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Price
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Delaware
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76-0307819
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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1333 Broadway, 10th Floor, New York, NY 10018
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(Address of Principal Executive Offices)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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NASDAQ Global Market
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
x
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Smaller reporting company
x
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(Do not check if a smaller reporting company)
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Emerging Growth Company
¨
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licensing our brands for distribution through interactive television (i.e. QVC, The Shopping Channel) whereby we design, manage production, merchandise the shows, and manage the on-air talent;
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licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, and traditional brick-and-mortar retail channels whereby we provide certain design services and, in certain cases, manage supply and merchandising;
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distribution of our brands to retailers that sell to the end consumer (wholesale);
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distribution of our brands through our e-commerce site directly to the end consumer;
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entering into strategic supply agreements directly with overseas factories for distribution to our retail partners and through our own direct-to-consumer e-commerce sites; and
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quickly integrate additional brands into our operating platform and leverage our design, production, marketing capabilities, and distribution relationships.
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our management team, including our officers’ and directors’ experience in, and relationships within the industry;
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our Fast-to-Market supply chain and integrated technology platform that enables us to design and distribute trend-right product; and
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our significant media and internet presence and distribution
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Expand and Leverage Fast-to-Market Production Platform.
In 2015, we developed a Fast-to-Market production platform designed to deliver short lead production capabilities to our retail customers, helping drive traffic and enable retailers to respond quickly to customer demand - a read-and-react model. Our Fast-to-Market production platform shortens the supply chain cycle by utilizing state of the art product lifecycle management systems (“PLM”), proprietary merchandising strategies, 3D design, trend analytics, data science and consumer insight testing to actively monitor fashion trends, while leveraging our experience and know-how to quickly design, test, market, produce, and source high-quality goods. We launched womens’ sportswear collections under several of our brands in the department store channel through our Fast-to-Market production platform in 2016 and 2017 through a license, and in November 2018 we transitioned the license to a wholesale business model. Given some of the challenges facing the department store industry today, including declining customer traffic, aggressive mark-down cadence, and inability to respond quickly to customer demands, we developed this Fast-to-Market production platform to address these challenges and deliver a 360-degree solution to our retail partners, including design, marketing, production, and sourcing services. We intend to leverage the platform across additional brands and retailers, and believe that it provides us with a value-added service that differentiates us from our competitors and competing brands.
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Continue to Develop our Integrated Technologies Platform.
We are developing and investing in integrated technologies including PLM and ERP systems, 3D design, trend analytics, data science, and consumer insight testing as a refinement of our Fast-to-Market production platform in order to design and plan our apparel collections more efficiently and intelligently. Driven by short-lead marketing, such as social media and new direct-to-consumer business models, consumers now expect more from apparel brands and retailers, and we believe that the solution is to deliver to the customer what they want, when they want it, at a price that they can confirm is fair. Advances in 3D design technologies and software allow us to design more efficiently, seamlessly communicate technical aspects of designs with our manufacturing partners, and produce better fitting, more consistent products. Additionally, photo-realistic images generated by the current generation of 3D design software can be used to perform consumer insight testing on products, to determine demand and plan quantities for production even before a sample is made. Trend analytics including advanced algorithms focused on internet searches, social media, and inventory trends provide a forward-looking view of consumer design preferences and allow us to design into trends early-on, while data analytics will allow us to review performance and respond quickly in our read-and-react Fast-to-Market model. We will also seek to utilize machine learning and artificial intelligence to automate at least a portion of these functions.
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Expand Other Retail Partnerships.
We have entered into promotional collaborations and/or marketing agreements with large global companies such as Hewlett Packard, Revlon, Johnson & Johnson, and Kleenex, and have developed exclusive programs through certain licensees for specialty retailers such as Best Buy and Bed Bath & Beyond. We plan to continue to develop strategic relationships under our brands that can leverage our media reach through interactive television and social media to drive traffic and sales for our brands and retail partners and enhance the visibility of our brands.
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Expand Wholesale License Relationships.
We have entered into numerous license agreements for various product categories under our brands. With the launch of our Fast-to-Market production platform in 2016, we have expanded the presence of our brands at department stores and subsequently launched additional categories in the department store channel, including footwear, handbags, dresses, costume jewelry, and sunglasses. We continue to seek opportunities to expand the businesses of our licensees, as well as entering into licenses for new categories under each of our brands where the category is authentic to the brand, for both our existing brands as well as brands that we may acquire and/or develop in the future.
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Expand Internationally.
In 2015, we expanded the Mizrahi Brand into Italy and France successfully on QVC and launched the H by Halston brand on QVC in the United Kingdom. In 2016, we expanded the Mizrahi Brand into the United Kingdom and the H by Halston brand into Italy and France on QVC. Halston Heritage is distributed through brick-and-mortar retail in Mexico and Canada. We plan to continue to expand our brands internationally and to license to certain international licensing partners the right to distribute products under our brands through department stores and other retailers in such international markets.
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Deliver Quality Product Offerings.
We employ a professional team to provide best in class design, production and distribution to ensure that our products adhere to stringent quality standards and design specifications that we have developed. We intend to continue to invest in our design and marketing capabilities in order to differentiate our services to our customers and licensees and our brands in the marketplace.
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Acquire, Develop or Partner with Brands.
We plan to continue to pursue the acquisition and/or development of additional brands or the rights to brands which we believe are synergistic and complementary to our overall strategy. Our brand acquisition and development strategy are focused on dynamic brands that we believe:
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are synergistic to our existing portfolio of brands;
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are strategic to our growth in a channel of distribution; and
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are expected to be accretive to our earnings.
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Agreement
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Current Term Expiry
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Automatic Renewal
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Xcel Commenced Brand with QVC
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QVC Product Launch
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IM QVC Agreement
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September 30, 2020
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one-year period
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September 2011
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2010
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Ripka QVC Agreement
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March 31, 2020
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one-year period
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April 2014
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1999
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H QVC Agreement
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December 31, 2020
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one-year period
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January 2015
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September 2015
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•
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The HIP Trademark Usage and Royalty Participation Agreement, had an initial term that expired on December 31, 2020 unless sooner terminated or renewed, and required that we pay to HIP: (i) 50% of the excess H Halston Royalty paid to us under the DRT Licenses and any other third party licenses that we may enter into; (ii) 25% of the excess developed brand royalty paid to us for the Highline Collective Brand under the DRT Licenses, and 20% of the excess developed brand royalty paid to us for any subsequent developed brand under the DRT Licenses, and (iii) 10% of the excess private label brand royalty paid to us under the DRT Licenses and during the first term only of the DRT Licenses. Additionally, we have the right, but not the obligation, at any time after January 31, 2023, to terminate the obligations under points (ii) and (iii) above by paying to HIP an amount equal to four times the sum of the developed brand credits and private label credits for the contract year ending on January 31, 2023 (the "Buy Out Payment''). The Buy-Out Payment was payable by us and at our sole discretion either (a) in cash, or (b) in a number of common shares of Xcel calculated based on the amount of the Buy-Out Payment divided by the average closing price for common shares of Xcel on a national exchange for the preceding five trading days, subject to a minimum price for common shares of Xcel of $7.00 per common share.
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A license and supply agreement with the Halston Operating Company, LLC (“HOC”), a subsidiary of HOH, with an initial term ending on January 31, 2022, subject to renewal. Under the HOC at-will license and supply agreement, HOC shall provide licensed products for sale to pre-approved retailers, including Hudson Bay Company ("HBC") and Dillard’s, and shall also be responsible for overseeing the visual merchandising and in-store retail environments for such approved retailers, and was responsible for training and oversight of any retail staff responsible for selling the licensed products within HBC and Dillard’s, as reasonably agreed upon between HOC and HBC and Dillard’s. The HOC at-will license and supply agreement provided for, among other things, design fees of $1.2 million for the period from July 1, 2017 through December 31, 2017, subsequent design fees of $2.4 million for the contractual yearly periods ending on January 31, 2019, and on December 31, 2020, 2021, and 2022, respectively, and sales-based royalties on the categories of products licensed under the agreement and the contractual year of payment.
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our management team, including our officers’ and directors’ historical track records and relationships within the industry;
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our brand management platform, which has a strong focus on design, product and marketing; and
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our operating strategies of wholesales and direct-to consumer sales and licensing brands with significant media presence and driving sales through our ubiquitous-channel retail sales strategy across interactive television, brick-and-mortar, and e-commerce distribution channels.
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could impair our liquidity;
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could make it more difficult for us to satisfy our other obligations;
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are secured by substantially all of our assets;
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require us to dedicate a substantial portion of our cash flow to payments on our debt obligations, which reduces the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements;
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could impede us from obtaining additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes;
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impose restrictions on us with respect to the use of our available cash, including in connection with future transactions;
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could limit our ability to execute on our acquisition strategy; and
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make us more vulnerable in the event of a downturn in our business prospects and could limit our flexibility to plan for, or react to, changes in our sales and licensing channels.
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establishing and maintaining favorable brand recognition;
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developing products that appeal to consumers;
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pricing products appropriately;
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determining and maintaining product quality;
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obtaining access to sufficient floor space in retail locations;
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providing appropriate services and support to retailers;
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maintaining and growing market share;
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developing and maintaining a competitive e-commerce site;
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hiring and retaining key employees; and
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protecting intellectual property.
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political and economic instability in countries or regions, especially Asia, including heightened terrorism and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays in deliveries or impoundment of goods;
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imposition of regulations, quotas and other trade restrictions relating to imports, including quotas imposed by bilateral textile agreements between the U.S. and foreign countries;
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currency exchange rates;
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imposition of increased duties, taxes and other charges on imports;
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labor union strikes at ports through which our products enter the U.S.;
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labor shortages in countries where contractors and suppliers are located;
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restrictions on the transfer of funds to or from foreign countries;
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disease epidemics and health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;
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the migration and development of manufacturing contractors, which could affect where our products are or are planned to be produced;
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increases in the costs of fuel, travel and transportation;
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reduced manufacturing flexibility because of geographic distance between our foreign manufacturers and us, increasing the risk that we may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product; and
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violations by foreign contractors of labor and wage standards and resulting adverse publicity.
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unanticipated costs associated with the target acquisition or its integration with our company;
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our ability to identify or consummate additional quality business opportunities, including potential licenses and new product lines and markets;
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negative effects on reported results of operations from acquisition related charges and costs, and amortization of acquired intangibles;
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diversion of management’s attention from other business concerns;
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the challenges of maintaining focus on, and continuing to execute, core strategies and business plans as our brand and license portfolio grows and becomes more diversified;
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adverse effects on existing licensing and other relationships;
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potential difficulties associated with the retention of key employees, and difficulties, delays and unanticipated costs associated with the assimilation of personnel, operations, systems and cultures, which may be retained by us in connection with or as a result of our acquisitions;
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risks of entering new domestic and international markets (whether it be with respect to new licensed product categories or new licensed product distribution channels) or markets in which we have limited prior experience; and
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increased concentration in our revenues with one or more customers in the event that the brand has distribution channels in which we currently distribute products under one or more of our brands.
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the basis on which the broker or dealer made the suitability determination; and
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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December 31, 2018
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High
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Low
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First Quarter
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$
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3.45
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$
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2.40
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Second Quarter
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$
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3.10
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$
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2.25
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Third Quarter
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$
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2.95
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$
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2.05
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Fourth Quarter
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$
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2.40
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$
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1.00
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December 31, 2017
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First Quarter
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$
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4.85
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$
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2.00
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Second Quarter
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$
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3.10
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$
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2.10
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Third Quarter
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$
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4.80
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$
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2.88
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Fourth Quarter
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$
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3.70
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$
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2.24
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•
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The Plan provides for the grant of stock options or restricted stock (any grant under the Plan, an “Award”). The stock options may be incentive stock options or non-qualified stock options.
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A total of 13,000,000 shares of common stock are eligible for issuance under the Plan, and the maximum number of shares of common stock with respect to which incentive stock options may be granted under the Plan is 5,000,000.
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The Plan may be administered by the Board of Directors (the “Board”) or a committee consisting of two or more members of the Board of Directors appointed by the Board (for purposes of this description, any such committee, a “Committee”).
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Officers and other employees of our Company or any parent or subsidiary of our Company who are at the time of the grant of an Award employed by us or any parent or subsidiary of our Company are eligible to be granted options or other Awards under the Plan. In addition, non-qualified stock options and other Awards may be granted under the Plan to any person, including, but not limited to, directors, independent agents, consultants and attorneys who the Board or the Committee, as the case may be, believes has contributed or will contribute to our success.
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With respect to incentive stock options granted to an eligible employee owning stock possessing more than 10% of the total combined voting power of all classes of our stock or the stock of a parent or subsidiary of our Company immediately before
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The exercise price of an incentive stock option will not be less than the fair market value of the shares underlying the option on the date the option is granted, provided, however, that the exercise price of an incentive stock option granted to a 10% Stockholder may not be less than 110% of such fair market value.
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The exercise price of a non-qualified stock option may not be less than fair market value of the shares of common stock underlying the option on the date the option is granted.
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Under the Plan, we may not, in the aggregate, grant incentive stock options that are first exercisable by any individual optionee during any calendar year (under all such plans of the optionee’s employer corporation and its “parent” and “subsidiary” corporations, as those terms are defined in Section 424 of the Internal Revenue Code) to the extent that the aggregate fair market value of the underlying stock (determined at the time the option is granted) exceeds $100,000.
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Restricted stock awards give the recipient the right to receive a specified number of shares of common stock, subject to such terms, conditions and restrictions as the Board or the Committee, as the case may be, deems appropriate. Restrictions may include limitations on the right to transfer the stock until the expiration of a specified period of time and forfeiture of the stock upon the occurrence of certain events such as the termination of employment prior to expiration of a specified period of time.
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Certain Awards made under the Plan may be granted so that they qualify as “performance-based compensation” (as this term is used in Internal Revenue Code Section 162(m) and the regulations thereunder) and are exempt from the deduction limitation imposed by Code Section 162(m) (these Awards are referred to as “Performance-Based Awards”). Under Internal Revenue Code Section 162(m), our tax deduction may be limited to the extent total compensation paid to the chief executive officer, or any of the four most highly compensated executive officers (other than the chief executive officer) exceeds $1 million in any one tax year. In accordance with the 2017 Tax Cuts and Jobs Act, the tax deductibility for each of these executives will be limited to $1,000,000 of compensation annually, including any performance based compensation. Among other criteria, Awards only qualify as performance-based awards if at the time of grant the compensation committee is comprised solely of two or more “outside directors” (as this term is used in Internal Revenue Code Section 162(m) and the regulations thereunder). In addition, we must obtain stockholder approval of material terms of performance goals for such “performance-based compensation.”
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All stock options and certain stock awards, performance awards, and stock units granted under the Plan, and the compensation attributable to such Awards, are intended to (i) qualify as performance-based awards or (ii) be otherwise exempt from the deduction limitation imposed by Internal Revenue Code Section 162(m).
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No options or other Awards may be granted on or after the tenth anniversary of the effective date of the Plan.
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Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
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Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
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Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
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Plan Category
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(a)
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(b)
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(c)
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Equity compensation Plans (1)
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4,472,690
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$
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6.49
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5,813,949
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Period
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Total Number of
Shares of
Common Stock
Purchased
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Average
Price per
Share
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Total Number of Shares
of Common Stock
Purchased as
Part of a Publicly
Announced
Plan or Program
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March 1, 2018 to Mar 31, 2018 (i)
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43,638
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$
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3.25
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—
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April 1, 2018 to April 30, 2018 (i)
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181,486
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3.09
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May 1, 2018 to May 31, 2018 (i)
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107
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2.8
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—
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November 1, 2018 to November 30, 2018 (i)
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145,920
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2.27
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Total year ended December 31, 2018
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371,151
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$
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2.79
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March 1, 2017 to March 31, 2017 (i)
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294,540
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$
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2.70
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—
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May 1, 2017 to May 31, 2017 (i)
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4,775
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2.30
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—
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September 1, 2017 to September 30, 2017 (i)
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2,200
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3.70
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—
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November 1, 2017 to November 30, 2017 (i)
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149,840
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2.55
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—
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Total year ended December 31, 2017
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451,355
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$
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2.66
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—
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(i)
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The shares were exchanged from employees and directors in connection with the income tax withholding obligations on behalf of such employees and directors from the vesting of restricted stock.
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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•
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licensing our brands for distribution through interactive television (i.e. QVC, The Shopping Channel) whereby we design, manage production, merchandise the shows, and manage the on-air talent;
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•
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licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, and traditional brick-and-mortar retail channels whereby we provide certain design services and, in certain cases, manage supply and merchandising;
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•
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distribution of our brands to retailers that sell to the end consumer (wholesale)
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•
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distribution of our brands through our e-commerce site directly to the end consumer;
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•
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entering into strategic supply agreements directly with overseas factories for distribution to our retail partners and through our own direct-to-consumer e-commerce sites; and
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•
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quickly integrate additional brands into our platform and leverage our design, production and marketing capabilities, and distribution relationships.
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•
|
our management team, including our officers’ and directors’ experience in, and relationships within the industry;
|
|
•
|
our Fast-to-Market supply chain and integrated technology platform enables us to design and distribute trend-right product; and
|
|
•
|
our operating strategy, significant media and internet presence and distribution network.
|
|
•
|
Equity-classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through the performance completion date;
|
|
•
|
For performance conditions, compensation cost associated with the award will be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition; and
|
|
•
|
The current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments.
|
|
|
Year Ended December 31,
|
||||||
|
($ in thousands)
|
2018
|
|
2017
|
||||
|
Net income (loss)
|
$
|
1,088
|
|
|
$
|
(10,122
|
)
|
|
Goodwill impairment
|
—
|
|
|
12,371
|
|
||
|
Non-cash interest and finance expense
|
41
|
|
|
38
|
|
||
|
Stock-based compensation
|
1,788
|
|
|
3,184
|
|
||
|
Non-recurring facility exit charges
|
799
|
|
|
—
|
|
||
|
Deferred income tax provision (benefit)
|
1,764
|
|
|
(526
|
)
|
||
|
Non-GAAP net income
|
$
|
5,480
|
|
|
$
|
4,945
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Diluted income (loss) earnings per share
|
$
|
0.06
|
|
|
$
|
(0.55
|
)
|
|
Goodwill impairment
|
—
|
|
|
0.67
|
|
||
|
Non-cash interest and finance expense
|
—
|
|
|
—
|
|
||
|
Stock-based compensation
|
0.10
|
|
|
0.17
|
|
||
|
Non-recurring facility exit charges
|
0.04
|
|
|
—
|
|
||
|
Deferred income tax (benefit) provision
|
0.10
|
|
|
(0.03
|
)
|
||
|
Non-GAAP diluted EPS
|
$
|
0.30
|
|
|
$
|
0.26
|
|
|
Non-GAAP diluted weighted average shares outstanding
|
18,281,638
|
|
|
18,867,172
|
|
||
|
|
Year Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
Basic weighted average shares
|
18,280,788
|
|
|
18,502,158
|
|
|
Effect of exercising warrants
|
850
|
|
|
364,209
|
|
|
Effect of exercising stock options
|
—
|
|
|
805
|
|
|
Non-GAAP diluted weighted average shares outstanding
|
18,281,638
|
|
|
18,867,172
|
|
|
|
Year Ended December 31,
|
||||||
|
($ in thousands)
|
2018
|
|
2017
|
||||
|
Net income (loss)
|
$
|
1,088
|
|
|
$
|
(10,122
|
)
|
|
Goodwill impairment
|
—
|
|
|
12,371
|
|
||
|
Depreciation and amortization
|
1,780
|
|
|
1,562
|
|
||
|
Interest and finance expense
|
1,011
|
|
|
1,347
|
|
||
|
Income tax provision (benefit)
|
1,831
|
|
|
(447
|
)
|
||
|
State and local franchise taxes
|
113
|
|
|
107
|
|
||
|
Stock-based compensation
|
1,788
|
|
|
3,184
|
|
||
|
Non-recurring facility exit charges
|
799
|
|
|
—
|
|
||
|
Adjusted EBITDA
|
$
|
8,410
|
|
|
$
|
8,002
|
|
|
($ in thousands)
Year Ending December 31,
|
|
Amount of
Principal
Payment
|
||
|
2019
|
|
$
|
4,000
|
|
|
2020
|
|
4,000
|
|
|
|
2021
|
|
7,500
|
|
|
|
Total
|
|
$
|
15,500
|
|
|
•
|
net worth (as defined in the Amended Loan Agreement) of at least
$90.0 million
at the end of each fiscal quarter ending on June 30 and
December 31,
of each fiscal year;
|
|
•
|
liquid assets of at least
$5.0 million
, until such time as the ratio of indebtedness to EBITDA (as defined in the Amended Loan Agreement) is less than 1.00 to 1.00 and, in which event, liquid assets must be at least
$3.0 million
;
|
|
•
|
a fixed charge ratio of at least
1.20
to 1.00 for each fiscal quarter ended June 30 and
December 31,
for the twelve fiscal month period ending on such date;
|
|
•
|
capital expenditures shall not exceed (i)
$2.7 million
for the year ended
December 31, 2017
, (ii)
$1.7 million
for 2018 and $0.7 million for any fiscal year thereafter; and
|
|
•
|
EBITDA (as defined in the Amended Loan Agreement) of $8.0 million for the fiscal years ending December 31, 2018 and 2019, and $9.0 million for the following fiscal years. (See Note 12
"Subsequent Events"
for updated covenants pursuant to the Second Amended and Restated Loan and Security Agreement)
|
|
($ in thousands)
|
|
Amount of Principal Payment
|
||
|
Year Ending December 31,
|
|
|||
|
2019
|
|
$
|
742
|
|
|
($ in thousands)
|
2019
|
|
2020
|
|
2021 and After
|
|
Total
|
||||||||
|
Term debt (i)
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
7,500
|
|
|
$
|
15,500
|
|
|
Term debt interest (i)
|
1,221
|
|
|
1,058
|
|
|
1,476
|
|
|
3,755
|
|
||||
|
IM Seller Note (principal and interest)
|
758
|
|
|
—
|
|
|
—
|
|
|
758
|
|
||||
|
Operating leases
|
2,393
|
|
|
2,423
|
|
|
11,811
|
|
|
16,627
|
|
||||
|
Employment contracts
|
5,105
|
|
|
2,853
|
|
|
474
|
|
|
8,432
|
|
||||
|
Total contractual cash obligations
|
$
|
13,477
|
|
|
$
|
10,334
|
|
|
$
|
21,261
|
|
|
$
|
45,072
|
|
|
(i)
|
The amount of future term debt and interest payments presented in the table above is as of December 31, 2018 and does not include the debt service obligations in accordance with the Second Amendment and Restated Loan and Security Agreement, effective February 2019.
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
|
||||
|
Assets
|
|
|
|
|
|
||
|
Current Assets:
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
$
|
8,837
|
|
|
$
|
10,185
|
|
|
Accounts receivable, net
|
11,010
|
|
|
8,528
|
|
||
|
Inventory
|
1,988
|
|
|
—
|
|
||
|
Prepaid expenses and other current assets
|
2,040
|
|
|
592
|
|
||
|
Total current assets
|
23,875
|
|
|
19,305
|
|
||
|
Property and equipment, net
|
3,202
|
|
|
2,376
|
|
||
|
Trademarks and other intangibles, net
|
108,989
|
|
|
110,120
|
|
||
|
Restricted cash
|
1,482
|
|
|
1,509
|
|
||
|
Other assets
|
511
|
|
|
1,708
|
|
||
|
Total non-current assets
|
114,184
|
|
|
115,713
|
|
||
|
|
|
|
|
||||
|
Total Assets
|
$
|
138,059
|
|
|
$
|
135,018
|
|
|
|
|
|
|
||||
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
|
Current Liabilities:
|
|
|
|
||||
|
Accounts payable, accrued expenses and other current liabilities
|
$
|
5,558
|
|
|
$
|
1,260
|
|
|
Accrued payroll
|
2,011
|
|
|
2,270
|
|
||
|
Deferred revenue
|
272
|
|
|
16
|
|
||
|
Current portion of long-term debt
|
5,325
|
|
|
5,459
|
|
||
|
Current portion of long-term debt, contingent obligations
|
2,950
|
|
|
100
|
|
||
|
Total current liabilities
|
16,116
|
|
|
9,105
|
|
||
|
Long-Term Liabilities:
|
|
|
|
||||
|
Long-term debt, less current portion
|
11,300
|
|
|
19,389
|
|
||
|
Deferred tax liabilities, net
|
8,139
|
|
|
6,375
|
|
||
|
Other long-term liabilities
|
2,622
|
|
|
2,455
|
|
||
|
Total long-term liabilities
|
22,061
|
|
|
28,219
|
|
||
|
Total Liabilities
|
38,177
|
|
|
37,324
|
|
||
|
|
|
|
|
||||
|
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 and 35,000,000 shares authorized at December 31, 2018 and 2017, respectively, and 18,138,616 and 18,318,961 issued and outstanding at December 31, 2018 and 2017, respectively
|
18
|
|
|
18
|
|
||
|
Paid-in capital
|
100,097
|
|
|
98,997
|
|
||
|
Accumulated deficit
|
(233
|
)
|
|
(1,321
|
)
|
||
|
Total Stockholders' Equity
|
99,882
|
|
|
97,694
|
|
||
|
|
|
|
|
||||
|
Total Liabilities and Stockholders' Equity
|
$
|
138,059
|
|
|
$
|
135,018
|
|
|
|
For the Year Ended
December 31, |
||||||
|
|
2018
|
|
2017
|
||||
|
Revenues
|
|
|
|
||||
|
Net licensing revenue
|
$
|
31,190
|
|
|
$
|
31,706
|
|
|
Sales
|
4,276
|
|
|
—
|
|
||
|
Total revenue
|
35,466
|
|
|
31,706
|
|
||
|
Cost of goods sold (sales)
|
2,702
|
|
|
—
|
|
||
|
Net revenue
|
32,764
|
|
|
31,706
|
|
||
|
Operating costs and expenses
|
|
|
|
||||
|
Salaries, benefits and employment taxes
|
16,560
|
|
|
16,760
|
|
||
|
Other design and marketing costs
|
2,696
|
|
|
2,352
|
|
||
|
Other selling, general and administrative expenses
|
5,211
|
|
|
4,699
|
|
||
|
Facilities exit charge
|
799
|
|
|
—
|
|
||
|
Stock-based compensation
|
1,788
|
|
|
3,184
|
|
||
|
Depreciation and amortization
|
1,780
|
|
|
1,562
|
|
||
|
Goodwill impairment
|
—
|
|
|
12,371
|
|
||
|
Total operating costs and expenses
|
28,834
|
|
|
40,928
|
|
||
|
|
|
|
|
||||
|
Operating income (loss)
|
3,930
|
|
|
(9,222
|
)
|
||
|
|
|
|
|
||||
|
Interest and finance expense
|
|
|
|
||||
|
Interest expense - term debt
|
912
|
|
|
1,171
|
|
||
|
Other interest and finance charges
|
99
|
|
|
176
|
|
||
|
Total interest and finance expense
|
1,011
|
|
|
1,347
|
|
||
|
|
|
|
|
||||
|
Income (loss) before income tax provision (benefit)
|
2,919
|
|
|
(10,569
|
)
|
||
|
|
|
|
|
||||
|
Income tax provision (benefit)
|
1,831
|
|
|
(447
|
)
|
||
|
|
|
|
|
||||
|
Net income (loss)
|
$
|
1,088
|
|
|
$
|
(10,122
|
)
|
|
|
|
|
|
||||
|
Earnings (loss) per share attributable to common stockholders:
|
|
|
|
||||
|
Basic
|
$
|
0.06
|
|
|
$
|
(0.55
|
)
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
(0.55
|
)
|
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
|
Basic
|
18,280,788
|
|
|
18,502,158
|
|
||
|
Diluted
|
18,281,638
|
|
|
18,502,158
|
|
||
|
|
|
|
|
|
|
|
Retained
Earnings / (Accumulated Deficit)
|
|
|
|||||||||
|
|
Common Stock
|
|
Paid-in
Capital
|
|
|
Total
|
||||||||||||
|
|
Shares
|
|
Amount
|
|||||||||||||||
|
Balance as of January 1, 2017
|
18,644,982
|
|
|
$
|
19
|
|
|
$
|
97,354
|
|
|
$
|
8,801
|
|
|
$
|
106,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Shares issued to employees in connection with restricted stock grants, net of forfeitures
|
125,334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Compensation expense in connection with stock options and restricted stock
|
—
|
|
|
—
|
|
|
2,839
|
|
|
—
|
|
|
2,839
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Shares repurchased including vested restricted stock in exchange for withholding taxes
|
(451,355
|
)
|
|
(1
|
)
|
|
(1,196
|
)
|
|
—
|
|
|
(1,197
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net loss for the year ended December 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,122
|
)
|
|
(10,122
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance as of December 31, 2017
|
18,318,961
|
|
|
18
|
|
|
98,997
|
|
|
(1,321
|
)
|
|
97,694
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Shares issued to employees in connection with restricted stock grants, net of forfeitures
|
190,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Compensation expense in connection with stock options and restricted stock
|
—
|
|
|
—
|
|
|
2,133
|
|
|
—
|
|
|
2,133
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Shares repurchased including vested restricted stock in exchange for withholding taxes
|
(371,151
|
)
|
|
—
|
|
|
(1,033
|
)
|
|
—
|
|
|
(1,033
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income for the year ended December 31, 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
1,088
|
|
|
1,088
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance as of December 31, 2018
|
18,138,616
|
|
|
$
|
18
|
|
|
$
|
100,097
|
|
|
$
|
(233
|
)
|
|
$
|
99,882
|
|
|
|
For the Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
|
Cash flows from operating activities
|
|
|
|
|
|
||
|
Net income (loss)
|
$
|
1,088
|
|
|
$
|
(10,122
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
|
Depreciation and amortization expense
|
1,780
|
|
|
1,562
|
|
||
|
Goodwill impairment
|
—
|
|
|
12,371
|
|
||
|
Amortization of deferred finance costs
|
169
|
|
|
193
|
|
||
|
Stock-based compensation
|
1,788
|
|
|
3,184
|
|
||
|
Allowance for doubtful accounts
|
172
|
|
|
13
|
|
||
|
Amortization of note discount
|
41
|
|
|
38
|
|
||
|
Deferred income tax
|
1,764
|
|
|
(526
|
)
|
||
|
Changes in operating assets and liabilities:
|
|
|
|
||||
|
Accounts receivable
|
(2,653
|
)
|
|
(1,572
|
)
|
||
|
Inventory
|
(1,988
|
)
|
|
—
|
|
||
|
Prepaid expenses and other assets
|
(373
|
)
|
|
4
|
|
||
|
Accounts payable, accrued expenses and other current liabilities
|
4,382
|
|
|
(524
|
)
|
||
|
Deferred revenue
|
256
|
|
|
(218
|
)
|
||
|
Other liabilities
|
167
|
|
|
274
|
|
||
|
Net cash provided by operating activities
|
6,593
|
|
|
4,677
|
|
||
|
|
|
|
|
||||
|
Cash flows from investing activities
|
|
|
|
||||
|
Cost to acquire intangible assets
|
—
|
|
|
(30
|
)
|
||
|
Purchase of property and equipment
|
(1,476
|
)
|
|
(208
|
)
|
||
|
Net cash used in investing activities
|
(1,476
|
)
|
|
(238
|
)
|
||
|
|
|
|
|
||||
|
Cash flows from financing activities
|
|
|
|
||||
|
Shares repurchased including vested restricted stock in exchange for withholding taxes
|
(1,033
|
)
|
|
(1,197
|
)
|
||
|
Payment of deferred finance costs
|
—
|
|
|
(7
|
)
|
||
|
Payment of long-term debt
|
(5,459
|
)
|
|
(7,177
|
)
|
||
|
Net cash used in financing activities
|
(6,492
|
)
|
|
(8,381
|
)
|
||
|
|
|
|
|
||||
|
Net decrease in cash, cash equivalents and restricted cash
|
(1,375
|
)
|
|
(3,942
|
)
|
||
|
|
|
|
|
||||
|
Cash, cash equivalents, and restricted cash at beginning of year
|
$
|
11,694
|
|
|
$
|
15,636
|
|
|
|
|
|
|
||||
|
Cash, cash equivalents, and restricted cash at end of year
|
$
|
10,319
|
|
|
$
|
11,694
|
|
|
|
|
|
|
||||
|
Reconciliation to amounts on consolidated balance sheets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
8,837
|
|
|
$
|
10,185
|
|
|
Restricted cash
|
1,482
|
|
|
1,509
|
|
||
|
Total cash, cash equivalents, and restricted cash
|
$
|
10,319
|
|
|
$
|
11,694
|
|
|
|
|
|
|
||||
|
Supplemental disclosure of non-cash activities:
|
|
|
|
||||
|
Liability for equity-based bonuses
|
$
|
(345
|
)
|
|
$
|
345
|
|
|
Settlement of Ripka earnout through offset to note receivable
|
$
|
100
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
|
Cash paid during the period for income taxes
|
$
|
302
|
|
|
$
|
167
|
|
|
Cash paid during the period for interest
|
$
|
969
|
|
|
$
|
1,253
|
|
|
•
|
Equity-classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through the performance completion date;
|
|
•
|
For performance conditions, compensation cost associated with the award will be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition; and
|
|
•
|
The current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments.
|
|
|
|
|
December 31, 2018
|
||||||||||
|
($ in thousands)
|
Weighted-
Average
Amortization
Period
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
|
Trademarks (indefinite-lived)
|
n/a
|
|
$
|
96,707
|
|
|
$
|
—
|
|
|
$
|
96,707
|
|
|
Trademarks (finite-lived)
|
15 years
|
|
15,463
|
|
|
3,521
|
|
|
11,942
|
|
|||
|
Non-compete agreement
|
7 years
|
|
561
|
|
|
321
|
|
|
240
|
|
|||
|
Copyrights and other intellectual property
|
10 years
|
|
190
|
|
|
90
|
|
|
100
|
|
|||
|
Total
|
|
|
$
|
112,921
|
|
|
$
|
3,932
|
|
|
$
|
108,989
|
|
|
|
|
|
December 31, 2017
|
||||||||||
|
($ in thousands)
|
Weighted-
Average
Amortization
Period
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
|
Trademarks (indefinite-lived)
|
n/a
|
|
$
|
96,707
|
|
|
$
|
—
|
|
|
$
|
96,707
|
|
|
Trademarks (finite-lived)
|
15 years
|
|
15,463
|
|
|
2,490
|
|
|
12,973
|
|
|||
|
Non-compete agreement
|
7 years
|
|
561
|
|
|
240
|
|
|
321
|
|
|||
|
Copyrights and other intellectual property
|
10 years
|
|
190
|
|
|
71
|
|
|
119
|
|
|||
|
Total
|
|
|
$
|
112,921
|
|
|
$
|
2,801
|
|
|
$
|
110,120
|
|
|
($ in thousands)
|
|
Amortization
Expense
|
||
|
Year Ending December 31,
|
|
|||
|
2019
|
|
$
|
1,130
|
|
|
2020
|
|
1,130
|
|
|
|
2021
|
|
1,130
|
|
|
|
2022
|
|
1,050
|
|
|
|
2023
|
|
1,050
|
|
|
|
Thereafter
|
|
6,793
|
|
|
|
Total
|
|
$
|
12,283
|
|
|
Agreement
|
|
Current Term
Expiry
|
|
Automatic
Renewal
|
|
Xcel Commenced
Brand with QVC
|
|
QVC Product
Launch
|
|
IM QVC Agreement
|
|
September 30, 2020
|
|
one-year period
|
|
September 2011
|
|
2010
|
|
Ripka QVC Agreement
|
|
March 31, 2020
|
|
one-year period
|
|
April 2014
|
|
1999
|
|
H QVC Agreement
|
|
December 31, 2020
|
|
one-year period
|
|
January 2015
|
|
September 2015
|
|
($ in thousands)
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Xcel Term Loan
|
$
|
15,500
|
|
|
$
|
19,500
|
|
|
Unamortized deferred finance costs related to term loans
|
(200
|
)
|
|
(346
|
)
|
||
|
IM Seller Note
|
742
|
|
|
2,201
|
|
||
|
Ripka Seller Notes
|
583
|
|
|
543
|
|
||
|
Contingent Obligation – JR Seller
|
100
|
|
|
200
|
|
||
|
Contingent Obligation – CW Seller
|
2,850
|
|
|
2,850
|
|
||
|
Total
|
19,575
|
|
|
24,948
|
|
||
|
Current portion (i), (ii)
|
8,275
|
|
|
5,559
|
|
||
|
Long-term debt
|
$
|
11,300
|
|
|
$
|
19,389
|
|
|
(i)
|
The current portion of long-term debt presented on the Consolidated Balance Sheet at
December 31, 2018
includes (a)
$4.0 million
related to the Xcel Term Loan, (b)
$0.74 million
related to the IM Seller Note, (c)
$2.95 million
related to Contingent Obligations, and (d)
$0.58 million
related to the Ripka Seller Note.
|
|
(ii)
|
The current portion of long-term debt presented on the consolidated balance sheet at
December 31, 2017
includes
$4.0 million
related to term loan debt,
$1.46 million
related to the IM Seller Note and
$0.1 million
related to a contingent obligation.
|
|
($ in thousands)
|
|
Amount of
Principal
Payment
|
||
|
Year Ending December 31,
|
|
|||
|
2019
|
|
$
|
4,000
|
|
|
2020
|
|
4,000
|
|
|
|
2021
|
|
7,500
|
|
|
|
Total
|
|
$
|
15,500
|
|
|
•
|
net worth (as defined in the Amended Loan Agreement) of at least
$90.0 million
at the end of each fiscal quarter ending on June 30 and
December 31,
of each fiscal year;
|
|
•
|
liquid assets of at least
$5.0 million
, until such time as the ratio of indebtedness to EBITDA (as defined in the Amended Loan Agreement) is less than 1.00 to 1.00 and, in which event, liquid assets must be at least
$3.0 million
;
|
|
•
|
a fixed charge ratio of at least
1.20
to 1.00 for each fiscal quarter ended June 30 and
December 31,
for the twelve fiscal month period ending on such date;
|
|
•
|
capital expenditures shall not exceed (i)
$2.7 million
for the year ended
December 31, 2017
and (ii)
$1.7 million
for the year ended
December 31, 2018
(iii)
$0.7 million
for any fiscal year thereafter; and
|
|
•
|
EBITDA (as defined in the Amended Loan Agreement) of
$8.0 million
for the fiscal years ending December 31, 2018 and 2019, and
$9.0 million
for the following fiscal years.
|
|
($ in thousands)
|
|
Amount of Principal Payment
|
||
|
Year Ending December 31,
|
|
|||
|
2019
|
|
$
|
742
|
|
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
(in Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
Outstanding at January 1, 2018
|
3,468,833
|
|
|
$
|
5.38
|
|
|
4.14
|
|
$
|
—
|
|
|
Granted
|
250,000
|
|
|
3.34
|
|
|
|
|
|
|||
|
Canceled
|
—
|
|
|
—
|
|
|
|
|
|
|||
|
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
|
Expired/Forfeited
|
(460,958
|
)
|
|
3.82
|
|
|
|
|
|
|||
|
Outstanding at December 31, and expected to vest
|
3,257,875
|
|
|
$
|
5.44
|
|
|
3.19
|
|
$
|
—
|
|
|
Exercisable at December 31, 2018
|
1,776,796
|
|
|
$
|
5.60
|
|
|
2.49
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||
|
|
2018
|
|
2017
|
|
Expected Volatility
|
20.91 – 29.65
|
|
33.69 – 35.20
|
|
Expected Dividend Yield
|
—%
|
|
—%
|
|
Expected Life (Term, in years)
|
2.5 – 3.5
|
|
3.25 – 5.42
|
|
Risk-Free Interest Rate
|
2.33 – 2.96%
|
|
0.91 – 1.21%
|
|
|
Number of
Options
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
|
Balance at January 1, 2018
|
2,613,497
|
|
|
$
|
1.23
|
|
|
Granted
|
250,000
|
|
|
0.54
|
|
|
|
Vested
|
(983,586
|
)
|
|
1.27
|
|
|
|
Forfeited or Canceled
|
(398,832
|
)
|
|
0.72
|
|
|
|
Balance at December 31, 2018
|
1,481,079
|
|
|
$
|
1.23
|
|
|
|
Number of
Warrants
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
(in Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
Outstanding and exercisable at January 1, 2018
|
1,891,743
|
|
|
$
|
6.81
|
|
|
1.92
|
|
$
|
—
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
|
Canceled
|
—
|
|
|
—
|
|
|
|
|
|
|||
|
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
|
Expired/Forfeited
|
(676,928
|
)
|
|
(2.31
|
)
|
|
|
|
|
|||
|
Outstanding and exercisable at December 31, 2018
|
1,214,815
|
|
|
$
|
9.32
|
|
|
1.66
|
|
$
|
—
|
|
|
|
Number of
Restricted
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
|
Outstanding at January 1, 2018
|
2,143,088
|
|
|
$
|
5.35
|
|
|
Granted
|
190,806
|
|
|
3.03
|
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
|
Vested
|
(873,684
|
)
|
|
5.74
|
|
|
|
Expired/Forfeited
|
—
|
|
|
—
|
|
|
|
Outstanding at December 31, 2018
|
1,460,210
|
|
|
$
|
4.82
|
|
|
Date
|
|
Total Number
of Shares
Purchased
|
|
Actual
Price Paid
per Share
|
|
Number of
Shares
Purchased as
Part of
Publicly
Announced
Plan
|
|
Fair value of
Re-Purchased
Shares
|
||||||
|
March 31, 2018 (i)
|
|
43,638
|
|
|
$
|
3.25
|
|
|
—
|
|
|
$
|
142,000
|
|
|
April 30, 2018 (i)
|
|
181,486
|
|
|
3.09
|
|
|
—
|
|
|
560,000
|
|
||
|
May 31, 2018 (i)
|
|
107
|
|
|
2.80
|
|
|
—
|
|
|
—
|
|
||
|
November 30, 2018 (i)
|
|
145,920
|
|
|
2.27
|
|
|
—
|
|
|
331,000
|
|
||
|
Total 2018
|
|
371,151
|
|
|
$
|
2.79
|
|
|
—
|
|
|
$
|
1,033,000
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
March 31, 2017 (i)
|
|
294,540
|
|
|
$
|
2.70
|
|
|
—
|
|
|
$
|
795,000
|
|
|
May 31, 2017 (i)
|
|
4,775
|
|
|
2.30
|
|
|
—
|
|
|
11,000
|
|
||
|
September 30, 2017 (i)
|
|
2,200
|
|
|
3.70
|
|
|
—
|
|
|
8,000
|
|
||
|
December 31, 2017 (i)
|
|
149,840
|
|
|
2.55
|
|
|
—
|
|
|
383,000
|
|
||
|
Total 2017
|
|
451,355
|
|
|
$
|
2.66
|
|
|
—
|
|
|
$
|
1,197,000
|
|
|
|
Year Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
Basic
|
18,280,788
|
|
|
18,502,158
|
|
|
Effect of exercise of warrants
|
850
|
|
|
—
|
|
|
Diluted
|
18,281,638
|
|
|
18,502,158
|
|
|
|
Year Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
Stock options and warrants
|
4,421,625
|
|
|
5,360,576
|
|
|
($ in thousands)
|
|
Lease
Payments
|
||
|
Year Ended December 31,
|
|
|||
|
2019
|
|
$
|
2,393
|
|
|
2020
|
|
2,423
|
|
|
|
2021
|
|
2,577
|
|
|
|
2022
|
|
1,732
|
|
|
|
2023
|
|
1,552
|
|
|
|
Thereafter
|
|
5,950
|
|
|
|
Total future noncancelable minimum lease payments
|
|
$
|
16,627
|
|
|
($ in thousands)
|
|
Employment
Contract
Payments
|
||
|
Year Ended December 31,
|
|
|||
|
2019
|
|
$
|
6,482
|
|
|
2020
|
|
2,507
|
|
|
|
2021
|
|
1,918
|
|
|
|
Thereafter
|
|
—
|
|
|
|
Total future minimum employment contract payments
|
|
$
|
10,907
|
|
|
($ in thousands)
|
|
2018
|
|
2017
|
||||
|
Balance as of January 1,
|
|
$
|
624
|
|
|
$
|
783
|
|
|
Cash payments, net
|
|
(113
|
)
|
|
(154
|
)
|
||
|
Adjustment to liability (revision to estimated cash flows)
|
|
799
|
|
|
(25
|
)
|
||
|
Accretion
|
|
8
|
|
|
20
|
|
||
|
Balance as of December 31,
|
|
$
|
1,318
|
|
|
$
|
624
|
|
|
($ in thousands)
|
Years Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Current:
|
|
|
|
|
|
||
|
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
State and local
|
67
|
|
|
79
|
|
||
|
Total current
|
67
|
|
|
79
|
|
||
|
|
|
|
|
||||
|
Deferred:
|
|
|
|
||||
|
Federal
|
1,404
|
|
|
(883
|
)
|
||
|
State and local
|
360
|
|
|
357
|
|
||
|
Total deferred
|
1,764
|
|
|
(526
|
)
|
||
|
Total (benefit) provision
|
$
|
1,831
|
|
|
$
|
(447
|
)
|
|
|
Years Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
U.S. statutory federal rate
|
21.00
|
%
|
|
(34.00
|
)%
|
|
State and local rate, net of federal tax
|
14.16
|
|
|
1.09
|
|
|
Stock compensation
|
18.25
|
|
|
9.37
|
|
|
Excess compensation deduction
|
8.38
|
|
|
4.49
|
|
|
Foreign tax credits
|
(1.03
|
)
|
|
(0.30
|
)
|
|
Federal true-ups
|
0.41
|
|
|
(0.17
|
)
|
|
Life insurance
|
1.28
|
|
|
0.57
|
|
|
Tax rate change due to Tax Cuts and Jobs Act
|
—
|
|
|
(24.88
|
)
|
|
Goodwill impairment
|
—
|
|
|
39.50
|
|
|
Other permanent differences
|
0.25
|
|
|
0.14
|
|
|
Income tax provision (benefit)
|
62.70
|
%
|
|
(4.19
|
)%
|
|
($ in thousands)
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Deferred tax assets
|
|
|
|
|
|
||
|
Stock-based compensation
|
$
|
3,099
|
|
|
$
|
4,097
|
|
|
Federal, state and local net operating loss carryforwards
|
566
|
|
|
312
|
|
||
|
Accrued compensation and other accrued expenses
|
1,009
|
|
|
1,132
|
|
||
|
Allowance for doubtful accounts
|
58
|
|
|
—
|
|
||
|
Basis difference arising from discounted note payable
|
355
|
|
|
387
|
|
||
|
Foreign tax credit
|
130
|
|
|
95
|
|
||
|
Charitable contribution carryover
|
55
|
|
|
47
|
|
||
|
Property and equipment
|
170
|
|
|
—
|
|
||
|
Other
|
—
|
|
|
10
|
|
||
|
Total deferred tax assets
|
$
|
5,442
|
|
|
$
|
6,080
|
|
|
|
|
|
|
||||
|
Deferred tax liabilities
|
|
|
|
||||
|
Property and equipment
|
—
|
|
|
220
|
|
||
|
Basis difference arising from intangible assets of acquisition
|
(13,581
|
)
|
|
(12,675
|
)
|
||
|
Total deferred tax liabilities
|
(13,581
|
)
|
|
(12,455
|
)
|
||
|
Net deferred tax liabilities
|
$
|
(8,139
|
)
|
|
$
|
(6,375
|
)
|
|
•
|
The HIP Trademark Usage and Royalty Participation Agreement, had an initial term that expired on
December 31, 2020
unless sooner terminated or renewed, and we shall pay to HIP: (i)
50%
of the excess H Halston Royalty paid to us under the DRT Licenses and any other third party licenses that we may enter into; (ii)
25%
of the excess developed brand royalty paid to us for the Highline Collective Brand under the DRT Licenses, and
20%
of the excess developed brand royalty paid to us for any subsequent developed brand under the DRT Licenses, and (iii)
10%
of the excess private label brand royalty paid to us under the DRT Licenses and during the first term only of the DRT Licenses. Additionally, we have the right, but not the obligation, at any time after January 31, 2023, to terminate the obligations under points (ii) and (iii) above by paying to HIP an amount equal to four times the sum of the developed brand credits and private label credits for the contract year ending on January 31, 2023 (the "Buy Out Payment''). The Buy-Out Payment was payable by us and at our sole discretion either (a) in cash, or (b) in a number of common shares of Xcel calculated based on the amount of the Buy-Out Payment divided by the average closing price for common shares of Xcel on a national exchange for the preceding
five
trading days, subject to a minimum price for common shares of Xcel of
$7.00
per common share.
|
|
•
|
A license and supply agreement with the Halston Operating Company, LLC (“HOC”), a subsidiary of HOH, with an initial term ending on
January 31, 2022
, subject to renewal. Under the HOC at-will license and supply agreement, HOC shall provide licensed products for sale to pre-approved retailers, including HBC and Dillard’s, and was also responsible for overseeing the visual merchandising and in-store retail environments for such approved retailers, as well as for training and oversight of any retail staff responsible for selling the licensed products within HBC and Dillard’s, as reasonably agreed upon between HOC and HBC and Dillard’s. The HOC at-will license and supply agreement provides for, among other things, design fees of
$1.2 million
for the period from July 1, 2017 through
December 31, 2018
, subsequent design fees of
$2.4 million
for the contractual yearly periods ending on January 31, 2019, and on December 31, 2020, 2021, and 2022, respectively, and sales-based royalties on the categories of products licensed under the agreement and the contractual year of payment.
|
|
($ in thousands)
|
|
||
|
Period
|
Amount
|
||
|
June 30, 2019– September 30, 2020
|
$
|
1,000
|
|
|
|
|
||
|
December 31, 2020
|
$
|
1,250
|
|
|
($ in thousands)
|
|
||
|
Period
|
Amount
|
||
|
March 31, 2020– September 30, 2020
|
$
|
250
|
|
|
|
|
||
|
March 31, 2021 -December 31, 2022
|
$
|
1,125
|
|
|
|
|
||
|
March 31, 2023 – December 31, 2023
|
$
|
1,250
|
|
|
•
|
net worth of at least
$90.0 million
at the end of each fiscal quarter;
|
|
•
|
liquid assets of at least
$5.0 million
at all times;
|
|
•
|
the fixed charge coverage ratio for the twelve-fiscal month period ending at the end of each fiscal quarter shall not be less than the ratio set forth below for such fiscal period:
|
|
Fiscal Quarter End
|
Fixed Charge Coverage Ratio
|
|
December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020
|
1.05 to 1.00
|
|
December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, December 31, 2021 and thereafter
|
1.10 to 1.00
|
|
•
|
capital expenditures shall not exceed
$1.7 million
for fiscal year
December 31, 2018
|
|
•
|
capital expenditures shall not exceed
$0.7 million
for any fiscal year beginning after
December 31, 2018
; and
|
|
•
|
the leverage ratio for the
twelve-fiscal month
period ending at the end of each fiscal period set forth below shall not exceed the ratio below:
|
|
Fiscal Period
|
Maximum Leverage Ratio
|
|
December 31, 2018
|
2.90 to 1.00
|
|
December 31, 2019, March 31, 2020, June 30, 2020, and September 30, 2020
|
2.40 to 1.00
|
|
December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021
|
1.70 to 1.00
|
|
December 31, 2021 and each Fiscal Quarter end thereafter
|
1.50 to 1.00
|
|
Target Prices
|
Number of Option Shares Vesting
|
|
$3.00
|
736,842
|
|
$5.00
|
626,316
|
|
$7.00
|
515,789
|
|
$9.00
|
405,263
|
|
$11.00
|
294,737
|
|
Target Prices
|
Number of Option Shares Vesting
|
|
$3.00
|
157,895
|
|
$5.00
|
134,211
|
|
$7.00
|
110,526
|
|
$9.00
|
86,842
|
|
$11.00
|
63,158
|
|
($ in thousands)
|
|
|
|
2019 Gross DRT Sales Level
|
Cash Bonus
|
$ Value of Stock Bonus
|
|
$242,500- $250,000
|
$90
|
$24
|
|
$250,000 - $257,500
|
$180
|
$45
|
|
$257,500 - $265,000
|
$270
|
$68
|
|
$265,000 or more
|
$360
|
$90
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
|
Item 9A.
|
Controls and Procedures
|
|
NAME
|
AGE
|
POSITION
|
|
Robert W. D’Loren
|
61
|
Chairman of the Board of Directors and Chief Executive Officer and President
|
|
James F. Haran
|
58
|
Chief Financial Officer and Assistant Secretary, and Principal Financial and Accounting Officer
|
|
Giuseppe “Joe” Falco
|
48
|
President and Chief Operating Officer of the Isaac Mizrahi Brand
|
|
Seth Burroughs
|
39
|
Executive Vice President of Business Development and Treasury and Secretary
|
|
Mark DiSanto
|
57
|
Director
|
|
James Fielding
|
54
|
Director
|
|
Michael R. Francis
|
56
|
Director
|
|
Howard Liebman
|
77
|
Director
|
|
Benjamin Malka
|
58
|
Director
|
|
Deborah Weinswig
|
48
|
Director
|
|
Annual Level of Target
EBITDA Achieved for each
fiscal year ending December 31,
2011 and thereafter
|
|
Percentage of 5% of the
IP Income earned by the
Company in excess of
$8 million
|
|
0%-49%
|
|
0%
|
|
50%-69%
|
|
60%
|
|
70%-89%
|
|
80%
|
|
90%-100%
|
|
100%
|
|
Name
|
|
Title
|
|
Year
|
|
Salary
|
|
Bonus (1)
|
|
Option
Awards
(2)(3)
|
|
All Other
Compensation
|
|
Total
|
||||||||||
|
Robert D’Loren
|
|
CEO and Chairman
|
|
2018
|
|
$
|
888,500
|
|
|
$
|
960,878
|
|
|
$
|
—
|
|
|
$
|
11,509
|
|
|
$
|
1,860,887
|
|
|
|
|
2017
|
|
873,000
|
|
|
977,386
|
|
|
—
|
|
|
19,706
|
|
|
1,870,092
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
James Haran
|
|
CFO
|
|
2018
|
|
366,000
|
|
|
45,000
|
|
|
—
|
|
|
5,798
|
|
|
416,798
|
|
|||||
|
|
|
2017
|
|
359,625
|
|
|
45,000
|
|
|
—
|
|
|
6,103
|
|
|
410,728
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Giuseppe Falco
|
|
President and COO
|
|
2018
|
|
625,000
|
|
|
225,000
|
|
|
—
|
|
|
—
|
|
|
850,000
|
|
|||||
|
|
|
2017
|
|
550,000
|
|
|
37,500
|
|
|
637,555
|
|
|
—
|
|
|
1,225,055
|
|
|||||||
|
(1)
|
Bonuses were paid in accordance with the executives’ respective employment agreements. See “Employment Agreements with Executives” in Item 10.
|
|
(2)
|
The dollar amounts shown represent the grant date fair value of stock option awards granted during the applicable fiscal year calculated in accordance with ASC Topic 718.
|
|
(3)
|
On January 24, 2017, Mr. Giuseppe Falco was granted options to purchase 500,000 shares of common stock. The exercise price of the options is $5.00 per share, whereby one-fifth of the options vested on January 1, 2018 and an additional one fifth of the options shall vest on each January 1, 2019, 2020, 2021, and 2022, respectively. As of December 31, 2018, 100,000 of these options have vested.
|
|
|
|
|
|
Options and Warrant Awards
|
|
Stock Awards
|
|||||||||||||||
|
Name
|
|
Title
|
|
Number of
Securities
Underlying
Unexercised
Options &
Warrants,
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options &
Warrants,
Unexercisable
|
|
Exercise
Price
|
|
Option or
Warrant
Expiration
Date
|
|
Number of
Shares of
Stock that
Have Not
Vested
|
|
Market
Value of
Shares of
Stock that
Have Not
Vested
|
|||||||
|
Robert D’Loren
|
|
CEO, Chairman
|
|
239,250
|
|
(1)
|
—
|
|
|
$
|
5.00
|
|
|
9/29/2021
|
|
|
|
|
|||
|
|
|
589,480
|
|
|
294,740
|
|
(3)
|
$
|
5.80
|
|
|
3/31/2021
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
241,228
|
|
(4)
|
$
|
272,588
|
|
||||||
|
James Haran
|
|
CFO
|
|
49,500
|
|
(1)
|
—
|
|
|
$
|
5.00
|
|
|
9/29/2021
|
|
|
|
|
|||
|
|
|
126,312
|
|
|
63,156
|
|
(3)
|
$
|
5.80
|
|
|
3/31/2021
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
45,394
|
|
(5)
|
$
|
51,295
|
|
||||||
|
Giuseppe Falco
|
|
President, COO
|
|
100,000
|
|
(1)
|
—
|
|
|
$
|
5.00
|
|
|
9/29/2021
|
|
|
|
|
|||
|
|
|
133,334
|
|
|
66,666
|
|
(3)
|
$
|
5.80
|
|
|
3/31/2021
|
|
|
|
|
|||||
|
|
|
50,000
|
|
(2)
|
—
|
|
|
$
|
7.50
|
|
|
5/15/2019
|
|
|
|
|
|||||
|
|
|
100,000
|
|
|
400,000
|
|
(7)
|
$
|
5.00
|
|
|
Multiple dates
|
(7)
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
195,333
|
|
(6)
|
$
|
220,726
|
|
||||||
|
|
||||
|
(1)
|
These options became exercisable on September 29, 2011, the date of grant, and expire on September 29, 2021.
|
|
(2)
|
Of these 50,000 options, 25,000 became exercisable on May 31, 2015 and 25,000 became exercisable on May 31, 2016. These options expire on May 15, 2019.
|
|
(3)
|
These options become exercisable as to one-third of the shares on each of March 31, 2017, 2018, and 2019, and expire on March 31, 2021.
|
|
(4)
|
Such shares vest (i) as to 36,843 shares of common stock on, March 31, 2019; (ii) as to 165,000 shares of common stock, on May 31, 2019; and (iii) as to 39,385 shares of common stock, on June 1, 2019; provided, however, that Mr. D’Loren has the right to extend each vesting date by six-month increments, in his sole discretion, prior to the date the restrictions would lapse.
|
|
(5)
|
Such shares vest (i) as to 7,894 shares of common stock, on March 31, 2019; (ii) as to 22,500 shares of common stock, on April 30, 2019; and (iii) as to 15,000 shares of common stock, on May 31, 2019; provided, however, that Mr. Haran has the right to extend each vesting date by six-month increments, in his sole discretion, prior to the date the restrictions would lapse.
|
|
(6)
|
Such shares vest (i) as to 77,500 shares of common stock, on March 31, 2019; (ii) as to 37,500 shares of common stock, on May 15, 2019; (iii) as to 30,333 shares of common stock, on June 1, 2019; and (iv) as to 50,000 shares of common stock, on April 30, 2019; provided, however, that Mr. Falco has the right to extend each vesting date by six-month increments, in his sole discretion, prior to the date the restrictions would lapse.
|
|
(7)
|
These options became exercisable as to one-fifth of the shares on January 1, 2018 and shall become exercisable as to an additional one-fifth of the shares on each of January 1, 2019, 2020, 2021 and 2022, and expire at the five-year anniversary of each vesting date for each individual one-fifth tranche.
|
|
Name
|
|
Fees Earned
or Paid
in Cash
|
|
Stock
Awards
|
|
Option
Awards
|
|
Total
|
||||||||
|
Mark DiSanto (1) (2)
|
|
$
|
35,000
|
|
|
$
|
24,000
|
|
|
$
|
18,176
|
|
|
$
|
77,176
|
|
|
Michael R. Francis (1) (2)
|
|
$
|
12,000
|
|
|
$
|
24,000
|
|
|
$
|
18,176
|
|
|
$
|
54,176
|
|
|
Richard Kirschenbaum (1) (2) (3)
|
|
$
|
9,000
|
|
|
$
|
24,000
|
|
|
$
|
18,176
|
|
|
$
|
51,176
|
|
|
Howard Liebman (1) (2)
|
|
$
|
31,000
|
|
|
$
|
24,000
|
|
|
$
|
18,176
|
|
|
$
|
73,176
|
|
|
Benjamin Malka (1) (2)
|
|
$
|
12,000
|
|
|
$
|
24,000
|
|
|
$
|
18,176
|
|
|
$
|
54,176
|
|
|
Deborah Weinswig (1) (2)
|
|
$
|
21,000
|
|
|
$
|
24,000
|
|
|
$
|
18,176
|
|
|
$
|
63,176
|
|
|
James Fielding (4)
|
|
$
|
6,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,000
|
|
|
|
||||
|
(1)
|
On April 2, 2018, each non-employee director was granted 8,000 shares of restricted stock pursuant to the terms and conditions of the Plan. Such shares of restricted stock will vest evenly over two years, whereby 50% shall vest on April 2, 2019 and 50% shall vest on April 2, 2020. Notwithstanding the foregoing, each grantee may extend the vesting date of all or a portion of the restricted shares by six months and, thereafter one or more times may further extend such date with respect to all or a portion of the restricted shares until the next following October 2 or April 2, as the case may be. The grant date fair value of the shares was $3.00 per share.
|
|
(2)
|
On April 2, 2018, each non-employee director was granted options to purchase 25,000 shares of stock pursuant to the terms and conditions of the Plan. Such options will vest evenly over two years, whereby 50% shall vest on April 2, 2019 and 50% shall vest on April 2, 2020. The exercise price of the options is $3.00 per share.
|
|
(3)
|
Richard Kirschenbaum resigned as a director of the Company on July 10, 2018.
|
|
(4)
|
Mr. Fielding was appointed to serve as a director on July 11, 2018.
|
|
Name and Address
|
|
Number of
Shares
of Common
Stock
Beneficially
Owned
|
|
Percent
Beneficially
Owned
|
||
|
Named executive officers and directors:
|
|
|
|
|
|
|
|
Robert D’Loren (1)
|
|
10,177,558
|
|
|
48.95
|
%
|
|
James Haran (2)
|
|
522,261
|
|
|
2.73
|
|
|
Giuseppe Falco (3)
|
|
803,912
|
|
|
4.13
|
|
|
Seth Burroughs (4)
|
|
495,438
|
|
|
2.59
|
|
|
Howard Liebman (5)
|
|
143,665
|
|
|
*
|
|
|
Benjamin Malka (6)
|
|
221,500
|
|
|
1.16
|
|
|
Mark DiSanto (7)
|
|
1,418,256
|
|
|
7.46
|
|
|
Michael R. Francis (8)
|
|
161,500
|
|
|
*
|
|
|
Deborah Weinswig (9)
|
|
20,500
|
|
|
*
|
|
|
James Fielding (10)
|
|
—
|
|
|
*
|
|
|
|
|
|
|
|
||
|
All directors and executive officers as a group (10 persons)(11)
|
|
13,763,065
|
|
|
62.54
|
|
|
|
|
|
|
|
||
|
5% Shareholders:
|
|
|
|
|
|
|
|
Isaac Mizrahi (12)
|
|
2,623,325
|
|
|
13.76
|
|
|
Buckingham Capital Management, Inc. (13)
|
|
1,076,097
|
|
|
5.69
|
|
|
485 Lexington Avenue, 3rd Floor, New York, NY 10017
|
|
|
|
|
|
|
|
Hilco Trading, LLC (14)
|
|
3,095,545
|
|
|
11.85
|
|
|
5 Revere Drive, Suite 206, Northbrook, IL 60062
|
|
|
|
|
|
|
|
Burch Acquisition LLC (15)
|
|
1,000,000
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5.29
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840 First Avenue, Suite 200, King of Prussia, PA 19406
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(1)
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Consists of (i)
992,666
shares held by Mr. D’Loren, (ii)
526,283
shares owned by Irrevocable Trust of Rose Dempsey (or the Irrevocable Trust) of which Mr. D’Loren and Mr. DiSanto are the trustees and as to which Mr. D’Loren has sole voting and dispositive power, (iii)
1,123,470
shares issuable upon exercise of immediately exercisable options and warrants, (iv)
241,228
restricted shares, (v) 2,473,325 shares of common stock (including 800,992 restricted shares) held in the name of Isaac Mizrahi, (vi)
299,139
shares of common stock (including
27,500
restricted shares) held in the name of Marisa Gardini, (vii)
777,778
shares of common stock held in the name of The H Company IP, LLC, and (viii)
136,525
other shares of restricted stock and
2,190,477
other shares of common stock as to which holders thereof granted to Mr. D’Loren irrevocable proxy and attorney-in-fact with respect to the shares, and (viii)
666,667
shares and
750,000
shares issuable upon exercise of immediately exercisable warrants to which holders thereof granted to Mr. D’Loren irrevocable proxy and attorney-in-fact with respect to the shares. Pursuant to a voting agreement Mr. Mizrahi and Ms. Gardini agreed to, and pursuant to restricted stock agreements certain grantees agreed to, appoint a person designated by our board of directors as their irrevocable proxy and attorney-in-fact with respect to the shares set forth in clauses (v), (vi) and (vii), respectively. Mr. D’Loren does not have any pecuniary interest in these shares described in clauses (v), (vi) and (vii) and disclaims beneficial ownership thereof. Does not include
326,671
shares held by the D’Loren Family Trust (or the Family Trust) of which Mark DiSanto is a trustee and has sole voting and dispositive power.
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(2)
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Consists of (i)
237,899
shares, (ii)
45,394
restricted shares, and (iii) immediately exercisable options and warrants to purchase
238,968
shares.
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(3)
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Includes (i)
58,579
shares, (ii)
195,333
restricted shares, and (iii)
550,000
shares issuable upon exercise of immediately exercisable warrants and options. Giuseppe Falco, the President and Chief Operating Officer of the Mizrahi brands, is an executive officer but not a named executive officer.
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(4)
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Consists of (i)
296,863
shares, (ii)
22,263
restricted shares, and (iii) immediately exercisable options and warrants to purchase
176,312
shares.
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(5)
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Consists of (i)
36,165
shares, (ii)
20,000
restricted shares, and (iii) immediately exercisable options to purchase
87,500
shares.
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(6)
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Consists of (i)
47,000
shares, (ii)
12,000
restricted shares, and (iii) immediately exercisable options and warrants to purchase
162,500
shares.
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(7)
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Consists of (i)
326,671
shares held by the D’Loren Family Trust, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the D’Loren Family Trust, (ii)
932,085
shares held by Mark X. DiSanto Investment Trust, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the Trust, (iii)
12,000
restricted shares, (iv)
87,500
shares issuable upon exercise of warrants and options that have vested, and (v)
60,000
shares held by other trusts, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the trusts.
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(8)
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Includes (i)
87,000
shares, (ii)
12,000
restricted shares and (ii) immediately exercisable options to purchase
62,500
shares.
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(9)
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Consists of (i)
8,000
restricted shares, and (ii) immediately exercisable options to purchase
12,500
shares.
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(10)
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Mr. Fielding was appointed to the Board on July 12, 2018 and, as such, he has not been awarded any shares of common stock as of the reference date indicated above.
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(11)
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Includes (i)
3,601,211
shares, (ii)
568,218
restricted shares, (iii)
438,750
shares issuable upon exercise of warrants that are currently exercisable, (iv)
1,962,500
shares issuable upon exercise of options that are currently exercisable, (v)
6,442,386
other shares of common stock as to which holders thereof granted to Mr. D’Loren irrevocable proxy and attorney-in-fact with respect to the shares, and (vi)
750,000
shares issuable upon exercise of immediately exercisable warrants to which holders thereof granted to Mr. D’Loren irrevocable proxy and attorney-in-fact with respect to the shares.
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(12)
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Consists of (i)
1,689,575
shares, (ii)
783,750
restricted shares, and (iii) immediately exercisable options to purchase
150,000
shares.
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(13)
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Based solely on a Schedule 13G/A filed on Feburary 13, 2019 by Buckingham Capital Management, Inc.
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(14)
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The H Company IP, LLC, or HIP, directly owns
1,777,778
shares of common stock, which we refer to as the H Company Shares. House of Halston, LLC, or Halston, is the parent company of HIP and may be deemed to share beneficial ownership of the H Company Shares by virtue of its ability to direct the business and investment decisions of HIP. The H Investment Company, LLC, or H Investment, in its capacity as the controlling member of Halston, has the ability to direct the investment decisions of Halston, including the power to direct the decisions of Halston regarding the disposition of the H Company Shares; therefore, H Investment may be deemed to beneficially own the H Company Shares. Hilco Brands, LLC, or Hilco Brands, in its capacity as a member of the Board of Managers of H Investment, has the ability to direct the management of H Investment’s business, including the power to direct the decisions of H Investment regarding the voting and disposition of the H Company Shares; therefore, Hilco Brands may be deemed to have indirect beneficial ownership of the H Company Shares. Hilco Trading, LLC, or Hilco Trading, is the parent company of Hilco Brands and may be deemed to share beneficial ownership of the H Company Shares by virtue of its ability to direct the business and investment decisions of Hilco Brands. Hilco Trading also directly owns 1,317,767 shares of our common stock, which we refer to as the Hilco Shares, of which
667,767
shares are outstanding and
650,000
shares are issuable upon exercise of a warrant that is currently exercisable. By virtue of the relationship described above and its direct ownership of the Hilco Shares, Hilco Trading beneficially owns
3,095,545
shares of our common stock. Jeffrey Bruce Hecktman is the majority owner of Hilco Trading and may be deemed to share beneficial ownership of the H Company Shares and the Hilco Shares by virtue of his ability to direct the business and investment decisions of Hilco Trading. By virtue of this relationship, Mr. Hecktman may be deemed to have indirect beneficial ownership of
3,095,545
shares of our common stock.
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(15)
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Consists of
1,000,000
shares of common stock.
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•
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The HIP Trademark Usage and Royalty Participation Agreement, has an initial term that expires on December 31, 2020 unless sooner terminated or renewed, and we shall pay to HIP: (i) 50% of the excess H Halston Royalty paid to us under the DRT Licenses and any other third party licenses that we may enter into; (ii) 25% of the excess developed brand royalty paid to us for the Highline Collective Brand under the DRT Licenses, and 20% of the excess developed brand royalty paid to us for any subsequent developed brand under the DRT Licenses, and (iii) 10% of the excess private label brand royalty paid to us under the DRT Licenses and during the first term only of the DRT Licenses. Additionally, we have the right, but not the obligation, at any time after January 31, 2023, to terminate the obligations under points (ii) and (iii) above by paying to HIP an amount equal to four times the sum of the developed brand credits and private label credits for the contract year ending on January 31, 2023 (the "Buy Out Payment''). The Buy-Out Payment may be payable by us and at our sole discretion either (a) in cash, or (b) in a number of common shares of Xcel calculated based on the amount of the Buy-Out Payment divided by the average closing price for common shares of Xcel on a national exchange for the preceding five trading days, subject to a minimum price for common shares of Xcel of $7.00 per common share. Once effective, it will terminate and replace the HIP Sublicense Agreement.
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•
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A license and supply agreement with the Halston Operating Company, LLC (“HOC”), a subsidiary of HOH, with an initial term ending on January 31, 2022, subject to renewal. Under the HOC at-will license and supply agreement, HOC shall provide licensed products for sale to pre-approved retailers, including HBC and Dillard’s, and shall also be responsible for overseeing the visual merchandising and in-store retail environments for such approved retailers, as well as be responsible for training and oversight of any retail staff responsible for selling the licensed products within HBC and Dillard’s, as reasonably agreed upon between HOC and HBC and Dillard’s. The at-will HOC license and supply agreement provides for, among other things, design fees of $1.2 million for the period from July 1, 2017 through December 31, 2017, subsequent design fees of $2.4 million for the contractual yearly periods ending on January 31, 2019, and on December 31, 2020, 2021, and 2022, respectively, and sales-based royalties on the categories of products licensed under the agreement and the contractual year of payment. Once effective, it will terminate and replace the HIP License Agreement.
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Item 15.
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Exhibits
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INDEX TO EXHIBITS
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Exhibit
Number
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Description
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Exhibit
Number
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Description
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Exhibit
Number
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Description
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101.INS
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XBRL Instance Document
(22)
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101.SCH
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XBRL Taxonomy Schema
(22)
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101.CAL
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XBRL Taxonomy Calculation Linkbase
(22)
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101.DEF
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XBRL Taxonomy Definition Linkbase
(22)
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101.LAB
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XBRL Taxonomy Label Linkbase
(22)
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101.PRE
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XBRL Taxonomy Presentation Linkbase
(22)
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(1)
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This Exhibit is incorporated by reference to the appropriate exhibit to the Current Report on Form 8-K, which was filed with the SEC on October 5, 2011.
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(2)
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This Exhibit is incorporated by reference to the appropriate exhibit to the Current Report filed on Form 8-K/A, which was filed with the SEC on February 7, 2012.
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(3)
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This Exhibit is incorporated by reference to the appropriate exhibit to the Current Report on Form 8-K, which was filed with the SEC on June 7, 2013.
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(4)
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This Exhibit is incorporated by reference to the appropriate exhibit to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013, which was filed with the SEC on August 13, 2013.
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(5)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on December 24, 2013.
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(6)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on March 20, 2014.
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(7)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on April 9, 2014.
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(8)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on December 24, 2014.
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(9)
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This Exhibit is incorporated by reference to the appropriate exhibit to the Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 31, 2015
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(10)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on July 14, 2015.
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(11)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on December 17, 2015.
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(12)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on March 3, 2016.
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(13)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on March 17, 2016.
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(14)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Definitive Proxy Statement on Form 14A, which was filed with the SEC on August 15, 2016.
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(15)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on Form 8-K, which was filed with the SEC on September 23, 2016.
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(16)
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This Exhibit is incorporated by reference to the appropriate Exhibit to the Current Report on form 8-K, which was filed with the SEC on March 1, 2017.
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(17)
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This Exhibit is incorporated by reference to the Current Report on Form 8-K, which was filed with the SEC on January 26, 2017.
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(18)
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This exhibit is incorporated by reference to the Registration Statement on Form S-3 (N. 333-216009), which was filed with the SEC on February 3, 2017.
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(19)
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This Exhibit is incorporated by reference to the Current Report on Form 8-K, which was filed with the SEC on May 1, 2017.
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(20)
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This Exhibit is incorporated by reference to the Current Report on Form 8-K, which was filed with the SEC on October 24, 2017.
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(21)
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This Exhibit is incorporated by reference to the Current Report on Form 8-K, which was filed with the SEC on December 8, 2017.
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(22)
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Filed herewith.
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Date: April 1, 2019
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/s/ Robert W. D’Loren
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Robert W. D’Loren, Chairman, President,
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Chief Executive Officer and Director
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(Principal Executive Officer)
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Name
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Title
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/s/ Robert W. D’Loren
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Chief Executive Officer and Chairman
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April 1, 2019
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Robert W. D’Loren
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(Principal Executive Officer)
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/s/ James Haran
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Chief Financial Officer
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April 1, 2019
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James Haran
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(Principal Financial Officer and
Principal Accounting Officer)
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/s/ Michael R. Francis
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Director
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April 1, 2019
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Michael R. Francis
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/s/ Benjamin Malka
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Director
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April 1, 2019
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Benjamin Malka
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/s/ Mark Disanto
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Director
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April 1, 2019
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Mark DiSanto
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/s/ James Fielding
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Director
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April 1, 2019
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James Fielding
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/s/ Howard Liebman
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Director
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April 1, 2019
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Howard Liebman
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Director
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April 1, 2019
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Deborah Weinswig
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No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
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| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
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No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
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