in operating, financing, or investing activities in the Company's consolidated statement of cash flows. The Company elected the available practical expedients under ASC 842-10-15-37 (thereby not separating lease components from non-lease components and instead accounting for all components as a single lease component) and ASC 842-10-65-1 (thereby, among other things, not reassessing lease classification), and implemented changes to its processes and methodologies related to leases to enable the preparation of financial information upon adoption and to allow for the correct identification, classification, and measurement of leases in accordance with the new guidance going forward |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Asset Acquisitions [Abstract] | |
Details of Aggregate Purchase Price | The Halston Heritage Trademark acquisition was accounted for as an asset purchase. The aggregate purchase price has been allocated to the following assets based on the fair value of the assets on the date of acquisition: ($ in thousands) Allocated to: Trademarks $ 10,588 Halston archives 200 Total acquisition price $ 10,788 The following represents the aggregate purchase price of $10.8 million: ($ in thousands, except share amounts) Cash $ 8,350 Fair value of Common Stock issued (777,778 shares) 1,058 Total direct initial consideration 9,408 Direct transaction expenses 480 Contingent obligation 900 Total consideration $ 10,788 |
Trademarks and Other Intangib_2
Trademarks and Other Intangibles (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Trademarks and Other Intangibles | Trademarks and other intangibles, net consist of the following: Weighted Average December 31, 2020 Amortization Gross Carrying Accumulated Net Carrying ($ in thousands) Period Amount Amortization Amount Trademarks (indefinite-lived) n/a $ 44,500 $ — $ 44,500 Trademarks (finite-lived) 15 years 21,613 6,867 14,746 Trademarks (finite-lived) 18 years 38,194 4,192 34,002 Other intellectual property 7 years 762 537 225 Copyrights and other intellectual property 10 years 190 128 62 Total $ 105,259 $ 11,724 $ 93,535 Weighted Average December 31, 2019 Amortization Gross Carrying Accumulated Net Carrying ($ in thousands) Period Amount Amortization Amount Trademarks (indefinite-lived) n/a $ 62,900 $ — $ 62,900 Trademarks (finite-lived) 15 years 16,213 4,560 11,653 Trademarks (finite-lived) 18 years 38,194 2,067 36,127 Other intellectual property 7 years 762 428 334 Copyrights and other intellectual property 10 years 190 109 81 Total $ 118,259 $ 7,164 $ 111,095 |
Schedule of Future Amortization Expense | Estimated future amortization expense related to finite-lived intangible assets over the remaining useful lives is as follows: ($ in thousands) Amortization Year Ending December 31, Expense 2021 $ 3,632 2022 3,632 2023 3,632 2024 3,617 2025 3,613 Thereafter 30,909 Total $ 49,035 |
Significant Contracts (Tables)
Significant Contracts (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Significant Contracts [Abstract] | |
Schedule Of License Agreements | The QVC Agreements include automatic renewal periods as detailed below unless terminated by either party. Current Term Automatic Xcel Commenced QVC Product Agreement Expiry Renewal Brand with QVC Launch IM QVC Agreement September 30, 2021 one-year period September 2011 2010 Ripka QVC Agreement March 31, 2022 one-year period April 2014 1999 H QVC Agreement December 31, 2022 three-year period January 2015 2015 Longaberger QVC Agreement October 31, 2021 two-year period November 2019 2019 |
Debt and Other Long-term Liab_2
Debt and Other Long-term Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Net Carrying Amount of Debt | The Company’s net carrying amount of debt is comprised of the following: December 31, December 31, ($ in thousands) 2020 2019 Term loan debt $ 16,750 $ 19,000 Unamortized deferred finance costs related to term loan (112) (179) Total 16,638 18,821 Current portion of long-term debt 2,800 2,250 Long-term debt $ 13,838 $ 16,571 |
Maturities of Long-term Debt | The remaining principal balance of the Term Loans, as amended, outstanding at December 31, 2020 is payable in fixed installments as set forth in the following table, plus the variable payments as described below: ($ in thousands) Installment Payment Dates Amount March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 $ 700 March 31, 2022, June 30, 2022, September 30, 2022, and December 31, 2022 $ 1,125 March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 $ 1,250 Thus, the aggregate remaining annual principal payments under the Term Loans at December 31, 2020 were as follows: Amount of ($ in thousands) Principal Year Ending December 31, Payment 2021 $ 2,800 2022 8,950 2023 5,000 Total $ 16,750 |
Schedule of Fixed Charge Coverage Ratios and Leverage Ratios | Fiscal Quarter End Fixed Charge Coverage Ratio December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 1.25 to 1.00 March 31, 2022, and thereafter 1.10 to 1.00 Fiscal Period Maximum Leverage Ratio December 31, 2020 3.50 to 1.00 March 31, 2021 3.15 to 1.00 June 30, 2021 3.00 to 1.00 September 30, 2021 2.75 to 1.00 December 31, 2021 2.50 to 1.00 March 31, 2022 and each Fiscal Quarter end thereafter 1.50 to 1.00 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Summary of Stock Option Activity | A summary of the Company’s stock option activity for the Current Year is as follows: Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Options Price (in Years) Value Outstanding at January 1, 2020 7,222,625 $ 3.33 5.82 $ — Granted 531,250 1.40 Canceled — — Exercised — — Expired/Forfeited (574,500) 3.94 Outstanding at December 31, 2020, and expected to vest 7,179,375 $ 3.14 4.93 $ — Exercisable at December 31, 2020 3,063,208 $ 4.91 1.22 $ — |
Schedule of Black-Scholes Assumptions for Fair Value of Options Granted | The fair value of the options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2020 2019 Expected Volatility 24.26 – 28.79 20.69 – 26.21 Expected Dividend Yield — % — % Expected Life (Term, in years) 2.5 – 3.5 2.5 – 3.5 Risk-Free Interest Rate 0.16 – 1.60 % 1.51 – 2.48 % |
Summary of Stock Option Activity for Non-Vested Options | The following table summarizes the Company’s stock option activity for non-vested options for the current year: Weighted Average Number of Grant Date Options Fair Value Balance at January 1, 2020 4,551,500 $ 0.18 Granted 531,250 0.14 Vested (444,083) 0.58 Forfeited or Canceled (522,500) 0.65 Balance at December 31, 2020 4,116,167 $ 0.08 |
Summary of Warrant Activity | A summary of the Company’s warrant activity for the Current Year is as follows: Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Warrants Price (in Years) Value Outstanding and exercisable at January 1, 2020 579,815 $ 4.63 2.32 $ — Granted — — Canceled — — Exercised — — Expired/Forfeited — — Outstanding and exercisable at December 31, 2020 579,815 $ 4.63 1.32 $ — |
Summary of Restricted Stock Activity | A summary of the Company’s restricted stock activity for the Current Year is as follows: Weighted Number of Average Restricted Grant Date Shares Fair Value Outstanding at January 1, 2020 1,230,623 $ 4.33 Granted 639,728 0.82 Canceled — — Vested (1,089,518) 2.43 Expired/Forfeited — — Outstanding at December 31, 2020 780,833 $ 4.09 |
Schedule Of Common Stock Repurchased | The following table provides information with respect to restricted stock purchased and retired by the Company during the Current Year and Prior Year: Number of Shares Purchased as Part of Total Number Actual Publicly Fair value of of Shares Price Paid Announced Re-Purchased Date Purchased per Share Plan Shares March 30, 2020 (i) 155,556 $ 0.65 — $ 102,000 May 20, 2020 (i) 87,249 0.98 — 85,000 December 24, 2020 (i) 2,478 1.14 — 3,000 Total 2020 245,283 $ 0.77 — $ 190,000 September 30, 2019 (i) 18,147 $ 1.34 — $ 25,000 October 31, 2019 (i) 29,189 1.75 — 51,000 November 30, 2019 (i) 57,980 1.45 — 84,000 December 31, 2019 (i) 9,846 1.45 — 14,000 Total 2019 115,162 $ 1.51 — $ 174,000 (i) The shares were exchanged from employees and directors in connection with the income tax withholding obligations on behalf of such employees and directors from the vesting of restricted stock. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Diluted Earnings Per Share | Year Ended December 31, 2020 2019 Basic 19,117,460 18,857,657 Effect of exercise of warrants — — Effect of exercise of stock options — — Diluted 19,117,460 18,857,657 |
Anti-dilutive Securities Excluded from Computation of Earnings Per Share | Year Ended December 31, 2020 2019 Stock options and warrants 7,759,190 7,802,440 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Total Lease Costs | ($ in thousands) 2020 2019 Operating lease cost $ 1,986 $ 1,925 Short-term lease cost 81 76 Variable lease cost 98 105 Sublease income (618) (488) Total lease cost $ 1,547 $ 1,618 |
Schedule of Future Minimum Lease Payments | As of December 31, 2020, the maturities of lease liabilities were as follows: ($ in thousands) 2021 $ 2022 2023 2024 2025 After 2025 Total lease payments Less: Discount Present value of lease liabilities Current portion of lease liabilities Non-current portion of lease liabilities $ |
Schedule of Contracts with Certain Executives and Key Employees | Employment ($ in thousands) Contract Year Ended December 31, Payments 2021 $ 4,595 2022 2,100 Thereafter — Total future minimum employment contract payments $ 6,695 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax (Benefit) Provision for Federal, State, and Local Income Taxes | Years Ended December 31, ($ in thousands) 2020 2019 Current: Federal $ (202) $ — State and local 66 63 Total current (136) 63 Deferred: Federal (3,538) (354) State and local (844) (351) Total deferred (4,382) (705) Total benefit $ (4,518) $ (642) |
Reconciliation of Income Tax at The Federal, State and Local Statutory Rates to The Company's Income Before Taxes | Years Ended December 31, 2020 2019 U.S. statutory federal rate 21.00 % 21.00 % State and local rate, net of federal tax 4.54 7.40 Stock compensation (1.94) (7.01) Excess compensation deduction (0.51) (5.08) Foreign tax credits 0.11 0.45 Life insurance (0.04) (0.81) Net operating loss carryback 0.56 — Paycheck Protection Program addback 2.18 — Other permanent differences (0.01) (0.16) Income tax benefit 25.89 % 15.79 % |
Net Deferred Tax Liabilities | December 31, ($ in thousands) 2020 2019 Deferred tax assets Stock-based compensation $ 2,440 $ 2,774 Federal, state and local net operating loss carryforwards 2,907 1,207 Accrued compensation and other accrued expenses 664 846 Allowance for doubtful accounts 329 43 Basis difference arising from discounted note payable 11 316 Foreign tax credit 219 148 Charitable contribution carryover 63 60 Property and equipment 321 180 Total deferred tax assets 6,954 5,574 Deferred tax liabilities Basis difference arising from intangible assets of acquisition (10,006) (13,008) Total deferred tax liabilities (10,006) (13,008) Net deferred tax liabilities $ (3,052) $ (7,434) |
Nature of Operations, Backgro_2
Nature of Operations, Background, and Basis of Presentation (Details) | Nov. 12, 2019 | Dec. 31, 2020 |
Longaberger Licensing, LLC | Variable Interest Entity, Primary Beneficiary | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 50.00% | 50.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | Apr. 01, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Summary Of Significant Accounting Policies [Line Items] | ||||
Accounts receivable | $ 8,889,000 | $ 10,622,000 | ||
Allowance for doubtful accounts | 1,200,000 | 200,000 | ||
Bad debt expense (recovery) | 1,100,000 | (100,000) | ||
Earned revenue accrued but not billed | 0 | 0 | ||
Property and equipment impairment | 100,000 | |||
Impairment charges on indefinite-lived intangible assets | 0 | |||
Impairment charges on finite-lived intangible assets | 0 | |||
Restricted cash | 1,100,000 | 1,100,000 | ||
Investment without readily determinable fair value | 100,000 | 100,000 | ||
Advertising cost during the period | 900,000 | 900,000 | ||
Operating lease right-of-use assets | 8,668,000 | 9,250,000 | ||
Operating lease obligation | 10,570,000 | |||
Unrecognized Tax Benefits | 0 | 0 | ||
COVID19 | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Accounts receivable | 1,200,000 | |||
Allowance for doubtful accounts | 1,000,000 | |||
Bad debt expense (recovery) | 1,000,000 | |||
Promissory Note Receivable [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Gross financing receivable | $ 900,000 | |||
Maturity date of promissory note receivable | Apr. 1, 2019 | |||
Effective yield on receivable with imputed interest (interest rate) | 5.10% | |||
Promissory note receivable | 0 | |||
Trademarks | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Impairment charges on indefinite-lived intangible assets | 6,200,000 | |||
Impairment charges on finite-lived intangible assets | $ 13,000,000 | |||
Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of property and equipment (in years) | 3 years | |||
Estimated useful life of finite-lived intangible asset (in years) | 7 years | |||
Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of property and equipment (in years) | 7 years | |||
Estimated useful life of finite-lived intangible asset (in years) | 18 years | |||
Irrevocable Letter Of Credit [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Restricted cash | $ 1,100,000 | $ 1,100,000 | ||
Restatement Adjustment [Member] | Accounting Standards Update 2016-02 | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Operating lease right-of-use assets | $ 10,400,000 | |||
Operating lease obligation | 13,200,000 | |||
Accrued rent offset to Operating lease right-of-use assets | $ 2,800,000 |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - USD ($) $ in Thousands | Feb. 11, 2019 | Dec. 31, 2020 |
Halston Heritage | ||
Schedule Of Asset Acquisition [Line Items] | ||
Cash | $ 8,350 | |
Common stock included in aggregate purchase price (in shares) | 777,778 | |
Fair value of Common Stock issued (777,778 shares) | $ 1,058 | |
Contingent consideration | 6,000 | |
Minimum deduction from net royalties | $ 1,500 | |
Maximum percentage of issued/issuable of earn-out shares | 4.99% | |
Halston Heritage | 50% of the first $10,000,000 of Excess Net Royalties | ||
Schedule Of Asset Acquisition [Line Items] | ||
Applicable percentage | 50.00% | |
Halston Heritage | 20% of aggregate Excess Net Royalties greater than $10,000,000 and up to $15,000,000 | ||
Schedule Of Asset Acquisition [Line Items] | ||
Applicable percentage | 20.00% | |
Halston Heritage | 0% of aggregate Excess Net Royalties in excess of $15,000,000 | ||
Schedule Of Asset Acquisition [Line Items] | ||
Applicable percentage | 0.00% | |
Maximum | Halston Heritage | 50% of the first $10,000,000 of Excess Net Royalties | ||
Schedule Of Asset Acquisition [Line Items] | ||
Excess net royalties | $ 10,000 | |
Maximum | Halston Heritage | 20% of aggregate Excess Net Royalties greater than $10,000,000 and up to $15,000,000 | ||
Schedule Of Asset Acquisition [Line Items] | ||
Excess net royalties | 15,000 | |
Minimum | Halston Heritage | 20% of aggregate Excess Net Royalties greater than $10,000,000 and up to $15,000,000 | ||
Schedule Of Asset Acquisition [Line Items] | ||
Excess net royalties | 10,000 | |
Minimum | Halston Heritage | 0% of aggregate Excess Net Royalties in excess of $15,000,000 | ||
Schedule Of Asset Acquisition [Line Items] | ||
Excess net royalties | $ 15,000 | |
Trademarks | Halston Heritage | ||
Schedule Of Asset Acquisition [Line Items] | ||
Weighted average useful life of finite-lived intangible assets acquired | 18 years | |
Halston archives | Halston Heritage | ||
Schedule Of Asset Acquisition [Line Items] | ||
Weighted average useful life of finite-lived intangible assets acquired | 7 years | |
House Of Halston LLC | Former Director | ||
Schedule Of Asset Acquisition [Line Items] | ||
Ownership Percentage in HOH | 25.00% |
Acquisition - Allocation of Agg
Acquisition - Allocation of Aggregate Purchase Price (Details) - Halston Heritage $ in Thousands | Feb. 11, 2019USD ($) |
Schedule Of Asset Acquisition [Line Items] | |
Total acquisition price | $ 10,788 |
Trademarks | |
Schedule Of Asset Acquisition [Line Items] | |
Finite-lived intangible assets | 10,588 |
Halston archives | |
Schedule Of Asset Acquisition [Line Items] | |
Finite-lived intangible assets | $ 200 |
Acquisition - Total Considerati
Acquisition - Total Consideration for Asset Acquisition (Details) - Halston Heritage $ in Thousands | Feb. 11, 2019USD ($) |
Schedule Of Asset Acquisition [Line Items] | |
Cash included in aggregate purchase price | $ 8,350 |
Issuance of common stock in connection with Halston Heritage assets acquisition | 1,058 |
Total direct initial consideration | 9,408 |
Direct transaction expenses | 480 |
Contingent obligation | 900 |
Total consideration | $ 10,788 |
Acquisition - Longaberger licen
Acquisition - Longaberger licensing (Details) - USD ($) | Nov. 12, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule Of Asset Acquisition [Line Items] | |||
Members contribution | $ 375,000 | ||
Intangible assets | $ 49,035,000 | ||
Longaberger Trademarks | |||
Schedule Of Asset Acquisition [Line Items] | |||
Initial capital contribution | $ 425,000 | ||
Members contribution | 375,000 | 300,000 | |
Total purchase price | 750,000 | ||
Intangible assets | 750,000 | ||
Non controlling interest | $ 375,000 | ||
Increase in carrying value of non-controlling interest | $ 300,000 | ||
Weighted average useful life of finite-lived intangible assets acquired | 15 years | ||
Longaberger Licensing, LLC | Variable Interest Entity, Primary Beneficiary | |||
Schedule Of Asset Acquisition [Line Items] | |||
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 50.00% | 50.00% |
Trademarks and Other Intangib_3
Trademarks and Other Intangibles - Schedule of Trademarks and Other Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Trademarks and Other Intangibles | ||
Gross Carrying Amount, Total | $ 105,259 | $ 118,259 |
Accumulated Amortization | 11,724 | 7,164 |
Net Carrying Amount | 49,035 | |
Net Carrying Amount, Total | $ 93,535 | $ 111,095 |
Trademarks | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 15 years | 15 years |
Gross Carrying Amount (definite-lived) | $ 21,613 | $ 16,213 |
Accumulated Amortization | 6,867 | 4,560 |
Net Carrying Amount | $ 14,746 | $ 11,653 |
Other intellectual property | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 7 years | 7 years |
Gross Carrying Amount (definite-lived) | $ 762 | $ 762 |
Accumulated Amortization | 537 | 428 |
Net Carrying Amount | $ 225 | $ 334 |
Copyrights and other intellectual property | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 10 years | 10 years |
Gross Carrying Amount (definite-lived) | $ 190 | $ 190 |
Accumulated Amortization | 128 | 109 |
Net Carrying Amount | 62 | 81 |
Trademarks | ||
Trademarks and Other Intangibles | ||
Gross Carrying Amount (indefinite-lived) | $ 44,500 | $ 62,900 |
Halston Heritage | Trademarks | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 18 years | 18 years |
Gross Carrying Amount (definite-lived) | $ 38,194 | $ 38,194 |
Accumulated Amortization | 4,192 | 2,067 |
Net Carrying Amount | $ 34,002 | $ 36,127 |
Trademarks and Other Intangib_4
Trademarks and Other Intangibles - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets [Line Items] | ||
Impairment charges on indefinite-lived intangible assets | $ 0 | |
Impairment of Intangible Assets, Finite-lived | $ 0 | |
Amortization expense for intangible assets | $ 4,600,000 | 3,200,000 |
Ripka Brands | ||
Goodwill and Intangible Assets [Line Items] | ||
Finite useful life | 15 years | |
Trademarks | ||
Goodwill and Intangible Assets [Line Items] | ||
Impairment charges on indefinite-lived intangible assets | $ 6,200,000 | |
Impairment of Intangible Assets, Finite-lived | $ 13,000,000 |
Trademarks and Other Intangib_5
Trademarks and Other Intangibles - Schedule of Future Amortization Expense (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Finite Lived Intangible Assets Future Amortization Expense: | |
2021 | $ 3,632 |
2022 | 3,632 |
2023 | 3,632 |
2024 | 3,617 |
2025 | 3,613 |
Thereafter | 30,909 |
Net Carrying Amount | $ 49,035 |
Significant Contracts - Schedul
Significant Contracts - Schedule of License Agreements (Details) | 12 Months Ended |
Dec. 31, 2020 | |
IM QVC Agreement [Member] | |
Current Term Expiry | Sep. 30, 2021 |
Automatic Renewal | 1 year |
Xcel Commenced Brand with QVC | September 2011 |
QVC Product Launch | 2010 |
Ripka QVC Agreement [Member] | |
Current Term Expiry | Mar. 31, 2022 |
Automatic Renewal | 1 year |
Xcel Commenced Brand with QVC | April 2014 |
QVC Product Launch | 1999 |
H QVC Agreement [Member] | |
Current Term Expiry | Dec. 31, 2022 |
Automatic Renewal | 3 years |
Xcel Commenced Brand with QVC | January 2015 |
QVC Product Launch | 2015 |
Longaberger QVC Agreement | |
Current Term Expiry | Oct. 31, 2021 |
Automatic Renewal | 2 years |
Xcel Commenced Brand with QVC | November 2019 |
QVC Product Launch | 2019 |
Significant Contracts - Additio
Significant Contracts - Additional Information (Details) - Royalty Agreement With Qurate - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Significant Contract Revenue | ||
Percentage of total net revenue | 60.00% | 53.00% |
Accounts receivable | $ 4,460 | $ 4,360 |
Percentage of total gross accounts receivables | 50.00% | 41.00% |
Royalty [Member] | ||
Significant Contract Revenue | ||
Revenue | $ 17,610 | $ 22,240 |
Debt and Other Long-term Liab_3
Debt and Other Long-term Liabilities - Net Carrying Amount of Debt (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Feb. 10, 2019 |
Debt | |||
Term loan debt | $ 16,750,000 | $ 19,000,000 | |
Unamortized deferred finance costs related to term loan | (112,000) | (179,000) | |
Total | 16,638,000 | 18,821,000 | |
Current portion of long-term debt | 2,800,000 | 2,250,000 | |
Long-term debt | 13,838,000 | 16,571,000 | |
Xcel Term Loan | |||
Debt | |||
Term loan debt | $ 16,750,000 | $ 14,500,000 | |
IM Term Loan | |||
Debt | |||
Term loan debt | $ 0 |
Debt and Other Long-term Liab_4
Debt and Other Long-term Liabilities - Xcel Loan Narrative (Details) | Mar. 31, 2019USD ($) | Feb. 11, 2019USD ($)loan | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Feb. 10, 2019USD ($) | Jan. 01, 2019USD ($) | Sep. 29, 2011USD ($) |
Debt | |||||||
Long-term Debt, Gross | $ 16,750,000 | $ 19,000,000 | |||||
Loss on extinguishment of debt | (189,000) | ||||||
financing fees | 27,000 | 315,000 | |||||
Interest expense | 1,193,000 | 1,285,000 | |||||
Other long-term liabilities | 224,000 | $ 224,000 | |||||
Debt Instrument, Fee Amount | 27,000 | ||||||
Xcel Term Loan | |||||||
Debt | |||||||
Long-term Debt, Gross | $ 16,750,000 | $ 14,500,000 | |||||
Face amount of loan | $ 22,000,000 | ||||||
Number of term loans | loan | 2 | ||||||
Proceeds from Issuance of Debt | $ 7,500,000 | ||||||
Capacity available to convert to incremental term loans | 5,000,000 | ||||||
Effective interest rate (as percentage) | 6.60% | 6.70% | |||||
Interest expense | $ 1,100,000 | $ 1,200,000 | |||||
Xcel Term Loan A | |||||||
Debt | |||||||
Face amount of loan | $ 7,300,000 | ||||||
Stated interest rate (as percentage) | 5.10% | ||||||
Xcel Term Loan B | |||||||
Debt | |||||||
Face amount of loan | $ 14,700,000 | ||||||
Stated interest rate (as percentage) | 6.25% | ||||||
IM Term Loan | |||||||
Debt | |||||||
Long-term Debt, Gross | 0 | ||||||
Face amount of loan | $ 7,400,000 | ||||||
Principal payment | $ 750,000 | ||||||
Interest expense | 4,000 | ||||||
Ripka Seller Note | |||||||
Debt | |||||||
Interest expense | 16,000 | ||||||
Accounts and Notes Receivable, Net | 900,000 | ||||||
Balance of note payable | 600,000 | 0 | $ 580,000 | ||||
Debt Conversion Converted Instrument Amount 2 | $ 100,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | |||||||
Debt | |||||||
Loss on extinguishment of debt | (200,000) | ||||||
Minimum net worth required to meet loan covenant | $ 90,000,000 | ||||||
financing fees | $ 30,000 | $ 300,000 | |||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | Through December 31, 2020 | |||||||
Debt | |||||||
Minimum liquid assets to meet loan covenants | 3,000,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | Fiscal quarters ending March 31, 2021 through September 30, 2021 | |||||||
Debt | |||||||
Minimum liquid assets to meet loan covenants | 2,500,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | Fiscal quarter ending December 31, 2021 | |||||||
Debt | |||||||
Minimum liquid assets to meet loan covenants | 3,000,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | After December 31 2021 | |||||||
Debt | |||||||
Minimum liquid assets to meet loan covenants | 5,000,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | Fiscal year ending December 31, 2020 | |||||||
Debt | |||||||
Maximum capital expenditures required to meet loan covenants | 1,600,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Xcel Term Loan | Fiscal year beginning after December 31, 2020 | |||||||
Debt | |||||||
Maximum capital expenditures required to meet loan covenants | 700,000 | ||||||
Second Amended And Restated Loan And Security Agreement | Additional Term Loan | |||||||
Debt | |||||||
Face amount of loan | $ 7,500,000 | ||||||
Revolving Credit Facility | Xcel Term Loan | Base Rate | |||||||
Debt | |||||||
Basis spread on variable rate | 2.00% | ||||||
Revolving Credit Facility | Xcel Term Loan B | Base Rate | |||||||
Debt | |||||||
Termination fee percentage | 2.00% | ||||||
Debt Termination Period, On Or Before Second Anniversary | Xcel Term Loan A | |||||||
Debt | |||||||
Termination fee percentage | 1.00% | ||||||
Debt Termination Period, After Second Anniversary But Before Third Anniversary | Xcel Term Loan A | |||||||
Debt | |||||||
Termination fee percentage | 0.50% | ||||||
Debt Termination Period, After Second Anniversary But Before Third Anniversary | Xcel Term Loan B | |||||||
Debt | |||||||
Termination fee percentage | 1.00% | ||||||
Debt Termination Period, After Third Anniversary | Xcel Term Loan | |||||||
Debt | |||||||
Termination fee percentage | 0.00% |
Debt and Other Long-term Liab_5
Debt and Other Long-term Liabilities - Xcel Term Loan Fixed Installments (Details) - Xcel Term Loan $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Debt | |
Repayment of loan as a percentage of Excess cash flow | 50.00% |
Minimum principal payment | $ 4,450 |
March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 | Secured Debt | |
Debt | |
Quarterly installment payments on term loans | 700 |
March 31, 2022, June 30, 2022, September 30, 2022, and December 31, 2022 | Secured Debt | |
Debt | |
Quarterly installment payments on term loans | 1,125 |
March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 | Secured Debt | |
Debt | |
Quarterly installment payments on term loans | $ 1,250 |
Debt and Other Long-term Liab_6
Debt and Other Long-term Liabilities - Xcel Term Loan Remaining Principal Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Feb. 10, 2019 |
Debt | |||
Total | $ 16,750 | $ 19,000 | |
Xcel Term Loan | |||
Debt | |||
2021 | 2,800 | ||
2022 | 8,950 | ||
2023 | 5,000 | ||
Total | $ 16,750 | $ 14,500 |
Debt and Other Long-term Liab_7
Debt and Other Long-term Liabilities - Schedule of Fixed Charge Coverage Ratios and Leverage Ratios (Details) - Second Amended And Restated Loan And Security Agreement - Xcel Term Loan | Feb. 11, 2019 |
December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 | |
Debt | |
Fixed charge coverage ratio required to meet loan covenant | 1.25 |
March 31, 2022, and thereafter | |
Debt | |
Fixed charge coverage ratio required to meet loan covenant | 1.10 |
December 31, 2020 | |
Debt | |
Leverage ratio required for loan covenant | 3.50 |
March 31, 2021 | |
Debt | |
Leverage ratio required for loan covenant | 3.15 |
June 30, 2021 | |
Debt | |
Leverage ratio required for loan covenant | 3 |
September 30, 2021 | |
Debt | |
Leverage ratio required for loan covenant | 2.75 |
December 31, 2021 | |
Debt | |
Leverage ratio required for loan covenant | 2.50 |
March 31, 2022 and each Fiscal Quarter end thereafter | |
Debt | |
Leverage ratio required for loan covenant | 1.50 |
Government assistance - PPP Loa
Government assistance - PPP Loan (Details) - USD ($) | Apr. 20, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Grants recognized as a reduction to operating expenses | $ 1,816,000 | ||
Interest expense | 1,193,000 | $ 1,285,000 | |
Paycheck Protection Program, CARES Act [Member] | |||
Debt Instrument [Line Items] | |||
Face amount of loan | $ 1,806,000 | ||
Stated interest rate (as percentage) | 1.00% | ||
Term of loan | 2 years | ||
Grants recognized as a reduction to operating expenses | 1,806,000 | ||
Interest expense | $ 0 |
Government assistance - Economi
Government assistance - Economic Incentive Disaster Loan (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
May 31, 2020 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||
Grants recognized as a reduction to operating expenses | $ 1,816,000 | |
Economic Incentive Disaster Loan | ||
Debt Instrument [Line Items] | ||
Economic Incentive Disaster Loan | $ 10,000 | |
Grants recognized as a reduction to operating expenses | $ 10,000 |
Stockholders' Equity - 2011 Equ
Stockholders' Equity - 2011 Equity Incentive Plan (Details) | Dec. 31, 2020shares |
Stockholders' Equity | |
Shares of common stock reserved for issuance (in shares) | 9,308,788 |
Stock Compensation Plan | 2011 Equity Incentive Plan | |
Stockholders' Equity | |
Number of common stock eligible for issuance | 13,000,000 |
Shares of common stock available for issuance (in shares) | 1,549,598 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options (Details) $ / shares in Units, $ in Millions | Dec. 21, 2020employee$ / sharesshares | Sep. 28, 2020$ / sharesshares | Aug. 21, 2020$ / sharesshares | Apr. 15, 2020$ / sharesshares | Apr. 01, 2020$ / sharesshares | Mar. 31, 2020$ / sharesshares | Mar. 13, 2020$ / sharesshares | Feb. 28, 2020$ / sharesshares | Jan. 31, 2020$ / sharesshares | Jan. 01, 2020$ / sharesshares | Dec. 31, 2019$ / sharesshares | Oct. 31, 2019$ / shares | Oct. 01, 2019$ / shares | Sep. 01, 2019$ / shares | May 01, 2019 | Apr. 15, 2019$ / shares | Apr. 01, 2019$ / shares | Feb. 27, 2019$ / sharesshares | Jan. 01, 2019$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares |
Number of Options | |||||||||||||||||||||
Outstanding, beginning balance (in shares) | 7,222,625 | 7,222,625 | |||||||||||||||||||
Granted (in shares) | 531,250 | ||||||||||||||||||||
Expired/Forfeited (in shares) | (574,500) | ||||||||||||||||||||
Outstanding, ending balance (in shares) | 7,222,625 | 7,179,375 | 7,222,625 | ||||||||||||||||||
Exercisable (in shares) | 3,063,208 | ||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 3.33 | $ 3.33 | |||||||||||||||||||
Granted (in dollars per share) | $ / shares | 1.40 | ||||||||||||||||||||
Expired/Forfeited (in dollars per share) | $ / shares | 3.94 | ||||||||||||||||||||
Outstanding, ending balance (in dollars per share) | $ / shares | $ 3.33 | 3.14 | $ 3.33 | ||||||||||||||||||
Exercisable (in dollars per share) | $ / shares | $ 4.91 | ||||||||||||||||||||
Other disclosures | |||||||||||||||||||||
Outstanding Weighted Average Remaining Contractual Life (in Years) | 5 years 9 months 26 days | 4 years 11 months 5 days | |||||||||||||||||||
Exercisable Weighted Average Remaining Contractual Life (in Years) | 1 year 2 months 19 days | ||||||||||||||||||||
Vested (in shares) | 444,083 | ||||||||||||||||||||
Number of employees to whom awards granted | employee | 2 | ||||||||||||||||||||
Compensation expense | $ | $ 0.2 | $ 0.5 | |||||||||||||||||||
Unrecognized compensation expense | $ | $ 0.2 | ||||||||||||||||||||
Weighted average period of recognition | 1 year 22 days | ||||||||||||||||||||
Board Observer | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 5,000 | ||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 4 | ||||||||||||||||||||
Other disclosures | |||||||||||||||||||||
Percentage of options vested per tranche | 50.00% | ||||||||||||||||||||
Consultant | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 22,750 | 13,500 | 75,000 | ||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 1 | $ 3 | $ 1.57 | ||||||||||||||||||
Other disclosures | |||||||||||||||||||||
Percentage of options vested per tranche | 33.33% | ||||||||||||||||||||
Employee | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 50,000 | 15,000 | 50,000 | 50,000 | |||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 1.09 | $ 0.71 | $ 0.61 | $ 1.40 | |||||||||||||||||
Other disclosures | |||||||||||||||||||||
Percentage of options vested per tranche | 50.00% | 33.33% | 33.33% | ||||||||||||||||||
A certain key employee | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 50,000 | 250,000 | |||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 5.50 | $ 3 | |||||||||||||||||||
Other disclosures | |||||||||||||||||||||
Vested (in shares) | 100,000 | ||||||||||||||||||||
Non Management Directors | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 200,000 | ||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 0.50 | $ 1.70 | |||||||||||||||||||
Other disclosures | |||||||||||||||||||||
Percentage of options vested per tranche | 50.00% | 50.00% | |||||||||||||||||||
Key Employees | |||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 1.72 | $ 1.77 | $ 1.59 | $ 1.40 | $ 1.38 | ||||||||||||||||
Other disclosures | |||||||||||||||||||||
Percentage of options vested per tranche | 33.33% | 33.33% | 33.33% | 50.00% | 50.00% | ||||||||||||||||
Chief Executive Officer | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 2,578,947 | ||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 1.70 | ||||||||||||||||||||
Chief Financial Officer | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 552,632 | ||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 1.70 | ||||||||||||||||||||
Officer | |||||||||||||||||||||
Number of Options | |||||||||||||||||||||
Granted (in shares) | 368,421 | ||||||||||||||||||||
Weighted Average Exercise Price | |||||||||||||||||||||
Granted (in dollars per share) | $ / shares | $ 1.70 | ||||||||||||||||||||
Five year expiration | |||||||||||||||||||||
Stockholders' Equity | |||||||||||||||||||||
Expiration period | 5 years | ||||||||||||||||||||
Seven year expiration | |||||||||||||||||||||
Stockholders' Equity | |||||||||||||||||||||
Expiration period | 7 years | ||||||||||||||||||||
Ten year expiration | |||||||||||||||||||||
Stockholders' Equity | |||||||||||||||||||||
Expiration period | 10 years |
Stockholders' Equity - Black-Sc
Stockholders' Equity - Black-Scholes Assumptions for Options Granted (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stockholders' Equity | ||
Expected Volatility Rate, Minimum | 24.26% | 20.69% |
Expected Volatility Rate, Maximum | 28.79% | 26.21% |
Risk-Free Interest Rate, Minimum | 0.16% | 1.51% |
Risk-Free Interest Rate, Maximum | 1.60% | 2.48% |
Minimum | ||
Stockholders' Equity | ||
Expected Life (in years) | 2 years 6 months | 2 years 6 months |
Maximum | ||
Stockholders' Equity | ||
Expected Life (in years) | 3 years 6 months | 3 years 6 months |
Stockholders' Equity - Non-Vest
Stockholders' Equity - Non-Vested Options (Details) | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of Options | |
Beginning Balance (in shares) | shares | 4,551,500 |
Granted (in shares) | shares | 531,250 |
Vested (in shares) | shares | (444,083) |
Forfeited or Canceled (in shares) | shares | (522,500) |
Ending Balance (in shares) | shares | 4,116,167 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (in dollars per share) | $ / shares | $ 0.18 |
Granted (in dollars per share) | $ / shares | 0.14 |
Vested (in dollars per share) | $ / shares | 0.58 |
Forfeited or Canceled (in dollars per share) | $ / shares | 0.65 |
Ending Balance (in dollars per share) | $ / shares | $ 0.08 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Other disclosures | ||
Compensation expense | $ 200,000 | $ 500,000 |
Five year expiration | ||
Stockholders' Equity | ||
Expiration period | 5 years | |
Seven year expiration | ||
Stockholders' Equity | ||
Expiration period | 7 years | |
Ten year expiration | ||
Stockholders' Equity | ||
Expiration period | 10 years | |
Warrant | ||
Number of Other than Options | ||
Outstanding and exercisable, beginning balance (in shares) | 579,815 | |
Outstanding and exercisable, ending balance (in shares) | 579,815 | 579,815 |
Weighted Average Exercise Price | ||
Outstanding, beginning balance (in dollars per share) | $ 4.63 | |
Outstanding, ending balance (in dollars per share) | $ 4.63 | $ 4.63 |
Weighted Average Remaining Contractual Life (in Years), Outstanding and exercisable | 1 year 3 months 26 days | 2 years 3 months 26 days |
Other disclosures | ||
Compensation expense | $ 0 | $ 14,000 |
Warrant | Five year expiration | ||
Stockholders' Equity | ||
Expiration period | 5 years |
Stockholders' Equity - Stock Aw
Stockholders' Equity - Stock Awards (Details) - USD ($) | Dec. 24, 2020 | May 20, 2020 | Mar. 30, 2020 | Feb. 27, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Other disclosures | ||||||
Compensation expense | $ 200,000 | $ 500,000 | ||||
Unrecognized compensation expense | $ 200,000 | |||||
Weighted average period of recognition | 1 year 22 days | |||||
Restricted Stock | ||||||
Number of Other than Options | ||||||
Outstanding and exercisable, beginning balance (in shares) | 1,230,623 | |||||
Granted (in shares) | 639,728 | |||||
Vested (in shares) | (1,089,518) | |||||
Outstanding and exercisable, ending balance (in shares) | 780,833 | 1,230,623 | ||||
Weighted Average Exercise Price | ||||||
Outstanding, beginning balance (in dollars per share) | $ 4.33 | |||||
Granted (in dollars per share) | 0.82 | |||||
Vested (in dollars per share) | 2.43 | |||||
Outstanding, ending balance (in dollars per share) | $ 4.09 | $ 4.33 | ||||
Other disclosures | ||||||
Compensation expense | $ 600,000 | $ 500,000 | ||||
Unrecognized compensation expense | $ 10,000 | |||||
Weighted average period of recognition | 3 months | |||||
Restricted Stock | Senior Management | ||||||
Number of Other than Options | ||||||
Granted (in shares) | 336,700 | |||||
Other disclosures | ||||||
Compensation expense | $ 300,000 | 200,000 | ||||
Restricted Stock | Employees | ||||||
Number of Other than Options | ||||||
Granted (in shares) | 32,300 | 270,728 | ||||
Other disclosures | ||||||
Compensation expense | $ 40,000 | $ 300,000 | ||||
Performance Shares | Key Employees | ||||||
Other disclosures | ||||||
Term of employment | 2 years | |||||
Performance stock bonus | $ 90,000 | $ 90,000 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Purchased and Retired (Details) - Restricted Stock - USD ($) $ / shares in Units, $ in Thousands | Dec. 24, 2020 | May 20, 2020 | Mar. 30, 2020 | Dec. 31, 2019 | Nov. 30, 2019 | Oct. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Stockholders' Equity | |||||||||
Total Number of Shares Purchased | 2,478 | 87,249 | 155,556 | 9,846 | 57,980 | 29,189 | 18,147 | 245,283 | 115,162 |
Actual Price Paid Per Share (in dollars per share) | $ 1.14 | $ 0.98 | $ 0.65 | $ 1.45 | $ 1.45 | $ 1.75 | $ 1.34 | $ 0.77 | $ 1.51 |
Fair value of Re-Purchased Shares | $ 3,000 | $ 85,000 | $ 102,000 | $ 14,000 | $ 84,000 | $ 51,000 | $ 25,000 | $ 190,000 | $ 174,000 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | Dec. 24, 2020 | May 20, 2020 | Apr. 01, 2020 | Mar. 30, 2020 | Oct. 31, 2019 | Oct. 01, 2019 | Sep. 01, 2019 | Jul. 18, 2019 | May 01, 2019 | Apr. 15, 2019 | Apr. 01, 2019 | Mar. 15, 2019 | Mar. 13, 2019 | Feb. 27, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Stockholders' Equity | ||||||||||||||||
Authorized number of shares | 51,000,000 | |||||||||||||||
Number of common stock shares authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Authorized number of shares of preferred stock | 1,000,000 | 1,000,000 | ||||||||||||||
Granted (in shares) | 531,250 | |||||||||||||||
Exercise price of options (in dollars per share) | $ 1.40 | |||||||||||||||
Compensation expense related to stock options | $ 200,000 | $ 500,000 | ||||||||||||||
Unrecognized compensation expense | $ 200,000 | |||||||||||||||
Weighted average period of recognition | 1 year 22 days | |||||||||||||||
Shares of common stock reserved for issuance (in shares) | 9,308,788 | |||||||||||||||
Five year expiration | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Expiration period | 5 years | |||||||||||||||
Seven year expiration | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Expiration period | 7 years | |||||||||||||||
Ten year expiration | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Expiration period | 10 years | |||||||||||||||
Chief Executive Officer | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Granted (in shares) | 2,578,947 | |||||||||||||||
Exercise price of options (in dollars per share) | $ 1.70 | |||||||||||||||
Number of exercisable options (in shares) | 0 | |||||||||||||||
Number of trading days | 10 days | |||||||||||||||
Chief Executive Officer | $3.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 736,842 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 3 | |||||||||||||||
Chief Executive Officer | $5.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 626,316 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 5 | |||||||||||||||
Chief Executive Officer | $7.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 515,789 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 7 | |||||||||||||||
Chief Executive Officer | $9.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 405,263 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 9 | |||||||||||||||
Chief Executive Officer | $11.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 294,737 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 11 | |||||||||||||||
Chief Financial Officer | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Granted (in shares) | 552,632 | |||||||||||||||
Exercise price of options (in dollars per share) | $ 1.70 | |||||||||||||||
Number of exercisable options (in shares) | 0 | |||||||||||||||
Number of trading days | 10 days | |||||||||||||||
Chief Financial Officer | $3.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 157,895 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 3 | |||||||||||||||
Chief Financial Officer | $5.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 134,211 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 5 | |||||||||||||||
Chief Financial Officer | $7.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 110,526 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 7 | |||||||||||||||
Chief Financial Officer | $9.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 86,842 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 9 | |||||||||||||||
Chief Financial Officer | $11.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 63,158 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 11 | |||||||||||||||
Officer | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Granted (in shares) | 368,421 | |||||||||||||||
Exercise price of options (in dollars per share) | $ 1.70 | |||||||||||||||
Number of exercisable options (in shares) | 0 | |||||||||||||||
Number of trading days | 10 days | |||||||||||||||
Officer | $3.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 105,263 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 3 | |||||||||||||||
Officer | $5.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 89,474 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 5 | |||||||||||||||
Officer | $7.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 73,684 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 7 | |||||||||||||||
Officer | $9.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 57,895 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 9 | |||||||||||||||
Officer | $11.00 | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Number of exercisable options (in shares) | 42,105 | |||||||||||||||
Lower range target price limit (in dollars per share) | $ 11 | |||||||||||||||
Employees | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Granted (in shares) | 50,000 | 154,000 | ||||||||||||||
Exercise price of options (in dollars per share) | $ 5.50 | $ 1.73 | ||||||||||||||
Non Management Directors | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Granted (in shares) | 200,000 | |||||||||||||||
Exercise price of options (in dollars per share) | $ 0.50 | $ 1.70 | ||||||||||||||
Number of exercisable options (in shares) | 150,000 | |||||||||||||||
Percentage of options vested per tranche | 50.00% | 50.00% | ||||||||||||||
Key Employees | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Exercise price of options (in dollars per share) | $ 1.72 | $ 1.77 | $ 1.59 | $ 1.40 | $ 1.38 | |||||||||||
Number of exercisable options (in shares) | 10,000 | 100,000 | 15,000 | 24,000 | 10,000 | |||||||||||
Percentage of options vested per tranche | 33.33% | 33.33% | 33.33% | 50.00% | 50.00% | |||||||||||
Restricted Stock | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Compensation expense related to stock options | $ 600,000 | 500,000 | ||||||||||||||
Unrecognized compensation expense | $ 10,000 | |||||||||||||||
Weighted average period of recognition | 3 months | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 639,728 | |||||||||||||||
Restricted Stock | Employees | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Compensation expense related to stock options | $ 40,000 | $ 300,000 | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 32,300 | 270,728 | ||||||||||||||
Restricted Stock | Non Management Directors | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Percentage of options vested per tranche | 50.00% | |||||||||||||||
Award vesting period (in years) | 2 years | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 60,000 | |||||||||||||||
Restricted Stock | Senior Management | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Compensation expense related to stock options | $ 300,000 | 200,000 | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 336,700 | |||||||||||||||
Performance Shares | Key Employees | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Performance stock bonus | 90,000 | 90,000 | ||||||||||||||
Term of employment | 2 years | |||||||||||||||
Warrant | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Percentage of options vested per tranche | 33.33% | |||||||||||||||
Compensation expense related to stock options | $ 0 | $ 14,000 | ||||||||||||||
Shares issuable under warrants (in shares) | 115,000 | |||||||||||||||
Warrants outstanding, exercise price (in dollars per share) | $ 3.17 | |||||||||||||||
Warrant | Five year expiration | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Expiration period | 5 years | |||||||||||||||
2011 Equity Incentive Plan | Stock Compensation Plan | ||||||||||||||||
Stockholders' Equity | ||||||||||||||||
Shares of common stock available for issuance (in shares) | 1,549,598 |
Earnings Per Share - Dilutive E
Earnings Per Share - Dilutive Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share Basic And Diluted [Line Items] | ||
Basic (in shares) | 19,117,460 | 18,857,657 |
Diluted (in shares) | 19,117,460 | 18,857,657 |
Warrant | ||
Earnings Per Share Basic And Diluted [Line Items] | ||
Effect of exercise of Warrants (in shares) | 0 | 0 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities Excluded (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Stock options and warrants (in shares) | 7,759,190 | 7,802,440 |
Commitments and Contingencies -
Commitments and Contingencies - Company Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease cost | $ 1,986 | $ 1,925 |
Short-term lease cost | 81 | 76 |
Variable lease cost | 98 | 105 |
Sublease income | (618) | (488) |
Total lease cost | $ 1,547 | $ 1,618 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
2021 | $ 2,682 | |
2022 | 1,700 | |
2023 | 1,711 | |
2024 | 1,711 | |
2025 | 1,711 | |
After 2025 | 3,334 | |
Total lease payments | 12,849 | |
Less: Discount | 2,279 | |
Present value of lease liabilities | 10,570 | |
Current portion of lease liabilities | 2,101 | $ 1,752 |
Non-current portion of lease liabilities | $ 8,469 | $ 9,773 |
Commitments and Contingencies_3
Commitments and Contingencies - Future Minimum Payments under Employment Contracts (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 4,595 |
2022 | 2,100 |
Total future minimum employment contract payments | $ 6,695 |
Commitments and Contingencies_4
Commitments and Contingencies - Additional Information (Details) $ in Thousands | Feb. 11, 2019USD ($) | Dec. 31, 2020USD ($)ft² | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) | Jan. 01, 2019USD ($) |
Commitments and Contingencies [Line Items] | |||||
Letters of credit | $ 1,100 | ||||
Operating lease expense | $ 1,500 | $ 1,600 | |||
Weighted average remaining lease term for operating leases | 6 years 3 months 18 days | ||||
Weighted average discount rate | 6.25% | ||||
Cash payments for operating lease expense | $ 1,900 | 2,400 | |||
Cash received from subleasing | 700 | 300 | |||
Contingent obligation | 900 | 900 | |||
Gain on reduction of contingent obligation | 2,850 | ||||
Plan | |||||
Commitments and Contingencies [Line Items] | |||||
Aggregate potential severance costs | 8,100 | ||||
COVID19 | |||||
Commitments and Contingencies [Line Items] | |||||
Additional allowance for doubtful accounts | $ 1,000 | ||||
CW Term Loan | |||||
Commitments and Contingencies [Line Items] | |||||
Gain on reduction of contingent obligation | 2,850 | ||||
Unsecured Contingent Obligation | 0 | ||||
Contingent Obligations | |||||
Commitments and Contingencies [Line Items] | |||||
Fair value of Ripka Earnout include in current portion of long-term debt | $ 100 | ||||
Minimum | |||||
Commitments and Contingencies [Line Items] | |||||
Remaining lease term | 1 year | ||||
Maximum | |||||
Commitments and Contingencies [Line Items] | |||||
Remaining lease term | 8 years | ||||
Long term Debt | Ripka Earn-Out | |||||
Commitments and Contingencies [Line Items] | |||||
Earn-out balance before settlement | 0 | $ 100 | |||
Main Headquarters Lease [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Lease expiration date | Oct. 30, 2027 | ||||
Office Space Lease [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Lease expiration date | Feb. 28, 2022 | ||||
Term of operating leases sublease | Feb. 27, 2022 | ||||
Retail Site [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Area of property leased | ft² | 1,300 | ||||
Halston Heritage | |||||
Commitments and Contingencies [Line Items] | |||||
Asset Acquisitions, Contingent Consideration, Amount | $ 6,000 | ||||
Contingent obligation | $ 900 |
Income Taxes - Income Tax (Bene
Income Taxes - Income Tax (Benefit) Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | ||
Federal | $ (202) | |
State and local | 66 | 63 |
Total current | (136) | 63 |
Deferred: | ||
Federal | (3,538) | (354) |
State and local | (844) | (351) |
Total deferred | (4,382) | (705) |
Total benefit | $ (4,518) | $ (642) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Rates (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory federal rate | 21.00% | 21.00% |
State and local rate, net of federal tax | 4.54% | 7.40% |
Stock compensation | (1.94%) | (7.01%) |
Excess compensation deduction | (0.51%) | (5.08%) |
Foreign tax credits | 0.11% | 0.45% |
Life insurance | (0.04%) | (0.81%) |
Net operating loss carryback | 0.56% | |
Paycheck Protection Program addback | 2.18% | |
Other permanent differences | (0.01%) | (0.16%) |
Income tax benefit | 25.89% | 15.79% |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||
Stock-based compensation | $ 2,440 | $ 2,774 |
Federal, state and local net operating loss carryforwards | 2,907 | 1,207 |
Accrued compensation and other accrued expenses | 664 | 846 |
Allowance for doubtful accounts | 329 | 43 |
Basis difference arising from discounted note payable | 11 | 316 |
Foreign tax credit | 219 | 148 |
Charitable contribution carryover | 63 | 60 |
Property and equipment | 321 | 180 |
Total deferred tax assets | 6,954 | 5,574 |
Deferred tax liabilities | ||
Basis difference arising from intangible assets of acquisition | (10,006) | (13,008) |
Total deferred tax liabilities | (10,006) | (13,008) |
Net deferred tax liabilities | $ (3,052) | $ (7,434) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforward available to offset future taxable income | $ 10,100 | $ 4,000 | |
Income tax (benefit) provision | (4,518) | $ (642) | |
COVID19 | |||
Operating Loss Carryforwards [Line Items] | |||
Tax refund receivable | 200 | ||
Income tax (benefit) provision | 100 | ||
Tax Year 2018 [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforward available to offset future taxable income | $ 300 | ||
Indefinite Lived [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforward available to offset future taxable income | $ 9,800 |
Related Party Transactions (Det
Related Party Transactions (Details) | Feb. 24, 2020USD ($)item | Feb. 11, 2019USD ($)shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Asset Purchase Agreement | ||||
Net revenue | $ 29,448,000 | $ 41,727,000 | ||
Net sales revenue | ||||
Asset Purchase Agreement | ||||
Net revenue | 9,193,000 | 15,292,000 | ||
Hilco Trading, LLC [Member] | ||||
Asset Purchase Agreement | ||||
Professional Fees | $ 50,000 | |||
Hilco Trading, LLC [Member] | XCel Brands, Inc. [Member] | ||||
Asset Purchase Agreement | ||||
Ownership percentage | 5.00% | |||
Halston Heritage | ||||
Asset Purchase Agreement | ||||
Cash included in aggregate purchase price | $ 8,350,000 | |||
Common stock included in aggregate purchase price (in shares) | shares | 777,778 | |||
Issuance of common stock in connection with Halston Heritage assets acquisition | $ 1,058,000 | |||
Contingent consideration | 6,000,000 | |||
Minimum deduction from net royalties | $ 1,500,000 | |||
Maximum percentage of issued/issuable of earn-out shares | 4.99% | |||
Halston Heritage | 50% of the first $10,000,000 of Excess Net Royalties | ||||
Asset Purchase Agreement | ||||
Applicable percentage | 50.00% | |||
Halston Heritage | 20% of aggregate Excess Net Royalties greater than $10,000,000 and up to $15,000,000 | ||||
Asset Purchase Agreement | ||||
Applicable percentage | 20.00% | |||
Halston Heritage | 0% of aggregate Excess Net Royalties in excess of $15,000,000 | ||||
Asset Purchase Agreement | ||||
Applicable percentage | 0.00% | |||
Maximum | Halston Heritage | 50% of the first $10,000,000 of Excess Net Royalties | ||||
Asset Purchase Agreement | ||||
Excess net royalties | $ 10,000,000 | |||
Maximum | Halston Heritage | 20% of aggregate Excess Net Royalties greater than $10,000,000 and up to $15,000,000 | ||||
Asset Purchase Agreement | ||||
Excess net royalties | 15,000,000 | |||
Minimum | Halston Heritage | 20% of aggregate Excess Net Royalties greater than $10,000,000 and up to $15,000,000 | ||||
Asset Purchase Agreement | ||||
Excess net royalties | 10,000,000 | |||
Minimum | Halston Heritage | 0% of aggregate Excess Net Royalties in excess of $15,000,000 | ||||
Asset Purchase Agreement | ||||
Excess net royalties | $ 15,000,000 | |||
Wife Of Robert W. D'Loren | ||||
Asset Purchase Agreement | ||||
Period for which the related party has worked in company's ERP system | 2 years | |||
Compensation | $ 140,000 | $ 170,000 | ||
Hilco Trading, LLC [Member] | Net sales revenue | ||||
Asset Purchase Agreement | ||||
Net revenue | $ 150,000 | |||
Hilco Trading, LLC [Member] | Hilco Global [Member] | Longaberger Licensing, LLC | ||||
Asset Purchase Agreement | ||||
Ownership percentage | 50.00% | |||
Isaac Mizrahis [Member] | ||||
Asset Purchase Agreement | ||||
Extension term | 2 years | |||
Initial cash bonus basis for Calculation | $ 2,500,000 | |||
Subsequent cash bonus basis for Calculation | $ 3,000,000 | |||
DRT Bonus | 10.00% | |||
Bricks-and-Mortar Bonus | 10.00% | |||
Endorsement Bonus | 40.00% | |||
Monday bonus per appearance | $ 10,000 | |||
Maximum appearances eligible for Monday bonus | item | 40 | |||
Termination compensation period | 2 years | |||
Period of restriction of doing similar activity post termination | 1 year | |||
Maximum ownership interest in investment | 3.00% | |||
Period of restriction for solicit business relations post termination. | 1 year | |||
2020 | $ 1,800,000 | |||
2021 | 2,000,000 | |||
2022 | 2,100,000 | |||
2023 | 2,250,000 | |||
2024 | 2,400,000 | |||
Isaac Mizrahis [Member] | Laugh Club [Member] | ||||
Asset Purchase Agreement | ||||
Annual fee | $ 720,000 | |||
House Of Halston LLC | Former Director | ||||
Asset Purchase Agreement | ||||
Ownership Percentage in HOH | 25.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events | Apr. 14, 2021USD ($)installment | Apr. 01, 2021USD ($) | Mar. 18, 2021USD ($) |
Subsequent Event [Line Items] | |||
Bonus Compensation Expense | $ 175,000 | ||
Chief Executive Officer | |||
Subsequent Event [Line Items] | |||
Bonus Compensation Expense | 100,000 | ||
Chief Financial Officer, President and Chief Operating Officer, and Executive Vice President of Business Development and Treasury [Member] | |||
Subsequent Event [Line Items] | |||
Bonus Compensation Expense | $ 25,000 | ||
Loan And Security Agreement With BHI And First Eagle Alternative Credit LLC | |||
Subsequent Event [Line Items] | |||
Face amount of loan | $ 25,000,000 | ||
Number of quarterly installments | installment | 16 | ||
Quarterly installment payment | $ 625,000 | ||
Final payment amount | 15,000,000 | ||
Amount of future financing | $ 25,000,000 | ||
Loan And Security Agreement With BHI And First Eagle Alternative Credit LLC | LIBOR | |||
Subsequent Event [Line Items] | |||
Basis spread on variable rate | 6.20% | ||
Lori Goldstein Brand | |||
Subsequent Event [Line Items] | |||
Term of employment agreement | 10 years | ||
Base salary rate | $ 1,200,000 | ||
Advisory and consultation fees | 800,000 | ||
Lori Goldstein Brand | |||
Subsequent Event [Line Items] | |||
Cash | 3,600,000 | ||
Contingent consideration | $ 12,500,000 |