Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 12, 2022 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Current Fiscal Year End Date | --12-31 | |
Document Transition Report | false | |
Entity File Number | 001-37527 | |
Entity Registrant Name | XCEL BRANDS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 76-0307819 | |
Entity Address, Address Line One | 1333 Broadway, 10th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10018 | |
City Area Code | 347 | |
Local Phone Number | 727-2474 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | XELB | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,624,860 | |
Entity Central Index Key | 0001083220 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 10,873 | $ 4,483 |
Accounts receivable, net of allowances of $1,180 and $1,090, respectively | 9,291 | 7,640 |
Inventory | 3,475 | 3,375 |
Prepaid expenses and other current assets | 1,975 | 1,681 |
Total current assets | 25,614 | 17,179 |
Non-current Assets: | ||
Property and equipment, net | 2,070 | 2,549 |
Operating lease right-of-use assets | 5,876 | 6,314 |
Trademarks and other intangibles, net | 50,735 | 98,304 |
Equity method investment | 19,797 | |
Restricted cash | 739 | |
Deferred tax assets, net | 141 | |
Other assets | 147 | 555 |
Total non-current assets | 78,625 | 108,602 |
Total Assets | 104,239 | 125,781 |
Current Liabilities: | ||
Accounts payable, accrued expenses and other current liabilities | 4,759 | 6,169 |
Accrued income taxes payable | 1,823 | 64 |
Accrued payroll | 276 | 577 |
Current portion of operating lease obligations | 1,094 | 1,207 |
Current portion of long-term debt | 2,500 | |
Current portion of contingent obligations | 2,800 | |
Total current liabilities | 10,752 | 10,517 |
Long-Term Liabilities: | ||
Long-term portion of operating lease obligations | 6,661 | 7,252 |
Long-term debt, net, less current portion | 25,531 | |
Long-term portion of contingent obligations | 4,739 | 7,539 |
Deferred tax liabilities, net | 1,244 | |
Total long-term liabilities | 12,644 | 40,322 |
Total Liabilities | 23,396 | 50,839 |
Commitments and Contingencies | ||
Stockholders' 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 19,624,860 and 19,571,119 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | 20 | 20 |
Paid-in capital | 103,490 | 103,039 |
Accumulated deficit | (22,776) | (28,779) |
Total Xcel Brands, Inc. stockholders' equity | 80,734 | 74,280 |
Noncontrolling interest | 109 | 662 |
Total Stockholders' Equity | 80,843 | 74,942 |
Total Liabilities and Stockholders' Equity | $ 104,239 | $ 125,781 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowances | $ 1,180 | $ 1,090 |
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) | 19,624,860 | 19,571,119 |
Common stock, shares outstanding (in shares) | 19,624,860 | 19,571,119 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues | ||||
Net revenue | $ 8,467 | $ 10,764 | $ 17,214 | $ 18,573 |
Cost of goods sold | 2,570 | 3,063 | 4,250 | 4,898 |
Gross profit | 5,897 | 7,701 | 12,964 | 13,675 |
Operating costs and expenses | ||||
Salaries, benefits and employment taxes | 5,236 | 4,049 | 10,089 | 8,101 |
Other selling, general and administrative expenses | 3,803 | 3,090 | 7,195 | 6,128 |
Stock-based compensation | 485 | 431 | 517 | 591 |
Depreciation and amortization | 1,812 | 1,848 | 3,632 | 3,058 |
Total operating costs and expenses | 11,336 | 9,418 | 21,433 | 17,878 |
Other income | ||||
Gain on sale of majority interest in Isaac Mizrahi brand | 20,608 | 20,608 | ||
Total Other income | 20,608 | 20,608 | ||
Operating income (loss) | 15,169 | (1,717) | 12,139 | (4,203) |
Interest and finance expense | ||||
Interest expense - term loan debt | 479 | 522 | 1,187 | 798 |
Other interest and finance charges (income), net | (1) | 100 | 104 | |
Loss on early extinguishment of debt | 2,324 | 821 | 2,324 | 821 |
Total interest and finance expense | 2,802 | 1,443 | 3,511 | 1,723 |
Income (loss) before income taxes | 12,367 | (3,160) | 8,628 | (5,926) |
Income tax provision (benefit) | 3,178 | (1,346) | 3,178 | (1,484) |
Net income (loss) | 9,189 | (1,814) | 5,450 | (4,442) |
Net loss attributable to noncontrolling interest | (301) | (256) | (553) | (337) |
Net income (loss) attributable to Xcel Brands, Inc. stockholders | $ 9,490 | $ (1,558) | $ 6,003 | $ (4,105) |
Earnings (loss) per common share attributable to Xcel Brands, Inc. stockholders: | ||||
Basic net income (loss) per share | $ 0.48 | $ (0.08) | $ 0.31 | $ (0.21) |
Diluted net income (loss) per share | $ 0.48 | $ (0.08) | $ 0.30 | $ (0.21) |
Weighted average number of common shares outstanding: | ||||
Basic weighted average common shares outstanding | 19,677,243 | 19,449,116 | 19,624,474 | 19,355,795 |
Diluted weighted average common shares outstanding | 19,814,448 | 19,449,116 | 19,756,775 | 19,355,795 |
Net licensing revenue | ||||
Revenues | ||||
Net revenue | $ 5,175 | $ 6,224 | $ 11,136 | $ 10,531 |
Net sales | ||||
Revenues | ||||
Net revenue | $ 3,292 | $ 4,540 | $ 6,078 | $ 8,042 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock Employees | Common Stock Executive Officer [Member] | Common Stock Consultants | Common Stock Director | Common Stock | Paid-In Capital [Member] Employees | Paid-In Capital [Member] Executive Officer [Member] | Paid-In Capital [Member] Consultants | Paid-In Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Noncontrolling Interest [Member] | Employees | Executive Officer [Member] | Consultants | Total |
Balances at Dec. 31, 2020 | $ 19 | $ 102,324 | $ (16,595) | $ 507 | $ 86,255 | ||||||||||
Balances (in shares) at Dec. 31, 2020 | 19,260,862 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation expense related to stock options and restricted stock | 169 | 169 | |||||||||||||
Shares issued on exercise of stock options, net (in shares) | 1,667 | ||||||||||||||
Net income (loss) | (2,547) | (81) | (2,628) | ||||||||||||
Balances at Mar. 31, 2021 | $ 19 | 102,493 | (19,142) | 426 | 83,796 | ||||||||||
Balances (in shares) at Mar. 31, 2021 | 19,262,529 | ||||||||||||||
Balances at Dec. 31, 2020 | $ 19 | 102,324 | (16,595) | 507 | 86,255 | ||||||||||
Balances (in shares) at Dec. 31, 2020 | 19,260,862 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | (4,442) | ||||||||||||||
Balances at Jun. 30, 2021 | $ 20 | 102,852 | (20,700) | 170 | 82,342 | ||||||||||
Balances (in shares) at Jun. 30, 2021 | 19,530,855 | ||||||||||||||
Balances at Mar. 31, 2021 | $ 19 | 102,493 | (19,142) | 426 | 83,796 | ||||||||||
Balances (in shares) at Mar. 31, 2021 | 19,262,529 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation expense related to stock options and restricted stock | 52 | 52 | |||||||||||||
Shares issued to executive related to stock grants for bonus payments | $ 1 | $ 282 | $ 283 | ||||||||||||
Shares issued to executive related to stock grants for bonus payments (in shares) | 181,179 | ||||||||||||||
Shares issued in connection with stock grants | $ 25 | $ 25 | |||||||||||||
Shares issued in connection with stock grants (in shares) | 14,045 | 50,000 | |||||||||||||
Shares issued on exercise of stock options, net (in shares) | 23,102 | ||||||||||||||
Net income (loss) | (1,558) | (256) | (1,814) | ||||||||||||
Balances at Jun. 30, 2021 | $ 20 | 102,852 | (20,700) | 170 | 82,342 | ||||||||||
Balances (in shares) at Jun. 30, 2021 | 19,530,855 | ||||||||||||||
Balances at Dec. 31, 2021 | $ 20 | 103,039 | (28,779) | 662 | 74,942 | ||||||||||
Balances (in shares) at Dec. 31, 2021 | 19,571,119 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation expense related to stock options and restricted stock | 30 | 30 | |||||||||||||
Net income (loss) | (3,487) | (252) | (3,739) | ||||||||||||
Balances at Mar. 31, 2022 | $ 20 | 103,069 | (32,266) | 410 | 71,233 | ||||||||||
Balances (in shares) at Mar. 31, 2022 | 19,571,119 | ||||||||||||||
Balances at Dec. 31, 2021 | $ 20 | 103,039 | (28,779) | 662 | 74,942 | ||||||||||
Balances (in shares) at Dec. 31, 2021 | 19,571,119 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | 5,450 | ||||||||||||||
Balances at Jun. 30, 2022 | $ 20 | 103,490 | (22,776) | 109 | 80,843 | ||||||||||
Balances (in shares) at Jun. 30, 2022 | 19,624,860 | ||||||||||||||
Balances at Mar. 31, 2022 | $ 20 | 103,069 | (32,266) | 410 | 71,233 | ||||||||||
Balances (in shares) at Mar. 31, 2022 | 19,571,119 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation expense related to stock options and restricted stock | 402 | 402 | |||||||||||||
Shares issued to executive related to stock grants for bonus payments | 281 | 281 | |||||||||||||
Shares issued to executive related to stock grants for bonus payments (in shares) | 178,727 | ||||||||||||||
Shares issued in connection with sale transaction (see Note 2 and Note 8) | 97 | 97 | |||||||||||||
Shares issued in connection with sale transaction (see Note 2 and Note 8) (in shares) | 65,275 | ||||||||||||||
Shares issued in connection with stock grants | $ 50 | $ 33 | $ 50 | $ 33 | |||||||||||
Shares issued in connection with stock grants (in shares) | 33,557 | 20,064 | 50,000 | ||||||||||||
Shares repurchased in exchange for withholding taxes | $ (357) | $ (85) | $ (357) | $ (85) | |||||||||||
Shares repurchased in exchange for withholding taxes (in shares) | (240,000) | (53,882) | |||||||||||||
Net income (loss) | 9,490 | (301) | 9,189 | ||||||||||||
Balances at Jun. 30, 2022 | $ 20 | $ 103,490 | $ (22,776) | $ 109 | $ 80,843 | ||||||||||
Balances (in shares) at Jun. 30, 2022 | 19,624,860 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities | ||||
Net income (loss) | $ 9,189 | $ (1,814) | $ 5,450 | $ (4,442) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||
Depreciation and amortization expense | 1,812 | 1,848 | 3,632 | 3,058 |
Amortization of deferred finance costs included in interest expense | 156 | 109 | ||
Stock-based compensation | 485 | 431 | 517 | 591 |
Provision for doubtful accounts | 90 | 132 | ||
Loss on early extinguishment of debt | 2,324 | 821 | 2,324 | 821 |
Deferred income tax provision (benefit) | 1,384 | (1,484) | ||
Gain on sale of majority interest in Isaac Mizrahi brand | (20,608) | (20,608) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (1,741) | (2,392) | ||
Inventory | (100) | (1,930) | ||
Prepaid expenses and other current and non-current assets | 8 | (174) | ||
Accounts payable, accrued expenses, accrued payroll, accrued income taxes payable, and other current liabilities | 552 | 192 | ||
Lease-related assets and liabilities | (159) | (225) | ||
Other liabilities | (224) | |||
Net cash used in operating activities | (8,719) | (5,744) | ||
Cash flows from investing activities | ||||
Net proceeds from sale of majority interest in Isaac Mizrahi brand | 45,408 | |||
Cash consideration for acquisition of Lori Goldstein assets | (1,616) | |||
Purchase of other intangible assets | (37) | |||
Purchase of property and equipment | (85) | (747) | ||
Net cash provided by (used in) investing activities | 45,323 | (2,400) | ||
Cash flows from financing activities | ||||
Proceeds from exercise of stock options | 5 | |||
Shares repurchased including vested restricted stock in exchange for withholding taxes | (442) | |||
Proceeds from revolving loan debt | 1,500 | |||
Proceeds from long-term debt | 25,000 | |||
Payment of deferred finance costs | (1,131) | |||
Payment of long-term debt | (29,000) | (17,375) | ||
Payment of prepayment, breakage and other fees associated with early extinguishment of long-term debt | (1,511) | (367) | ||
Net cash (used in) provided by financing activities | (30,953) | 7,632 | ||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 5,651 | (512) | ||
Cash, cash equivalents, and restricted cash at beginning of period | 5,222 | 6,066 | ||
Cash, cash equivalents, and restricted cash at end of period | 10,873 | 5,554 | 10,873 | 5,554 |
Reconciliation to amounts on condensed consolidated balance sheets: | ||||
Cash and cash equivalents | 10,873 | 4,815 | 10,873 | 4,815 |
Restricted cash | 739 | 739 | ||
Total cash, cash equivalents, and restricted cash | $ 10,873 | $ 5,554 | 10,873 | 5,554 |
Supplemental disclosure of non-cash activities: | ||||
Consideration payable to seller of Lori Goldstein assets | 2,045 | |||
Contingent obligation related to acquisition of Lori Goldstein assets at fair value | 6,639 | |||
Liability for equity-based bonuses | (283) | 62 | ||
Supplemental disclosure of cash flow information: | ||||
Cash paid during the period for interest | $ 1,032 | 852 | ||
Cash paid during the period for income taxes | $ 15 |
Nature of Operations, Backgroun
Nature of Operations, Background, and Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
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 The accompanying condensed consolidated balance sheet as of December 31, 2021 (which has been derived from audited financial statements) and the unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements were prepared following the same policies and procedures used in the preparation of the audited consolidated financial statements and reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the results of operations, financial position, and cash flows of Xcel Brands, Inc. and its subsidiaries (the “Company” or "Xcel"). The results of operations for the interim periods presented herein are not necessarily indicative of the results for the entire fiscal year or for any future interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 15, 2022. 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 LOGO by Lori Goldstein brand (the “Lori Goldstein Brand”), the Halston brands (the "Halston Brand"), the Judith Ripka brands (the "Ripka Brand"), the C Wonder brands (the "C Wonder Brand"), the Longaberger brand (the “Longaberger Brand”), the Isaac Mizrahi brands (the "Isaac Mizrahi Brand"), and other proprietary brands. ● The Lori Goldstein Brand, Halston Brand, Ripka Brand, and C Wonder Brand are wholly owned by the Company. ● The Company manages the Longaberger Brand through its 50% ownership interest in Longaberger Licensing, LLC; the Company consolidates Longaberger Licensing, LLC and recognizes noncontrolling interest for the remaining ownership interest held by a third party. ● The Company wholly owned and managed the Isaac Mizrahi Brand through May 31, 2022. On May 31, 2022, the Company sold to a third party a majority interest in a newly-created subsidiary that was formed to hold the Isaac Mizrahi Brand trademarks, but retained a noncontrolling interest in the brand through a 30% ownership interest in IM Topco, LLC and continues to participate in the operations of the business; the Company accounts for its interest in IM Topco, LLC using the equity method of accounting. See Note 2 for additional details. The Company designs, produces, markets, and distributes products, licenses its brands to third parties, and generates licensing revenues through contractual arrangements with manufacturers and retailers. The Company and its licensees distribute through an omni-channel retail sales strategy, which includes distribution through interactive television, digital live-stream shopping, brick-and-mortar retail, wholesale, and e-commerce channels to be everywhere its customers shop. The Company’s wholesale and direct-to-consumer operations are presented as "Net sales" and "Cost of goods sold" in the Condensed Consolidated Statements of Operations, separately from the Company’s licensing revenues. Liquidity The Company had net income of approximately $9.5 million and $6.0 million during the three and six months ended June 30, 2022, respectively, and had an accumulated deficit of approximately $22.8 million as of June 30, 2022. The Company had working capital (current assets less current liabilities, excluding the current portion of lease obligations and any contingent obligations payable in common stock) of approximately $16.9 million as of June 30, 2022. The Company’s cash and cash equivalents were approximately $10.9 million as of June 30, 2022. In conjunction with the sale of the majority interest in the Isaac Mizrahi Brand (as described in Note 2), the Company used a portion of the proceeds to extinguish all of its term loan debt, which had a balance of approximately $28.4 million. Management expects that existing cash and operating cash flows will be adequate to meet the Company’s operating and capital expenditure needs for at least the twelve months subsequent to the filing date of this Quarterly Report on Form 10-Q. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jun. 30, 2022 | |
Acquisitions and Divestitures [Abstract] | |
Acquisitions and Divestitures | 2. Acquisitions and Divestitures Sale of Majority Interest in Isaac Mizrahi Brand On May 27, 2022, Xcel (along with IM Topco, LLC (“IM Topco”) and IM Brands, LLC (“IMB”), both wholly owned subsidiaries of the Company) and IM WHP, LLC (“WHP”), a subsidiary of WHP Global, a private equity-backed brand management and licensing company, entered into a membership purchase agreement. Pursuant to this agreement, on May 31, 2022, (i) the Company contributed assets owned by IMB, including the Isaac Mizrahi Brand trademarks and other intellectual property rights relating thereto into IM Topco, and (ii) the Company sold 70% of the membership interests of IM Topco to WHP. The purchase price paid by WHP to the Company at the closing of the transaction in exchange for the 70% membership interest in IM Topco consisted of $46.2 million in cash. Pursuant to the purchase agreement, the Company will also be entitled to receive an “earn-out” payment in the amount of $2.0 million if, during the period from January 1, 2023 through December 31, 2023, (i) IM Topco receives Net Royalty Revenue (as defined in the purchase agreement) in an amount equal to or greater than $17.5 million and (ii) IM Topco generates EBITDA (as defined in the purchase agreement) in an amount equal to or greater than $11.8 million. Additionally, in the event that IM Topco receives less than $13.347 million in aggregate royalties for any four consecutive calendar quarters over a three-year period ending on the third anniversary of the closing, WHP will be entitled to receive from the Company up to $16 million, less all amounts of net cash flow distributed to WHP for such period, as an adjustment to the purchase price, payable in either cash or equity interests in IM Topco held by the Company. In connection with the aforementioned purchase agreement, on May 31, 2022, the Company and WHP entered into an Amended and Restated Limited Liability Company Agreement of IM Topco (the “Business Venture Agreement”) governing the operation of IM Topco as a partnership between the Company and WHP following the closing. Pursuant to the Business Venture Agreement, IM Topco is managed by a single Manager appointed by the vote of a majority-in-interest of IM Topco’s members, and WHP serves as the sole Manager of IM Topco. The Business Venture Agreement contains customary provisions for the governance of a partnership, including with respect to decision making, access to information, restrictions on transfer of interests, and covenants. Pursuant to the Business Venture Agreement, IM Topco’s Net Cash Flow (as defined in the agreement) shall be distributed to the members during each fiscal year no less than once per fiscal quarter, as follows: (i) first, 100% to WHP, until WHP has received an aggregate amount during such fiscal year equal to $8,852,000 ; (ii) second, 100% to Xcel, until Xcel has received an aggregate amount during such fiscal year equal to $1,316,200 ; and (iii) thereafter, in proportion to the members’ respective percentage interests. The amounts described in (i) and (ii) above are subject to adjustment in certain circumstances as set forth in the Business Venture Agreement. The Company also entered into a number of other related agreements on May 31, 2022 in connection with the transaction, as described below: ● The Company entered into a services agreement with IM Topco, pursuant to which the Company will provide certain design and support services (including assistance with the operations of the interactive television business and related talent support) to IM Topco in exchange for payments of $0.3 million per fiscal year. ● The Company entered into a license agreement with IM Topco, pursuant to which IM Topco granted the Company a license to use certain Isaac Mizrahi trademarks on and in connection with the design, manufacture, distribution, sale, and promotion of women’s sportswear products in the United States and Canada during the term of the agreement, in exchange for the payment of royalties in connection therewith. The initial term of this agreement ends December 31, 2026, and provides guaranteed royalties of $0.4 million per year to IM Topco. ● The Company’s licensing agreement with Qurate Retail Group related to the Isaac Mizrahi Brand (see Note 4) was assigned to IM Topco as of May 31, 2022. ● The Company’s employment agreement with Mr. Mizrahi and the Company’s services agreement with Laugh Club (see Note 10) were transferred to IM Topco. In addition, all 522,500 unvested shares of restricted stock of the Company held by Mr. Mizrahi (for which all stock-based compensation expense had been previously recognized in prior periods) were immediately vested, with 240,000 of such shares being surrendered for cancellation in satisfaction of withholding tax obligations. In addition, the Company issued 33,557 additional shares of common stock of the Company (valued at $50,000 ) to Mr. Mizrahi, which vested immediately, and made a $100,000 cash payment to Mr. Mizrahi. Management assessed and evaluated the ownership structure and other terms of the May 27, 2022 membership purchase agreement and Business Venture Agreement, as well as considered the Company’s continuing involvement with the Isaac Mizrahi Brand through the aforementioned services agreement and licensing agreement, and concluded that (i) IM Topco is not a Variable Interest Entity under Accounting Standards Codification (“ASC”) Topic 810, and (ii) the Company has significant influence over, but does not control, IM Topco. As such, on May 31, 2022, the Company de-recognized the carrying amount of the The Company incurred approximately $0.9 million of expenses directly related to this transaction, including legal fees and agent fees, of which $0.1 million of the agent fees were paid through the issuance of 65,275 shares of the Company’s common stock, which were recognized as a reduction to the gain from the transaction. The Company recognized a net pre-tax gain from the transaction of $20.6 million, which is classified as other income in the condensed consolidated statements of operations for the three and six months ended June 30, 2022. The Company accounts for its interest in the ongoing operations of IM Topco as other income under the equity method of accounting. The Company did not recognize any equity income related to its investment for the three and six months ended June 30, 2022, due to the aforementioned distribution provisions set forth in the Business Venture Agreement. In addition to the amounts described above, the Company’s Board of Directors awarded cash bonuses totaling approximately $1.0 million to certain members of the Company’s senior management, consisting of bonuses of $770,000 to Robert D’Loren, $115,000 to Jim Haran, and $130,000 to Seth Burroughs. These bonuses are included in Salaries, benefits and employment taxes in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2022. Acquisition of LOGO by Lori Goldstein Brand On April 1, 2021, the Company acquired certain assets of Lori Goldstein, Ltd. (the "Seller"), including the “LOGO by Lori Goldstein” trademark and other intellectual property rights relating thereto. Pursuant to the asset purchase agreement related to this transaction, the Company delivered $1.6 million in cash consideration to the Seller at closing, and was obligated to subsequently deliver an additional $2.0 million in cash to the Seller, which was paid in July 2021. In addition to the consideration described above, the Seller is eligible to earn additional consideration of up to $12.5 million (the “Lori Goldstein Earn-Out”), which would be payable, in cash, within 45 days after the end of each applicable calendar year during the six paid The LOGO by Lori Goldstein brand acquisition was accounted for as an asset purchase, and the aggregate purchase price of $10.3 million was allocated entirely to the trademarks of the brand. Such trademarks have been determined by management to have a finite useful life, and accordingly, amortization is recorded in the Company’s condensed consolidated statements of operations. The Lori Goldstein trademarks are being amortized on a straight-line basis over their expected useful life of four years. |
Trademarks and Other Intangible
Trademarks and Other Intangibles | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Trademarks and Other Intangibles | 3. Trademarks and Other Intangibles Trademarks and other intangibles, net consist of the following: Weighted Average June 30, 2022 Amortization Gross Carrying Accumulated Net Carrying ($ in thousands) Period Amount Amortization Amount Trademarks (finite-lived) 15 years 68,880 18,307 50,573 Copyrights and other intellectual property 8 years 429 267 162 Total $ 69,309 $ 18,574 $ 50,735 Weighted Average December 31, 2021 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 68,880 15,268 53,612 Non-compete agreement 7 years 562 562 — Copyrights and other intellectual property 8 years 429 237 192 Total $ 114,371 $ 16,067 $ 98,304 Amortization expense for intangible assets was approximately $1.54 million for the three-month period ended June 30, 2022 (the "current quarter") and was approximately $1.55 million for the three-month period ended June 30, 2021 (the "prior year quarter"). Amortization expense for intangible assets was approximately $3.07 million for the six-month period ended June 30, 2022 (the "current six months") and was approximately $2.46 million for the six-month period ended June 30, 2021 (the "prior year six months"). During the current quarter, the Company sold its $44.5 million of indefinite-lived trademarks related to the Isaac Mizrahi Brand; see Note 2 for details. During the current six months, the Company retired its intangible asset for a non-compete agreement related to the Halston Brand, as such intangible asset had reached the end of its estimated useful life and had become fully amortized. |
Significant Contracts and Conce
Significant Contracts and Concentrations | 6 Months Ended |
Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
Significant Contracts and Concentrations | 4. Significant Contracts and Concentrations Qurate Agreements Under the Company’s agreements with Qurate Retail Group (“Qurate”), collectively referred to as the Qurate Agreements, Qurate is obligated to make payments to the Company on a quarterly basis, based primarily upon a percentage of net retail sales of Lori Goldstein, Judith Ripka, and Longaberger branded merchandise. The Company was also previously a party to a similar agreement with Qurate related to the Isaac Mizrahi Brand through May 31, 2022; see Note 2 for details. 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 Qurate Agreements, net of customer returns, and excluding freight, shipping and handling charges, and sales, use, or other taxes. Net licensing revenue from the Qurate Agreements represents a significant portion of the Company’s total net revenue. ● Net licensing revenue from the Qurate Agreements totaled $4.05 million and $5.45 million for the current quarter and prior year quarter, respectively, representing approximately 48% and 51% of the Company’s total net revenue for the current quarter and prior year quarter, respectively. ● Net licensing revenue from the Qurate Agreements totaled $9.06 million and $9.19 million for the current six months and prior year six months, respectively, representing approximately 53% and 50% of the Company’s total net revenue for the current six months and prior year six months, respectively. ● As of June 30, 2022 and December 31, 2021, the Company had receivables from Qurate of $4.15 million and $3.51 million, respectively, representing approximately 45% and 46% of the Company’s total net accounts receivable, respectively. |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
Allowance for Doubtful Accounts | 5. Allowance for Doubtful Accounts Accounts receivable are presented on the Company’s condensed consolidated balance sheets net of allowances of $1.18 and $1.09 million as of June 30, 2022 and December 31, 2021, respectively. The Company recognized bad debt expense of $0.09 million in the current quarter and current six months, and $0.13 million in the prior year six months, but did not recognize any bad debt expense in the prior year quarter. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Leases | 6. Leases The Company has an operating lease for its corporate offices and operations facility, as well as certain equipment with a term of 12 months or less. The Company also has an operating lease for its former retail store location, which was closed in the first quarter of 2022; the Company is currently in the process of negotiating the termination of this lease. The Company previously had an operating lease for its former office location, which it subleased to a third-party subtenant through February 27, 2022, and the Company’s lease of this office space expired by its terms on February 28, 2022. As of June 30, 2022, the Company’s real estate leases have remaining lease terms of 5 – 7 years, with a weighted average remaining lease term of approximately 5.4 years and a weighted average discount rate of 6.25%. 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 (the date on which the lessor makes the underlying asset available for use) 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 operations on a straight-line basis over the lease terms. Lease expense for operating lease payments is generally recognized on a straight-line basis over the lease term. 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. Lease expense included in selling, general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations was approximately $0.4 million for both the current quarter and prior year quarter, and was approximately $0.7 million for the current six months and prior year six months. Cash paid for amounts included in the measurement of operating lease liabilities was $0.4 million in the current quarter, $0.7 million in the prior year quarter, $1.0 million in the current six months, and $1.3 million in the prior year six months. As of June 30, 2022, the maturities of lease obligations were as follows: ($ in thousands) 2022 (April 1 through December 31) $ 744 2023 1,711 2024 1,711 2025 1,711 2026 1,710 Thereafter (through 2028) 1,610 Total lease payments 9,197 Less: Discount 1,442 Present value of lease liabilities 7,755 Current portion of lease liabilities 1,094 Non-current portion of lease liabilities $ 6,661 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt The Company’s net carrying amount of debt was comprised of the following: June 30, December 31, ($ in thousands) 2022 2021 Term loan debt $ — $ 29,000 Unamortized deferred finance costs related to term loan debt — (969) Total — 28,031 Current portion of debt — 2,500 Long-term debt $ — $ 25,531 On May 31, 2022, the Company used $30.1 million of the proceeds received from the transaction related to the Isaac Mizrahi Brand (see Note 2) to repay all amounts outstanding under the December 30, 2021 term loan agreement with First Eagle Alternative Credit Agent, LLC (“FEAC”), consisting of $28.4 million in principal amount, a $1.4 million prepayment fee, and approximately $0.3 million in interest and related expenses. As a result, the Company recognized a loss on early extinguishment of debt of approximately $2.3 million during the current quarter and current six months, consisting of approximately $1.4 million of debt prepayment premium, the immediate write-off of approximately $0.8 million of unamortized deferred finance costs, and approximately $0.1 million of other costs. Term Loan Debt (through May 31, 2022) On December 30, 2021, Xcel, as Borrower, and its wholly-owned subsidiaries, IM Brands, LLC, JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, Judith Ripka Fine Jewelry, LLC, H Heritage Licensing, LLC, Xcel-CT MFG, LLC and Gold Licensing, LLC, as Guarantors (each a “Guarantor” and collectively, the “Guarantors”), entered into a Loan and Security Agreement (the “Loan Agreement”) with FEAC, as lead arranger and as administrative agent and collateral agent for the lenders party to the Loan Agreement, and the financial institutions party thereto as lenders (the “Lenders”). Pursuant to the Loan Agreement, the Lenders made a term loan in the aggregate amount of $29.0 million (the “Term Loan”). The proceeds of the Term Loan were used for the purpose of refinancing existing indebtedness (i.e., previous term loan debt), to pay fees, costs, and expenses incurred in connection with entering into the Loan Agreement, and for working capital purposes. Upon entering into the Loan Agreement, Xcel paid a 1.75% closing fee to FEAC for the benefit of the Lenders; the Company also paid approximately $0.5 million of various legal and other fees in connection with the execution of the Loan Agreement. These fees and costs totaling approximately $0.97 million were deferred on the Company’s balance sheet as of December 31, 2021 as a reduction of the carrying value of the Term Loan, and commencing in 2022 were being amortized to interest expense over the term of the Term Loan using the effective interest method. The New Term Loan was to mature on April 14, 2025. Principal on the New Term Loan was payable in quarterly installments of $625,000 on each of March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 2022 and ending on March 31, 2025, with a final payment of $20,875,000 due on the maturity date of April 14, 2025. Under the Loan Agreement, Xcel had the right upon thirty For the current quarter and prior year quarter, the Company incurred interest expense (including both interest paid in cash and the amortization of deferred finance costs) related to term loan debt of approximately $0.48 million and $0.52 million, respectively. The effective interest rate related to term loan debt was approximately 9.8% and 9.0% for the current quarter and prior year quarter, respectively. For the current six months and prior year six months, the Company incurred interest expense (including both interest paid in cash and the amortization of deferred finance costs) related to term loan debt of approximately $1.19 million and $0.80 million, respectively. The effective interest rate related to term loan debt was approximately 9.8% and 7.8% for the current quarter and prior year quarter, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity Equity Incentive Plans The Company’s 2021 Equity Incentive Plan (the “2021 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 4,000,000 shares of common stock are eligible for issuance under the 2021 Plan. The 2021 Plan provides for the grant of any or all of the following types of awards: stock options (incentive or non-qualified), restricted stock, restricted stock units, performance awards, or cash awards. The 2021 Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board. In addition, stock-based awards (including options, warrants, and restricted stock) previously granted under the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) remain outstanding and shares of common stock may be issued to satisfy options or warrants previously granted under the 2011 Plan, although no new awards may be granted under the 2011 Plan. Stock-based Compensation The Company accounts for stock-based compensation in accordance with Accounting Standards Codification 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. Forfeitures are accounted for 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. Expense for such awards is recognized only to the extent that the achievement of the specified performance target(s) has been met or is considered probable. Total expense recognized in the current quarter and prior year quarter for all forms of stock-based compensation was approximately $0.58 million and $0.43 million, respectively. Of the current quarter expense amount, approximately $0.39 million related to employees and approximately $0.19 million related to directors and consultants. Approximately $0.48 million of the current quarter expense was recorded as operating costs, and approximately $0.10 million was recorded as a reduction to other income. Of the prior year quarter expense amount, all of which was recorded as operating costs in the accompanying condensed consolidated statements of operations, approximately $0.38 million related to employees and approximately $0.05 million related to directors and consultants. Total expense recognized in the current six months and prior year six months for all forms of stock-based compensation was approximately $0.61 million and $0.59 million, respectively. Of the current six months expense amount, approximately $0.40 million related to employees and approximately $0.21 million related to directors and consultants. Approximately $0.51 million of the current six months expense was recorded as operating costs, and approximately $0.10 million was recorded as a reduction to other income. Of the prior year six months expense amount, approximately $0.52 million related to employees and approximately $0.07 million related to directors and consultants. Stock Options A summary of the Company’s stock options activity for the current six months is as follows: Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Options Price (in Years) Value Outstanding at January 1, 2022 5,630,970 $ 2.25 5.46 $ — Granted 605,850 1.61 Canceled — — Exercised — — Expired/Forfeited (454,930) 3.24 Outstanding at June 30, 2022, and expected to vest 5,781,890 $ 2.11 5.17 $ — Exercisable at June 30, 2022 2,068,556 $ 2.80 2.23 $ — On April 20, 2022, the Company granted options to purchase an aggregate of 380,850 shares of common stock to various employees. The exercise price of the options is $1.62 per share, and all options vested immediately on the date of grant. On April 20, 2022 the Company granted options to purchase an aggregate of 125,000 shares of common stock to non-management directors. The exercise price of the options is $1.62 per share, and 50% of the options vest on each of April 20, 2023 and April 20, 2024. On April 26, 2022, the Company granted options to purchase an aggregate of 100,000 shares of common stock to a consultant. The exercise price of the options is $1.58 per share, and all options vested immediately on the date of grant. Compensation expense related to stock options for the current quarter and the prior year quarter was approximately $0.38 million and $0.04 million, respectively. Compensation expense related to stock options for the current six months and the prior year six months was approximately $0.40 million and $0.20 million, respectively. Total unrecognized compensation expense related to unvested stock options at June 30, 2022 was approximately $0.15 million and is expected to be recognized over a weighted average period of approximately 1.49 years. A summary of the Company’s non-vested stock options activity for the current six months is as follows: Weighted Average Number of Grant Date Options Fair Value Balance at January 1, 2022 3,873,334 $ 0.07 Granted 605,850 0.79 Vested (755,850) 0.73 Forfeited or Canceled (10,000) 1.09 Balance at June 30, 2022 3,713,334 $ 0.05 Warrants A summary of the Company’s warrants activity for the current six months 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, 2022 116,065 $ 3.15 2.57 $ — Granted — — Canceled — — Exercised — — Expired/Forfeited — — Outstanding and exercisable at June 30, 2022 116,065 $ 3.15 2.08 $ — No compensation expense related to warrants was recognized in the current quarter, prior year quarter, current six months, or prior year six months. Stock Awards A summary of the Company’s restricted stock activity for the current six months is as follows: Weighted Number of Average Restricted Grant Date Shares Fair Value Outstanding at January 1, 2022 815,833 $ 4.00 Granted 347,623 1.58 Canceled — — Vested (820,123) 3.12 Expired/Forfeited — — Outstanding at June 30, 2022 343,333 $ 3.66 On April 20, 2022, the Company issued an aggregate of 50,000 shares of common stock to non-management directors, which vest evenly over two years, of which 50% shall vest on April 20, 2023, and 50% shall vest on April 20, 2024. On April 20, 2022, the Company issued 20,064 shares of common stock to a consultant, which vested immediately. On May 31, 2022, the Company issued 65,275 shares of common stock to a consultant in connection with the transaction related to the Isaac Mizrahi Brand (see Note 2); these shares vested immediately. On May 31, 2022, the Company issued 33,557 shares of common stock to a key employee, which vested immediately. Additionally, on April 20, 2022, the Company issued 178,727 shares of common stock to a member of senior management as payment for a performance bonus earned in 2021. These shares vested immediately. The Company had previously recognized compensation expense of approximately $0.28 million in 2021 to accrue for this performance bonus. Compensation expense related to stock awards was approximately $0.20 million for the current quarter and approximately $0.39 million for the prior year quarter. Compensation expense related to stock awards was approximately $0.21 million for the current six months and approximately $0.39 million for the prior year six months. Total unrecognized compensation expense related to unvested restricted stock grants at June 30, 2022 was approximately $0.11 million and is expected to be recognized over a weighted average period of approximately 1.45 years. Shares Available Under the Company’s Equity Incentive Plans As of June 30, 2022, there were 3,140,909 shares of common stock available for award grants under the 2021 Plan. Shares Reserved for Issuance As of June 30, 2022, there were 9,038,864 shares of common stock reserved for issuance, including 5,897,955 shares reserved for issuance pursuant to unexercised warrants and stock options, and 3,140,909 shares available for award grants under the 2021 Plan. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | 9. Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period, including stock options and warrants, using the treasury stock method. Diluted EPS excludes all potentially dilutive shares of common stock if their effect is anti-dilutive. The following table is a reconciliation of the numerator and denominator of the basic and diluted net income (loss) per share computations for the three and six months ended June 30, 2022: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Numerator: Net income (loss) attributable to Xcel Brands, Inc. stockholders (in thousands) $ 9,490 $ (1,558) $ 6,003 $ (4,105) Denominator: Basic weighted average number of shares outstanding 19,677,243 19,449,116 19,624,474 19,355,795 Add: Effect of warrants 657 — 639 — Add: Effect of stock options 136,548 — 131,662 — Diluted weighted average number of shares outstanding 19,814,448 19,449,116 19,756,775 19,355,795 Basic net income (loss) per share $ 0.48 $ (0.08) $ 0.31 $ (0.21) Diluted net income (loss) per share $ 0.48 $ (0.08) $ 0.30 $ (0.21) As a result of the net loss for the prior year quarter and prior year six months, the Company calculated diluted EPS using basic weighted average shares outstanding for such periods, as utilizing diluted shares would be anti-dilutive to loss per share. The computation of basic and diluted earnings (loss) per share excludes the following potentially dilutive securities because their inclusion would be anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Stock options 5,781,890 5,847,825 5,781,890 5,847,825 Warrants 116,065 579,815 116,065 579,815 Total 5,897,955 6,427,640 5,897,955 6,427,640 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 10. Income Taxes The estimated annual effective income tax rate for the current quarter and the prior year quarter was approximately 25% and 43%, respectively, resulting in an income tax provision (benefit) of $3.18 million and $(1.35) million, respectively. The estimated annual effective income tax rate for the current six months and the prior year six months was approximately 35% and 25%, respectively, resulting in an income tax provision (benefit) of $3.18 million and $(1.48) million, respectively. For the current quarter, the federal statutory rate differed from the effective tax rate primarily due to recurring permanent differences, state taxes, and the discrete treatment of stock compensation shortfall, which increased the effective tax rate by approximately 10%, partially offset by the reversal of a valuation allowance that was previously recorded in the first quarter of 2022, which decreased the effective tax rate by approximately 6%. For the prior year quarter, the federal statutory rate differed from the effective tax rate primarily due to recurring permanent differences and state taxes, which increased the effective tax rate by approximately 15% and 7%, respectively. For the current six months, the federal statutory rate differed from the effective tax rate primarily due to recurring permanent differences, state taxes, and the discrete treatment of stock compensation shortfall, which increased the effective tax rate by approximately 14%. For the prior year six months, the federal statutory rate differed from the effective tax rate primarily due to state taxes, which increased the effective tax rate by approximately 7%, partially offset by the impact of recurring permanent differences, which decreased the effective tax rate by approximately 3%. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions 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. This employment agreement remained in effect through May 31, 2022. On May 31, 2022, this agreement was transferred to IM Topco as part of the transaction in which the Company sold a majority interest in the Isaac Mizrahi Brand trademarks to a third party (see Note 2 for details). The term of the employment agreement with Mr. Mizrahi was to expire on December 31, 2022, subject to earlier termination or extension. Mr. Mizrahi’s annual base salary was $1.8 million, $2.0 million, and $2.1 million per annum during the term of the agreement, subject to adjustment in the event Mr. Mizrahi did not make a specified number of appearances on Qurate’s QVC channel. Mr. Mizrahi was 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 and 2022, consisting 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 following: ● “DRT Revenue 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. The employment agreement also included severance provisions. In the event Mr. Mizrahi’s employment was terminated by the Company without “cause,” or if Mr. Mizrahi resigned with “good reason,” then Mr. Mizrahi would have been 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. Additionally, during the term of Mr. Mizrahi’s employment by the Company and for a one-year period after the termination of such employment (unless his 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 also entered into a services agreement with Laugh Club, an entity wholly-owned by Mr. Mizrahi, pursuant to which Laugh Club provided services to Mr. Mizrahi necessary for Mr. Mizrahi to perform his services pursuant to the employment agreement. The Company paid Laugh Club an annual fee of $0.72 million for such services. This services agreement remained in effect through May 31, 2022. On May 31, 2022, this agreement was transferred to IM Topco as part of the transaction in which the Company sold a majority interest in the Isaac Mizrahi Brand trademarks to a third party (see Note 2 for details). In addition, on May 31, 2022, all 522,500 unvested shares of restricted stock of the Company held by Mr. Mizrahi (for which all stock-based compensation expense had been previously recognized in prior periods) were immediately vested, with 240,000 of such shares being surrendered for cancellation in satisfaction of withholding tax obligations. Also on May 31, 2022, the Company issued 33,557 additional shares of common stock of the Company (valued at $50,000) to Mr. Mizrahi, which vested immediately, and made a $100,000 cash payment to Mr. Mizrahi. IM Topco, LLC The Company holds a noncontrolling interest in IM Topco, which is accounted for under the equity method of accounting. On May 31, 2022, the Company entered into a license agreement with IM Topco, pursuant to which IM Topco granted the Company a license to use certain Isaac Mizrahi trademarks on and in connection with the design, manufacture, distribution, sale, and promotion of women’s sportswear products in the United States and Canada during the term of the agreement, in exchange for the payment of royalties in connection therewith. The initial term of this agreement ends December 31, 2026, and provides guaranteed royalties to IM Topco of $400,000 per year. For the three and six months ended June 30, 2022, the Company recognized royalty expense related to this agreement of $31,000. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Contingent Obligation – Halston Heritage Earn-Out In connection with the February 11, 2019 purchase of the Halston Heritage trademarks from H Company IP, LLC (“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. The Halston Heritage Earn-Out of $0.9 million is recorded as a current liability at June 30, 2022 and as a long-term liability at December 31, 2021 in the accompanying condensed 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. Management estimates that it is highly unlikely the Company will owe any of this contingent obligation at December 31, 2022. In accordance with ASC Topic 480, “Distinguishing Liabilities from Equity,” the Halston Heritage Earn-Out obligation is treated as a liability in the accompanying condensed consolidated balance sheets because of the variable number of shares payable under the agreement. Contingent Obligation – Lori Goldstein Earn-Out In connection with the April 1, 2021 acquisition of the Lori Goldstein trademarks, the Company agreed to pay the seller additional cash consideration (the “Lori Goldstein Earn-Out”) of up to an aggregate of $12.5 million, based on royalties earned during the six Contingent Obligation – Isaac Mizrahi Transaction In connection with the May 31, 2022 transaction related to the sale of a majority interest in the Isaac Mizrahi Brand (see Note 2), the Company has agreed with WHP that, in the event that IM Topco receives less than $13.3 million in aggregate royalties for any four consecutive calendar quarters over a three-year period ending on May 31, 2025, WHP will be entitled to receive from the Company up to $16 million, less all amounts of net cash flow distributed to WHP for such period, as an adjustment to the purchase price previously paid by WHP. Such amount would be payable by the Company in either cash or equity interests in IM Topco held by the Company. No amount has been recorded in the accompanying condensed consolidated balance sheets related to this contingent obligation, and management believes the likelihood of any such payment is remote. Legal Proceedings From time to time, the Company becomes involved in legal claims and litigation in the ordinary course of business. In the opinion of management, based on consultations with legal counsel, the disposition of litigation currently pending against the Company is unlikely to have, individually or in the aggregate, a materially adverse effect on the Company’s business, financial position, results of operations, or cash flows. The Company routinely assesses all its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. 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 circulate throughout the U.S. and the world. COVID-19 (including actions taken by national, state, and local governments in response to COVID-19) has had an unprecedented impact on the U.S. and global economy. The impacts of the ongoing COVID-19 pandemic are broad reaching and have had an impact on the Company’s licensing and wholesale businesses. The COVID-19 pandemic has impacted 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 pandemic has also impacted distribution and logistics providers' ability to operate in the normal course of business. Further, the initial onset of the pandemic in 2020 resulted in a sudden decrease in sales for many of the Company’s products, from which the Company has yet to fully recover. The initial onset of the pandemic resulted in order cancellations and a decrease in accounts receivable collections, and the Company recorded additional allowances for doubtful accounts of approximately $1 million and $0.1 million for the years ended December 31, 2020 and 2021, respectively, related to retailers that filed for bankruptcy. Due to the ongoing COVID-19 pandemic, there is significant uncertainty surrounding the impact on the Company’s future results of operations and cash flows. Continued impacts of the pandemic could materially adversely affect the Company’s near-term and long-term revenues, earnings, liquidity, and cash flows as the Company’s customers and/or licensees may request temporary relief, delay, or not make scheduled payments. |
Trademarks and Other Intangib_2
Trademarks and Other Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Trademarks and Other Intangibles | Weighted Average June 30, 2022 Amortization Gross Carrying Accumulated Net Carrying ($ in thousands) Period Amount Amortization Amount Trademarks (finite-lived) 15 years 68,880 18,307 50,573 Copyrights and other intellectual property 8 years 429 267 162 Total $ 69,309 $ 18,574 $ 50,735 Weighted Average December 31, 2021 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 68,880 15,268 53,612 Non-compete agreement 7 years 562 562 — Copyrights and other intellectual property 8 years 429 237 192 Total $ 114,371 $ 16,067 $ 98,304 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Maturities of Lease Liabilities | ($ in thousands) 2022 (April 1 through December 31) $ 744 2023 1,711 2024 1,711 2025 1,711 2026 1,710 Thereafter (through 2028) 1,610 Total lease payments 9,197 Less: Discount 1,442 Present value of lease liabilities 7,755 Current portion of lease liabilities 1,094 Non-current portion of lease liabilities $ 6,661 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Net Carrying Amount of Debt | June 30, December 31, ($ in thousands) 2022 2021 Term loan debt $ — $ 29,000 Unamortized deferred finance costs related to term loan debt — (969) Total — 28,031 Current portion of debt — 2,500 Long-term debt $ — $ 25,531 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Summary of Stock Option Activity | Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Options Price (in Years) Value Outstanding at January 1, 2022 5,630,970 $ 2.25 5.46 $ — Granted 605,850 1.61 Canceled — — Exercised — — Expired/Forfeited (454,930) 3.24 Outstanding at June 30, 2022, and expected to vest 5,781,890 $ 2.11 5.17 $ — Exercisable at June 30, 2022 2,068,556 $ 2.80 2.23 $ — |
Summary of Stock Option Activity for Non-Vested Options | Weighted Average Number of Grant Date Options Fair Value Balance at January 1, 2022 3,873,334 $ 0.07 Granted 605,850 0.79 Vested (755,850) 0.73 Forfeited or Canceled (10,000) 1.09 Balance at June 30, 2022 3,713,334 $ 0.05 |
Summary of Warrant Activity | Weighted Average Weighted Remaining Average Contractual Aggregate Number of Exercise Life Intrinsic Warrants Price (in Years) Value Outstanding and exercisable at January 1, 2022 116,065 $ 3.15 2.57 $ — Granted — — Canceled — — Exercised — — Expired/Forfeited — — Outstanding and exercisable at June 30, 2022 116,065 $ 3.15 2.08 $ — |
Summary of Restricted Stock Activity | Weighted Number of Average Restricted Grant Date Shares Fair Value Outstanding at January 1, 2022 815,833 $ 4.00 Granted 347,623 1.58 Canceled — — Vested (820,123) 3.12 Expired/Forfeited — — Outstanding at June 30, 2022 343,333 $ 3.66 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings (Loss) Per Share | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Numerator: Net income (loss) attributable to Xcel Brands, Inc. stockholders (in thousands) $ 9,490 $ (1,558) $ 6,003 $ (4,105) Denominator: Basic weighted average number of shares outstanding 19,677,243 19,449,116 19,624,474 19,355,795 Add: Effect of warrants 657 — 639 — Add: Effect of stock options 136,548 — 131,662 — Diluted weighted average number of shares outstanding 19,814,448 19,449,116 19,756,775 19,355,795 Basic net income (loss) per share $ 0.48 $ (0.08) $ 0.31 $ (0.21) Diluted net income (loss) per share $ 0.48 $ (0.08) $ 0.30 $ (0.21) |
Anti-dilutive Securities Excluded from Computation of Earnings (Loss) Per Share | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Stock options 5,781,890 5,847,825 5,781,890 5,847,825 Warrants 116,065 579,815 116,065 579,815 Total 5,897,955 6,427,640 5,897,955 6,427,640 |
Nature of Operations, Backgro_2
Nature of Operations, Background, and Basis of Presentation (Details) | 6 Months Ended | |
Jun. 30, 2022 | May 31, 2022 | |
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% | |
IM Topco, LLC | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Ownership interest | 30% |
Nature of Operations, Backgro_3
Nature of Operations, Background, and Basis of Presentation - Liquidity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
May 31, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net income | $ 9,490 | $ (1,558) | $ 6,003 | $ (4,105) | ||
Accumulated deficit | (22,776) | (22,776) | $ (28,779) | |||
Working capital, Net | 16,900 | 16,900 | ||||
Cash and cash equivalents | $ 10,873 | $ 4,815 | 10,873 | 4,815 | ||
Payment of long-term debt | 29,000 | $ 17,375 | ||||
New Loan Agreement | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Payment of long-term debt | $ 28,400 | $ 28,400 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Sale of Majority Interest in Isaac Mizrahi Brand (Details) | 3 Months Ended | 6 Months Ended | ||
May 31, 2022 USD ($) shares | May 27, 2022 USD ($) item | Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) shares | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Additional shares issued | shares | 65,275 | |||
Amount of de-recognized asset | $ 44,500,000 | |||
Fair value of retained interest | 19,800,000 | |||
Expenses related to this transaction | 900,000 | |||
Agent fees paid | 100,000 | |||
Net pre-tax gain | $ 20,600,000 | $ 20,600,000 | ||
Management | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash bonus | 1,000,000 | |||
Robert D’Loren [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash bonus | 770,000 | |||
Jim Haran | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash bonus | 115,000 | |||
Seth Burroughs | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash bonus | $ 130,000 | |||
IM Topco, LLC | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Ownership interest | 70% | |||
Restricted Stock | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of shares vested | shares | 820,123 | |||
Isaac Mizrahi | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Shares surrendered for cancellation | shares | 240,000 | |||
Additional shares issued | shares | 33,557 | |||
Value of shares issued | $ 50,000 | |||
Payments to related party | $ 100,000 | |||
Isaac Mizrahi | Restricted Stock | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of shares vested | shares | 522,500 | |||
Business Venture Agreement | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net cash flow distributable to members (in percent) | 100% | |||
Net cash flow distributable to members | $ 1,316,200 | |||
Business Venture Agreement | WHP | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net cash flow distributable to members (in percent) | 100% | |||
Net cash flow distributable to members | $ 8,852,000 | |||
Services Agreement | IM Topco | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenue from services provided | 300,000 | |||
License Agreement | IM Topco | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Royalty guarantees | $ 400,000 | $ 400,000 | ||
Due from related party | $ 400,000 | |||
IM Brand trademarks and other intellectual property rights | Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Percentage of membership interests sold | 70% | |||
Purchase price paid in cash | $ 46,200,000 | |||
Earn-out consideration | 2,000,000 | |||
Amount of adjustments to retained interest | 17,500,000 | |||
EBITDA | $ 11,800,000 | |||
Number of consecutive quarters for royalty payable term | item | 4 | |||
Royalty payable term | 3 years | |||
Adjustments to purchase price payable | $ 16,000,000 | |||
IM Brand trademarks and other intellectual property rights | Disposed of by Sale | Maximum | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Royalty guarantees | $ 13,347,000 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures - Acquisition of LOGO by Lori Goldstein Brand (Details) - Lori Goldstein Brand - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | 15 Months Ended | |
Apr. 01, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
Schedule Of Asset Acquisition [Line Items] | ||||
Cash paid at closing | $ 1.6 | |||
Cash paid subsequent to closing | 2 | |||
Contingent consideration | $ 12.5 | |||
Period for payment of additional consideration | 45 days | |||
Maximum period for payment of additional consideration | 6 years | |||
Percentage of additional consideration on royalty contribution | 75% | |||
Asset Acquisition, Contingent Obligation | $ 6.6 | $ 6.6 | $ 6.6 | |
Purchase price | $ 10.3 | |||
Weighted average useful life of finite-lived intangible assets acquired | 4 years | |||
Earn out contingent consideration payable | $ 0 | $ 0 | ||
Earn out consideration paid | $ 0 | |||
Maximum | ||||
Schedule Of Asset Acquisition [Line Items] | ||||
Contingent consideration | $ 12.5 |
Trademarks and Other Intangib_3
Trademarks and Other Intangibles - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Goodwill and Intangible Assets [Line Items] | ||||
Amortization expense for intangible assets | $ 1,540 | $ 1,550 | $ 3,070 | $ 2,460 |
Trademarks | ||||
Goodwill and Intangible Assets [Line Items] | ||||
Proceeds from sale of assets | $ 44,500 |
Trademarks and Other Intangib_4
Trademarks and Other Intangibles - Schedule of Trademarks and Other Intangibles (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trademarks and Other Intangibles | ||
Gross Carrying Amount (definite-lived) | $ 69,309 | |
Gross Carrying Amount, Total | $ 114,371 | |
Accumulated Amortization | 18,574 | 16,067 |
Net Carrying Amount | 50,735 | |
Net Carrying Amount, Total | $ 50,735 | $ 98,304 |
Trademarks | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 15 years | 15 years |
Gross Carrying Amount (definite-lived) | $ 68,880 | $ 68,880 |
Accumulated Amortization | 18,307 | 15,268 |
Net Carrying Amount | $ 50,573 | $ 53,612 |
Non-compete agreement | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 7 years | |
Gross Carrying Amount (definite-lived) | $ 562 | |
Accumulated Amortization | $ 562 | |
Copyrights and other intellectual property | ||
Trademarks and Other Intangibles | ||
Weighted Average Amortization Period | 8 years | 8 years |
Gross Carrying Amount (definite-lived) | $ 429 | $ 429 |
Accumulated Amortization | 267 | 237 |
Net Carrying Amount | $ 162 | 192 |
Trademarks | ||
Trademarks and Other Intangibles | ||
Gross Carrying Amount (indefinite-lived) | $ 44,500 |
Significant Contracts and Con_2
Significant Contracts and Concentrations - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Product Information [Line Items] | |||||
Net revenue | $ 8,467 | $ 10,764 | $ 17,214 | $ 18,573 | |
Accounts receivable | 9,291 | 9,291 | $ 7,640 | ||
Net licensing revenue | |||||
Product Information [Line Items] | |||||
Net revenue | $ 5,175 | $ 6,224 | $ 11,136 | $ 10,531 | |
Sales [Member] | Customer Concentration Risk [Member] | Qurate | |||||
Product Information [Line Items] | |||||
Concentration Risk, Percentage | 48% | 51% | 53% | 50% | |
Sales [Member] | Customer Concentration Risk [Member] | Qurate | Net licensing revenue | |||||
Product Information [Line Items] | |||||
Net revenue | $ 4,050 | $ 5,450 | $ 9,060 | $ 9,190 | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Qurate | |||||
Product Information [Line Items] | |||||
Concentration Risk, Percentage | 45% | 46% | |||
Accounts receivable | $ 4,150 | $ 4,150 | $ 3,510 |
Allowance for Doubtful Accoun_2
Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Credit Loss [Abstract] | |||||
Allowance for doubtful accounts receivable | $ 1,180 | $ 1,180 | $ 1,090 | ||
Bad debt expense | $ 90 | $ 0 | $ 90 | $ 130 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Lessee, Lease, Description [Line Items] | ||||
Weighted average remaining lease term for operating leases | 5 years 4 months 24 days | 5 years 4 months 24 days | ||
Weighted average discount rate | 6.25% | 6.25% | ||
Cash payments for operating lease expense | $ 0.4 | $ 0.7 | $ 1 | $ 1.3 |
Selling, general and administrative expenses | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease expense | $ 0.4 | $ 0.4 | $ 0.7 | $ 0.7 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 5 years | 5 years | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 7 years | 7 years |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2022 (April 1 through December 31) | $ 744 | |
2023 | 1,711 | |
2024 | 1,711 | |
2025 | 1,711 | |
2026 | 1,710 | |
Thereafter (through 2028) | 1,610 | |
Total lease payments | 9,197 | |
Less: Discount | 1,442 | |
Present value of lease liabilities | 7,755 | |
Current portion of lease liabilities | 1,094 | $ 1,207 |
Non-current portion of lease liabilities | $ 6,661 | $ 7,252 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
May 31, 2022 | Dec. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Debt | ||||||
Unamortized deferred finance costs | $ 800,000 | $ 800,000 | ||||
Interest expense - term loan debt | $ 479,000 | $ 522,000 | $ 1,187,000 | $ 798,000 | ||
Effective interest rate (as percentage) | 9.80% | 9% | 9.80% | 7.80% | ||
Repayment of principal | $ 29,000,000 | $ 17,375,000 | ||||
Prepayment fee | $ 1,400,000 | |||||
Interest and related expenses | 300,000 | $ 2,802,000 | $ 1,443,000 | 3,511,000 | 1,723,000 | |
Loss on extinguishment of debt | (2,324,000) | $ (821,000) | (2,324,000) | $ (821,000) | ||
Prepayment premium | 1,400,000 | 1,400,000 | ||||
Other costs | $ 100,000 | 100,000 | ||||
IM Intellectual Property | ||||||
Debt | ||||||
Cash proceeds from sale | 30,100,000 | |||||
New Loan Agreement | ||||||
Debt | ||||||
Face amount of loan | $ 29,000,000 | |||||
Percentage of closing fee | 1.75% | |||||
Legal and other fees | $ 500,000 | |||||
Deferred issuance cost | 970,000 | |||||
Quarterly installment payment | 625,000 | |||||
Final payment amount | $ 20,875,000 | |||||
Notice period to terminate or prepay | 30 days | |||||
Repayment of principal | $ 28,400,000 | $ 28,400,000 | ||||
New Loan Agreement | On Or Before First Anniversary | ||||||
Debt | ||||||
Maximum Prepayment Of Debt Amount | $ 1,400,000 | |||||
Percentage of prepayment premium | 5% |
Debt - Net Carrying Amount of D
Debt - Net Carrying Amount of Debt (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Debt Disclosure [Abstract] | |
Term loan debt | $ 29,000 |
Unamortized deferred finance costs related to term loan debt | (969) |
Total | 28,031 |
Current portion of debt | 2,500 |
Long-term debt | $ 25,531 |
Stockholders' Equity - Equity I
Stockholders' Equity - Equity Incentive Plans (Details) | Jun. 30, 2022 shares |
Stockholders' Equity | |
Shares of common stock reserved for issuance (in shares) | 9,038,864 |
2011 Equity Incentive Plan | |
Stockholders' Equity | |
Shares of common stock reserved for issuance (in shares) | 5,897,955 |
2021 Equity Incentive Plan | |
Stockholders' Equity | |
Number of common stock eligible for issuance | 4,000,000 |
Shares of common stock available for issuance (in shares) | 3,140,909 |
Shares of common stock reserved for issuance (in shares) | 3,140,909 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Stockholders' Equity | ||||
Compensation expense | $ 580 | $ 430 | $ 610 | $ 590 |
Operating cost | 485 | 431 | 517 | 591 |
Reduction in other income | 100 | 100 | ||
Minimum | ||||
Stockholders' Equity | ||||
Operating cost | 480 | 510 | ||
Non Management Directors | ||||
Stockholders' Equity | ||||
Compensation expense | 190 | 50 | 210 | 70 |
Employee | ||||
Stockholders' Equity | ||||
Compensation expense | $ 390 | $ 380 | $ 400 | $ 520 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Apr. 26, 2022 | Apr. 20, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Other disclosures | |||||||
Compensation expense | $ 580,000 | $ 430,000 | $ 610,000 | $ 590,000 | |||
Employee | |||||||
Other disclosures | |||||||
Compensation expense | 390,000 | 380,000 | 400,000 | 520,000 | |||
Non Management Directors | |||||||
Other disclosures | |||||||
Compensation expense | $ 190,000 | 50,000 | $ 210,000 | 70,000 | |||
Employee Stock Option | |||||||
Number of Options | |||||||
Outstanding, beginning balance (in shares) | 5,630,970 | ||||||
Granted (in shares) | 605,850 | ||||||
Canceled (in shares) | 0 | ||||||
Exercised (in shares) | 0 | ||||||
Expired/Forfeited (in shares) | (454,930) | ||||||
Outstanding, ending balance (in shares) | 5,781,890 | 5,781,890 | 5,630,970 | ||||
Exercisable (in shares) | 2,068,556 | 2,068,556 | |||||
Weighted Average Exercise Price | |||||||
Outstanding, beginning balance (in dollars per share) | $ 2.25 | ||||||
Granted (in dollars per share) | 1.61 | ||||||
Canceled (in dollars per share) | 0 | ||||||
Exercised (in dollars per share) | 0 | ||||||
Expired/Forfeited (in dollars per share) | 3.24 | ||||||
Outstanding, ending balance (in dollars per share) | $ 2.11 | 2.11 | $ 2.25 | ||||
Exercisable (in dollars per share) | $ 2.80 | $ 2.80 | |||||
Other disclosures | |||||||
Outstanding Weighted Average Remaining Contractual Life (in Years) | 5 years 2 months 1 day | 5 years 5 months 15 days | |||||
Exercisable Weighted Average Remaining Contractual Life (in Years) | 2 years 2 months 23 days | ||||||
Aggregate Intrinsic Value, Outstanding | $ 0 | $ 0 | $ 0 | ||||
Aggregate Intrinsic Value, Exercisable | 0 | 0 | |||||
Compensation expense | 380,000 | $ 40,000 | 400,000 | $ 200,000 | |||
Unrecognized compensation expense | $ 150,000 | $ 150,000 | |||||
Weighted average period of recognition | 1 year 5 months 26 days | ||||||
Employee Stock Option | Employee | |||||||
Number of Options | |||||||
Granted (in shares) | 380,850 | ||||||
Weighted Average Exercise Price | |||||||
Granted (in dollars per share) | $ 1.62 | ||||||
Employee Stock Option | Non Management Directors | |||||||
Number of Options | |||||||
Granted (in shares) | 125,000 | ||||||
Weighted Average Exercise Price | |||||||
Granted (in dollars per share) | $ 1.62 | ||||||
Other disclosures | |||||||
Vesting percentage per year | 50% | ||||||
Employee Stock Option | Consultant | |||||||
Number of Options | |||||||
Granted (in shares) | 100,000 | ||||||
Weighted Average Exercise Price | |||||||
Granted (in dollars per share) | $ 1.58 |
Stockholders' Equity - Non-Vest
Stockholders' Equity - Non-Vested Options (Details) | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Employee Stock Option | |
Number of Options | |
Beginning Balance (in shares) | 3,873,334 |
Granted (in shares) | 605,850 |
Vested (in shares) | (755,850) |
Forfeited or Canceled (in shares) | (10,000) |
Ending Balance (in shares) | 3,713,334 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (in dollars per share) | $ / shares | $ 0.07 |
Granted (in dollars per share) | $ / shares | 0.79 |
Vested (in dollars per share) | $ / shares | 0.73 |
Forfeited or Canceled (in dollars per share) | $ / shares | 1.09 |
Ending Balance (in dollars per share) | $ / shares | $ 0.05 |
Employee Stock Option | |
Number of Options | |
Granted (in shares) | 605,850 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Other disclosures | |||||
Compensation expense | $ 580,000 | $ 430,000 | $ 610,000 | $ 590,000 | |
Warrant | |||||
Number of Other than Options | |||||
Outstanding and exercisable, beginning balance (in shares) | 116,065 | ||||
Granted (in shares) | 0 | ||||
Canceled (in shares) | 0 | ||||
Exercised (in shares) | 0 | ||||
Expired/Forfeited (in shares) | 0 | ||||
Outstanding and exercisable, ending balance (in shares) | 116,065 | 116,065 | 116,065 | ||
Weighted Average Exercise Price | |||||
Outstanding and exercisable, beginning balance (in dollars per share) | $ 3.15 | ||||
Granted (in dollars per share) | 0 | ||||
Canceled (in dollars per share) | 0 | ||||
Exercised (in dollars per share) | 0 | ||||
Expired/Forfeited (in dollars per share) | 0 | ||||
Outstanding and exercisable, ending balance (in dollars per share) | $ 3.15 | $ 3.15 | $ 3.15 | ||
Weighted Average Remaining Contractual Life (in Years), Outstanding and exercisable | 2 years 29 days | 2 years 6 months 25 days | |||
Aggregate Intrinsic Value, Outstanding and exercisable | $ 0 | $ 0 | $ 0 | ||
Other disclosures | |||||
Compensation expense | $ 0 | $ 0 | $ 0 | $ 0 |
Stockholders' Equity - Stock Aw
Stockholders' Equity - Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
May 31, 2022 | Apr. 20, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Other disclosures | ||||||
Compensation expense | $ 580 | $ 430 | $ 610 | $ 590 | ||
Non Management Directors | ||||||
Other disclosures | ||||||
Compensation expense | 190 | 50 | 210 | 70 | ||
Employee | ||||||
Other disclosures | ||||||
Compensation expense | $ 390 | 380 | $ 400 | 520 | ||
Restricted Stock | ||||||
Number of Other than Options | ||||||
Outstanding, beginning balance (in shares) | 815,833 | |||||
Granted (in shares) | 347,623 | |||||
Canceled (in shares) | 0 | |||||
Vested (in shares) | (820,123) | |||||
Expired/Forfeited (in shares) | 0 | |||||
Outstanding, ending balance (in shares) | 343,333 | 343,333 | ||||
Weighted Average Exercise Price | ||||||
Outstanding, beginning balance (in dollars per share) | $ 4 | |||||
Granted (in dollars per share) | 1.58 | |||||
Canceled (in dollars per share) | 0 | |||||
Vested (in dollars per share) | 3.12 | |||||
Expired/Forfeited (in dollars per share) | 0 | |||||
Outstanding, ending balance (in dollars per share) | $ 3.66 | $ 3.66 | ||||
Other disclosures | ||||||
Compensation expense | $ 200 | $ 390 | $ 210 | $ 390 | ||
Unrecognized compensation expense | $ 110 | $ 110 | ||||
Weighted average period of recognition | 1 year 5 months 12 days | |||||
Restricted Stock | Non Management Directors | ||||||
Number of Other than Options | ||||||
Granted (in shares) | 50,000 | |||||
Other disclosures | ||||||
Award vesting period (in years) | 2 years | |||||
Restricted Stock | Consultant | ||||||
Number of Other than Options | ||||||
Granted (in shares) | 65,275 | 20,064 | ||||
Restricted Stock | Employee | ||||||
Number of Other than Options | ||||||
Granted (in shares) | 33,557 | |||||
Restricted Stock | Senior Management | ||||||
Number of Other than Options | ||||||
Granted (in shares) | 178,727 | |||||
Other disclosures | ||||||
Compensation expense | $ 280 | |||||
Restricted Stock | April 20, 2023 | Non Management Directors | ||||||
Other disclosures | ||||||
Percentage of options vested per tranche | 50% | |||||
Restricted Stock | April 20, 2024 | Non Management Directors | ||||||
Other disclosures | ||||||
Percentage of options vested per tranche | 50% |
Earnings (Loss) Per Share - Bas
Earnings (Loss) Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Xcel Brands, Inc. stockholders | $ 9,490 | $ (1,558) | $ 6,003 | $ (4,105) |
Basic weighted average common shares outstanding | 19,677,243 | 19,449,116 | 19,624,474 | 19,355,795 |
Add: Effect of warrants (in shares) | 657 | 639 | ||
Add: Effect of stock options (in shares) | 136,548 | 131,662 | ||
Diluted weighted average common shares outstanding | 19,814,448 | 19,449,116 | 19,756,775 | 19,355,795 |
Basic net income (loss) per share | $ 0.48 | $ (0.08) | $ 0.31 | $ (0.21) |
Diluted net income (loss) per share | $ 0.48 | $ (0.08) | $ 0.30 | $ (0.21) |
Earnings (Loss) Per Share - Ant
Earnings (Loss) Per Share - Anti-dilutive Securities Excluded (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities | 5,897,955 | 6,427,640 | 5,897,955 | 6,427,640 |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities | 5,781,890 | 5,847,825 | 5,781,890 | 5,847,825 |
Warrant | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities | 116,065 | 579,815 | 116,065 | 579,815 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 25% | 43% | 35% | 25% |
Income tax (benefit) provision | $ 3,178 | $ (1,346) | $ 3,178 | $ (1,484) |
Effect of state taxes on effective tax rate | 10% | 15% | 14% | 7% |
Effect of permanent differences on effective tax rate | 7% | (3.00%) | ||
Valuation allowance | 6% |
Related Party Transactions - Is
Related Party Transactions - Isaac Mizrahi (Details) | 6 Months Ended | ||
May 31, 2022 USD ($) shares | Feb. 24, 2020 USD ($) item | Jun. 30, 2022 USD ($) shares | |
Asset Purchase Agreement | |||
Additional shares issued | shares | 65,275 | ||
Restricted Stock | |||
Asset Purchase Agreement | |||
Number of shares vested | shares | 820,123 | ||
Isaac Mizrahi | |||
Asset Purchase Agreement | |||
Initial cash bonus basis for Calculation | $ 2,500,000 | ||
Subsequent cash bonus basis for Calculation | $ 3,000,000 | ||
DRT Bonus | 10% | ||
Bricks-and-Mortar Bonus | 10% | ||
Endorsement Bonus | 40% | ||
Monday bonus per appearance | $ 10,000 | ||
Maximum appearances eligible for Monday bonus | item | 40 | ||
Period of restriction of doing similar activity post termination | 1 year | ||
Maximum ownership interest in investment | 3% | ||
Period of restriction for solicit business relations post termination. | 1 year | ||
Shares surrendered for cancellation | shares | 240,000 | ||
Additional shares issued | shares | 33,557 | ||
Payments to related party | $ 100,000 | ||
2020 | $ 1,800,000 | ||
2021 | 2,000,000 | ||
2022 | 2,100,000 | ||
Value of shares issued | $ 50,000 | ||
Isaac Mizrahi | Restricted Stock | |||
Asset Purchase Agreement | |||
Number of shares vested | shares | 522,500 | ||
Isaac Mizrahi | Laugh Club Annual Fee [Member] | |||
Asset Purchase Agreement | |||
Related Party Costs | $ 720,000 | ||
IM Topco [Member] | License Agreement | |||
Asset Purchase Agreement | |||
Royalty guarantees | $ 400,000 | ||
Recognized royalty expense | $ 31,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
May 31, 2022 USD ($) item | Apr. 01, 2021 USD ($) | Feb. 11, 2019 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Commitments and Contingencies | ||||||
Current portion of contingent obligations | $ 2,800 | |||||
Long-term portion of contingent obligations | 4,739 | $ 7,539 | ||||
Isaac Mizrahi sale transaction with IM Topco | Disposed of by Sale | ||||||
Commitments and Contingencies | ||||||
Number of consecutive quarters for royalty payable term | item | 4 | |||||
Royalty payable term | 3 years | |||||
Contingent obligation | $ 0 | |||||
Isaac Mizrahi sale transaction with IM Topco | Disposed of by Sale | Maximum | ||||||
Commitments and Contingencies | ||||||
Royalty guarantees | 13,300 | |||||
Adjustments to purchase price payable | $ 16,000 | |||||
Lori Goldstein Brand | ||||||
Commitments and Contingencies | ||||||
Contingent consideration | $ 12,500 | |||||
Asset Acquisition, Contingent Obligation | 6,600 | $ 6,600 | 6,600 | |||
Asset Acquisition, Royalties Term | 6 years | |||||
Current portion of contingent obligations | $ 1,900 | |||||
Long-term portion of contingent obligations | 4,700 | |||||
Earn-out liability recorded | 0 | |||||
Lori Goldstein Brand | Maximum | ||||||
Commitments and Contingencies | ||||||
Contingent consideration | $ 12,500 | |||||
Halston Heritage Trademarks | ||||||
Commitments and Contingencies | ||||||
Contingent consideration | $ 6,000 | |||||
Earn-out liability recorded | $ 900 | 900 | ||||
COVID19 | ||||||
Commitments and Contingencies | ||||||
Additional allowance for doubtful accounts | $ 100 | $ 1,000 |
Acquisitions and Divestitures_3
Acquisitions and Divestitures - Acquisition of LOGO by Lori Goldstein Brand (Details) - Lori Goldstein Brand - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | 15 Months Ended | |
Apr. 01, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
Schedule Of Asset Acquisition [Line Items] | ||||
Cash paid at closing | $ 1.6 | |||
Cash paid subsequent to closing | 2 | |||
Contingent consideration | $ 12.5 | |||
Period for payment of additional consideration | 45 days | |||
Maximum period for payment of additional consideration | 6 years | |||
Percentage of additional consideration on royalty contribution | 75% | |||
Asset Acquisition, Contingent Obligation | $ 6.6 | $ 6.6 | $ 6.6 | |
Purchase price | $ 10.3 | |||
Weighted average useful life of finite-lived intangible assets acquired | 4 years | |||
Earn out contingent consideration payable | $ 0 | $ 0 | ||
Earn out consideration paid | $ 0 | |||
Maximum | ||||
Schedule Of Asset Acquisition [Line Items] | ||||
Contingent consideration | $ 12.5 |