Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 10, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | XCel Brands, Inc. | |
Entity Central Index Key | 1,083,220 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | XELB | |
Entity Common Stock, Shares Outstanding | 18,284,536 | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Current Assets: | |||
Cash and cash equivalents | $ 8,638 | $ 10,185 | |
Accounts receivable, net | 9,640 | 8,528 | |
Inventory | 924 | 0 | |
Prepaid expenses and other current assets | 1,508 | 592 | |
Total current assets | 20,710 | 19,305 | |
Property and equipment, net | 2,999 | 2,376 | |
Trademarks and other intangibles, net | 109,272 | 110,120 | |
Restricted cash | 1,509 | 1,509 | |
Other assets | 726 | 1,708 | |
Total non-current assets | 114,506 | 115,713 | |
Total Assets | 135,216 | 135,018 | |
Current Liabilities: | |||
Accounts payable, accrued expenses and other current liabilities | 2,499 | 1,260 | |
Accrued payroll | 1,653 | 2,270 | |
Deferred revenue | 13 | 16 | |
Current portion of long-term debt | 5,315 | [1] | 5,459 |
Current portion of long-term debt, contingent obligations | 2,950 | 100 | |
Total current liabilities | 12,430 | 9,105 | |
Long-Term Liabilities: | |||
Long-term debt, less current portion | 12,266 | 19,389 | |
Deferred tax liabilities, net | 8,092 | 6,375 | |
Other long-term liabilities | 2,307 | 2,455 | |
Total long-term liabilities | 22,665 | 28,219 | |
Total Liabilities | 35,095 | 37,324 | |
Commitments and Contingencies | |||
Stockholders' Equity: | |||
Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued and outstanding | 0 | 0 | |
Common stock, $.001 par value, 50,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively, and 18,266,202 and 18,318,961 issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 18 | 18 | |
Paid-in capital | 100,055 | 98,997 | |
Retained earnings (accumulated deficit) | 48 | (1,321) | |
Total Stockholders' Equity | 100,121 | 97,694 | |
Total Liabilities and Stockholders' Equity | $ 135,216 | $ 135,018 | |
[1] | The current portion of long-term debt as of September 30, 2018 consists of (a) $4.0 million related to the Xcel Term Loan, (b) $0.74 million related to the IM Seller Note, and (c) $0.57 million related to the Ripka Seller Note. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 18,266,202 | 18,318,961 |
Common stock, shares outstanding | 18,266,202 | 18,318,961 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Net licensing revenue | $ 7,823 | $ 7,890 | $ 24,445 | $ 24,690 |
Sales | 444 | 0 | 1,075 | 0 |
Total revenue | 8,267 | 7,890 | 25,520 | 24,690 |
Cost of goods sold (sales) | 231 | 0 | 640 | 0 |
Net revenues | 8,036 | 7,890 | 24,880 | 24,690 |
Operating costs and expenses | ||||
Salaries, benefits and employment taxes | 3,815 | 4,079 | 12,361 | 12,806 |
Other design and marketing costs | 639 | 287 | 2,194 | 1,803 |
Other selling, general and administrative expenses | 1,281 | 1,188 | 3,691 | 3,602 |
Stock-based compensation | 447 | 690 | 1,415 | 2,496 |
Depreciation and amortization | 456 | 389 | 1,323 | 1,173 |
Total operating costs and expenses | 6,638 | 6,633 | 20,984 | 21,880 |
Operating income | 1,398 | 1,257 | 3,896 | 2,810 |
Interest and finance expense | ||||
Interest expense - term debt | 224 | 273 | 706 | 905 |
Other interest and finance charges | 34 | 41 | 104 | 135 |
Total interest and finance expense | 258 | 314 | 810 | 1,040 |
Income before income taxes | 1,140 | 943 | 3,086 | 1,770 |
Income tax provision | 158 | 691 | 1,717 | 1,704 |
Net income | $ 982 | $ 252 | $ 1,369 | $ 66 |
Basic net income per share: | $ 0.05 | $ 0.01 | $ 0.07 | $ 0 |
Diluted net income per share: | $ 0.05 | $ 0.01 | $ 0.07 | $ 0 |
Basic weighted average common shares outstanding | 18,266,202 | 18,470,977 | 18,304,608 | 18,530,963 |
Diluted weighted average common shares outstanding | 18,267,043 | 18,872,753 | 18,310,654 | 18,896,418 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 1,369 | $ 66 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,323 | 1,173 |
Amortization of deferred finance costs | 129 | 146 |
Stock-based compensation | 1,415 | 2,496 |
Amortization of note discount | 31 | 28 |
Deferred income tax provision | 1,717 | 1,704 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,112) | (2,548) |
Inventory | (924) | 0 |
Prepaid expenses and other assets | (51) | 211 |
Accounts payable, accrued expenses and other current liabilities | 967 | (1,237) |
Deferred revenue | (3) | (161) |
Other liabilities | (148) | 456 |
Net cash provided by operating activities | 4,713 | 2,334 |
Cash flows from investing activities | ||
Cost to acquire intangible assets | 0 | (23) |
Purchase of property and equipment | (1,099) | (167) |
Net cash used in investing activities | (1,099) | (190) |
Cash flows from financing activities | ||
Shares repurchased including vested restricted stock in exchange for withholding taxes | (702) | (814) |
Payment of deferred finance costs | 0 | (7) |
Payment of long-term debt | (4,459) | (7,177) |
Net cash used in financing activities | (5,161) | (7,998) |
Net decrease in cash, cash equivalents, and restricted cash | (1,547) | (5,854) |
Cash, cash equivalents, and restricted cash at beginning of period | 11,694 | 15,636 |
Cash, cash equivalents, and restricted cash at end of period | 10,147 | 9,782 |
Reconciliation to amounts on consolidated balance sheets: | ||
Cash and cash equivalents | 8,638 | 8,273 |
Restricted cash | 1,509 | 1,509 |
Total cash, cash equivalents, and restricted cash | 10,147 | 9,782 |
Supplemental disclosure of non-cash activities: | ||
Settlement of Ripka earnout through offset to note receivable | 100 | 0 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for income taxes | 258 | 151 |
Cash paid during the period for interest | $ 754 | $ 1,175 |
Nature of Operations, Backgroun
Nature of Operations, Background, and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. Nature of Operations, Background, and Basis of Presentation The accompanying condensed consolidated balance sheet as of December 31, 2017 (which has been derived from audited financial statements) and the unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements were prepared following the same policies and procedures used in the preparation of the audited consolidated financial statements and reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the results of operations, financial position, and cash flows of Xcel Brands, Inc. (“Xcel”) and its subsidiaries (the “Company”). The results of operations for the interim periods presented herein are not necessarily indicative of the results for the entire fiscal year or for any future interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on March 30, 2018. The Company is a media and consumer products company. It is engaged in the design, production, marketing, wholesale, direct-to-consumer sales and licensing of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of dynamic consumer lifestyle brands. The Company has developed a Fast-to-Market capability driven by its proprietary integrated technology platform. Currently, the Company’s brand portfolio consists of the Isaac Mizrahi brand (the "Isaac Mizrahi Brand"), the Judith Ripka brand (the “Ripka Brand”), the H by Halston and H Halston brands (collectively, the “H Halston Brands”), the C Wonder brand (the “C Wonder Brand”), and the Highline Collective brand. The Company licenses its brands to third parties, provides certain design, production, and marketing and distribution services, and generates licensing, design, and service fee revenues through contractual arrangements with manufacturers and retailers. This includes licensing its own brands for promotion and distribution through a ubiquitous-channel retail sales strategy, which includes distribution through interactive television, the internet, and traditional brick-and-mortar retail channels. Commencing with the quarter ended March 31, 2018, the Company separately presented in the Condensed Consolidated Statements of Operations sales and cost of goods sold relating to its jewelry wholesale and e-commerce operations. As of September 30, 2018, the inventory balance related to this business is approximately $0.92 million on our Condensed Consolidated Balance Sheet. Inventory is stated at the lower of cost or market value. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Recently Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” This guidance is effective for public companies for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as a finance or operating lease. In addition, in July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements”, which among other things, addresses questions related to the initial adoption of the standard in comparative periods by creating another transition method (other than the modified retrospective transition method) that companies can elect to use. The new method allows entities to adopt the new standard at the effective date and recognize a cumulative-effective adjustment in the opening balance of retained earnings in the year of adoption. When adopting the new method, an entity would no longer be required to retroactively apply the standard to prior periods presented in the financial statements. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 (i.e., calendar years beginning on January 1, 2019), including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2016-02, and 2018-11, will have on our consolidated financial statements and disclosures. In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which largely aligns the accounting for share-based payment awards issued to employees and nonemployees. Under previous GAAP, the accounting for nonemployee share-based payments differed from that applied to employee awards, particularly with regard to the measurement date and the impact of performance conditions. Under the new guidance, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. Changes to the accounting for nonemployee awards include: 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. The new guidance also clarifies that any share-based payment awards issued to customers should be evaluated under Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 (i.e., calendar years beginning on January 1, 2019), including interim periods within those fiscal years. The guidance should be applied to all new awards granted after the date of adoption. In addition, all liability-classified awards that have not been settled and equity-classified awards for which a measurement date has not been established by the adoption date should be remeasured at fair value as of the adoption date with a cumulative effect adjustment to opening retained earnings in the fiscal year of adoption. Early adoption is permitted. The adoption of ASU 2018-07 did not have a material impact on the Company’s consolidated financial statements. |
Trademarks and Other Intangible
Trademarks and Other Intangibles | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | 2. Trademarks and Other Intangibles Trademarks and other intangibles, net consist of the following: September 30, 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 (definite-lived) 15 years 15,463 3,263 12,200 Non-compete agreement 7 years 561 301 260 Copyrights and other intellectual property 10 years 190 85 105 Total $ 112,921 $ 3,649 $ 109,272 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 (definite-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 Amortization expense for intangible assets was approximately $0.28 million in each of the three-month periods ended September 30, 2018 and 2017. Amortization expense for intangible assets was approximately $0.85 million in each of the nine-month periods ended September 30, 2018 and 2017. The trademarks related to the Isaac Mizrahi Brand, the Ripka Brand, and the H Halston Brands have been determined to have indefinite useful lives and, accordingly, no amortization has been recorded for these assets. |
Revenue Recognition and Signifi
Revenue Recognition and Significant Contracts | 9 Months Ended |
Sep. 30, 2018 | |
Significant Contracts [Abstract] | |
Significant Contracts [Text Block] | 3. Revenue Recognition and Significant Contracts The Company adopted ASC 606 under the modified retrospective adoption method effective January 1, 2018, by applying the new guidance only to contracts that were not completed at the date of initial application. The Company’s evaluation of the impact of the adoption of the new revenue standard on its consolidated financial statements included the identification of revenue within the scope of the guidance and the evaluation of applicable revenue contracts. The Company performed an extensive analysis of its existing contracts with customers and its revenue recognition policies and determined that the adoption did not result in material differences from the Company’s prior revenue recognition policies. In addition, the adoption of ASC 606 did not result in material differences in the amount of revenue recognized in the current quarter and year-to-date period when compared to the amount of revenue that would have been recognized in the current quarter and year-to-date period under the old guidance. The Company recognizes revenue continuously over time as it satisfies its continuous obligation of granting access to its licensed intellectual properties, which are deemed symbolic intellectual properties under the new revenue guidance. Payments are typically due after sales have occurred and have been reported by the licensees or, whereas applicable, in accordance with minimum guaranteed payments provisions. The timing of performance obligations is typically consistent with the timing of payments, however there may be differences if contracts provide for advances or significant escalations of contractually guaranteed minimum payments. There were no such differences that would have a material impact on our unaudited condensed consolidated balance sheet at September 30, 2018 or December 31, 2017. In accordance with ASC 606-10-55-65, the Company recognizes revenue at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied (in whole or in part). More specifically, the Company separately identifies: (i) Contracts for which, based on experience, royalties are expected to exceed any applicable minimum guaranteed payments, and to which an output-based measure of progress based on the “right to invoice” practical expedient is applied because the royalties due for each period correlate directly with the value to the customer of the Company’s performance in each period (this approach is identified as “View A” by the FASB Revenue Recognition Transition Resource Group, “TRG”); and (ii) Contracts for which revenue is recognized based on minimum guaranteed payments using an appropriate measure of progress, in which minimum guaranteed payments are straight-lined over the term of the contract and recognized ratably based on the passage of time, and to which the royalty recognition constraint to the sales-based royalties in excess of minimum guaranteed is applied and such sales-based royalties are recognized to distinct period only when the minimum guaranteed is exceeded on a cumulative basis (this approach is identified as “View C” by the TRG). The Company does not typically perform by transferring goods or services to customers before the customer pays consideration or before payment is due, thus the implementation of ASC 606 did not result in material contract assets in accordance with ASC 606-10-45-3. The Company’s unconditional right to receive consideration based on the terms and conditions of licensing contracts is presented as accounts receivable on the accompanying condensed consolidated balance. The Company typically does not receive consideration in advance of performance and, consequently, amounts of contract liabilities as defined by ASC 606-10-45-2 were not material as of September 30, 2018 and December 31, 2017. The Company does not disclose the amount attributable to unsatisfied or partially satisfied performance obligations for variable revenue contracts (identified under “View A” above) in accordance with the optional exemption allowed under ASC 606. The Company did not have any revenue recognized in the reporting period from performance obligations satisfied, or partially satisfied, in previous periods. Remaining minimum guaranteed payments for active contracts as of September 30, 2018 are expected to be recognized ratably in accordance with View C over the remaining term of each contract based on the passage of time and through December 2023. Although the new revenue standard did not result in a material impact on the Company’s ongoing results of operations, the Company did implement changes to its processes and methodologies related to revenue recognition. These included the development of new policies and/or modification of existing policies based on the five-step model provided in the new revenue standard, new training, ongoing contract review requirements, and gathering of information provided for disclosures. QVC Agreements Under the Company’s agreements with QVC, QVC is required to pay the Company fees based primarily on a percentage of its net sales of Isaac Mizrahi, Ripka, H Halston, and C Wonder branded merchandise. QVC royalty revenue represents a significant portion of the Company’s total revenues. Net revenues from QVC totaled $6.42 million and $6.32 million for the current and prior year quarter, respectively, representing approximately 80% of the Company’s net revenues for each quarter. Net revenues from QVC totaled $19.90 million and $20.33 million for the current and the prior year nine months, respectively, representing approximately 80% and 82% of the Company’s net revenues, respectively. As of September 30, 2018, and December 31, 2017, the Company had receivables from QVC of $6.45 million and $5.47 million, respectively, representing approximately 67% and 64% of the Company’s total receivables, respectively. On April 28, 2017, the Company and QVC entered into an amendment to terminate the C Wonder QVC Agreement effective May 1, 2017 and commence a sell-off period. During the sell-off period, QVC remained obligated to pay royalties to the Company through January 31, 2018, and QVC retained exclusive rights with respect to C Wonder branded products for interactive television, excluding certain permitted international entities, through May 1, 2018. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | 4. Debt The Company’s net carrying amount of debt was comprised of the following: ($ in thousands) September 30, 2018 December 31, 2017 Xcel Term Loan $ 16,500 $ 19,500 Unamortized deferred finance costs related to term loan (234 ) (346 ) IM Seller Note 742 2,201 Ripka Seller Note 573 543 Contingent obligation - JR Seller 100 200 Contingent obligation - CW Seller 2,850 2,850 Total 20,531 24,948 Current portion of long term debt (i) 5,315 5,459 Current Portion of long term debt, contingent obligations (ii) 2,950 100 Long-term debt $ 12,266 $ 19,389 (i) The current portion of long-term debt as of September 30, 2018 consists of (a) $4.0 million related to the Xcel Term Loan, (b) $0.74 million related to the IM Seller Note, and (c) $0.57 million related to the Ripka Seller Note. (ii) The current portion of long-term debt, contingent obligations as of September 30, 2018 consists of (a) $0.1 million related to the contingent obligation - JR Seller and (b) $2.85 million related to the C Wonder contingent obligation in connection with the purchase of the C Wonder Brand. Xcel Term Loan On February 26, 2016, Xcel and its wholly owned subsidiaries, IM Brands, LLC, JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, IMNY Retail Management, LLC, and IMNY E-Store, USA, LLC (each a “Guarantor” and collectively, the “Guarantors”), as Guarantors, entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with BHI as agent, and the financial institutions party thereto as lenders (the “Lenders”). The Loan Agreement amended and restated the IM Term Loan, the JR Term Loan, and the H Term Loan. Pursuant to the Loan Agreement, Xcel assumed the obligations of each of IM Brands, LLC, JR Licensing, LLC, and H Licensing, LLC under the respective term loans with BHI in the aggregate principal amount of $27,875,000 (the loan under the Loan Agreement is referred to as the “Xcel Term Loan”). On February 24, 2017, Xcel and BHI amended the terms of the Loan Agreement (the “Amended Loan Agreement”). Under this amendment, principal payments for the year ending December 31, 2017 were increased by a total of $1,000,000, principal payments for the year ending December 31, 2021 were decreased by $1,000,000, and the minimum EBITDA (as defined in the Amended Loan Agreement) requirement for the year ended December 31, 2016 was eliminated. There were no changes to the total principal balance, interest rate, maturity date, or other terms of the Loan Agreement. Management assessed and determined that this amendment represented a debt modification and, accordingly, no gain or loss was recorded. On June 15, 2017, Xcel and BHI entered into a second amendment to the Amended Loan Agreement. Under this amendment, principal payments for the year ending December 31, 2017 were increased by a total of $750,000, principal payments for the year ending December 31, 2021 were decreased by $750,000, the minimum EBITDA (as defined in the Second Amendment to the Amended Loan Agreement) requirement for the year ending December 31, 2017 was changed from $9,000,000 to $7,000,000, and the minimum EBITDA requirements for the years ending December 31, 2018 and 2019 were changed from $9,000,000 to $8,000,000. There were no changes to the total principal balance, interest rate, maturity date, or other terms of the Loan Agreement. Management assessed and determined that this amendment represented a debt modification and, accordingly, no gain or loss was recorded. The current effective interest rate on the Amended Loan Agreement is approximately 6.05%. The Xcel Term Loan matures on January 1, 2021. Principal on the Xcel Term Loan is payable in quarterly installments on each of January 1, April 1, July 1 and October 1. As of September 30, 2018, the aggregate remaining scheduled annual principal payments under the Second Amendment to the Loan Agreement were as follows: ($ in thousands) Year Ending December 31, Amount of Principal Payment 2018 (October 1 through December 31) $ 1,000 2019 4,000 2020 4,000 2021 7,500 Total $ 16,500 Commencing with the fiscal year ending December 31, 2017, the Company is required to repay a portion of the Xcel Term Loan in an amount equal to 10% of the excess cash flow for the fiscal year; provided that no early termination fee shall be payable with respect to any such payment (the “Excess Cash Flow Principal Payment”). Excess cash flow means, for any period, cash flow from operations (before certain permitted distributions) less (i) capital expenditures not made through the incurrence of indebtedness, (ii) all cash interest and principal and taxes paid or payable during such period, and (iii) all dividends declared and paid during such period to equity holders of any credit party treated as a disregarded entity for tax purposes. The estimated Excess Cash Flow Principal Payment provision of the Xcel Term Loan is expected to be minimal for the year ending December 31, 2018. As of September 30, 2018, there was no allocation to the current portion of long-term debt relating to the Excess Cash Flow Principal Payment. Under the Amendment to the Loan Agreement, the Company has the right to prepay the Xcel Term Loan, provided that any prepayment of less than all of the outstanding balance shall be applied to the remaining amounts due in inverse order of maturity. If the Xcel Term Loan is prepaid on or prior to the third anniversary of the closing date (including as a result of an event of default), the Company shall pay an early termination fee equal to the principal amount outstanding under the Xcel Term Loan on the date of prepayment, multiplied by: (i) two percent (2.00%) if the Xcel Term Loan is prepaid on or after the closing date and on or before the second anniversary of the closing date; or (ii) one percent (1.00%) if the Xcel Term Loan is prepaid after the second anniversary of the closing date and on or before the third anniversary of the closing date. Xcel’s obligations under the Amended Loan Agreement are guaranteed by the Guarantors and secured by all of the assets of Xcel and the Guarantors (as well as any subsidiary formed or acquired that becomes a credit party to the Amended Loan Agreement) and, subject to certain limitations contained in the Amended Loan Agreement, equity interests of the Guarantors (as well as any subsidiary formed or acquired that becomes a credit party to the Amended Loan Agreement). The Amended Loan Agreement contains customary covenants, including reporting requirements, trademark preservation, and the following financial covenants of the Company (on a consolidated basis with the Guarantors and any subsidiaries subsequently formed or acquired that become a credit party under the Amended Loan Agreement): · Net worth (as defined in the Amended Loan Agreement) of at least $90,000,000 at the end of each fiscal quarter ending on June 30 and December 31 of each fiscal year; · Liquid assets of at least $5,000,000, 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 $3,000,000; · 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) $1,700,000 for the year ending December 31, 2018 and (ii) $700,000 for any fiscal year thereafter; and · EBITDA (as defined in the Amended Loan Agreement) of not less than $8,000,000 for the fiscal years ending December 31, 2018 and 2019, and not less of $9,000,000 for the following fiscal years. The Company was in compliance with all applicable covenants as of September 30, 2018. Interest on the Xcel Term Loan accrues at a fixed rate of 5.1% per annum and is payable on each day on which the scheduled principal payments are required to be made. For the current and prior year quarter, the Company incurred interest expense on its senior term loan debt with BHI of approximately $215,000 and $257,000, respectively. For the current and prior year nine months, the Company incurred interest expense on its senior term loan debt with BHI of approximately $677,000 and $852,000, respectively. IM Seller Note On September 29, 2011, as part of the consideration for the purchase of the Isaac Mizrahi Business, the Company issued to IM Ready-Made, LLC (“IM Ready”) a promissory note in the principal amount of $7,377,000 (as amended, the “IM Seller Note”). The stated interest rate of the IM Seller Note was 0.25% per annum. Management determined that this rate was below the Company’s expected borrowing rate, which was then estimated at 9.25% per annum. Therefore, the Company discounted the IM Seller Note by $1,740,000 using a 9.0% imputed annual interest rate, resulting in an initial value of $5,637,000. In addition, on September 29, 2011, the Company prepaid $123,000 of interest on the IM Seller Note. The imputed interest amount was amortized over the term of the IM Seller Note and recorded as other interest and finance expense on the Company’s condensed consolidated statements of operations. On December 24, 2013, the IM Seller Note was amended to (1) revise the maturity date to September 30, 2016, (2) revise the date to which the maturity date may be extended to September 30, 2018, (3) provide the Company with a prepayment right with its common stock, subject to remitting in cash certain required cash payments and a minimum common stock price of $4.50 per share, and (4) require interim scheduled payments. On September 19, 2016, the IM Seller Note was further amended and restated to (1) revise the maturity date to March 31, 2019, (2) require six semi-annual principal and interest installment payments of $750,000, commencing on September 30, 2016 and ending on March 31, 2019, (3) revise the stated interest rate to 2.236% per annum, (4) allow for optional prepayments at any time at the Company’s discretion without premium or penalty, and (5) require that all payments of principal and interest be made in cash. Management assessed and determined that this amendment represented a debt modification and, accordingly, no gain or loss was recorded. As of September 30, 2018, the aggregate remaining annual principal payment under the IM Seller Note was as follows: ($ in thousands) Year Ending December 31, Amount of Principal Payment 2018 (October 1 through December 31) $ - 2019 742 Total $ 742 For the current and prior year quarter, the Company incurred interest expense of approximately $8,000 and $16,000, respectively, under the IM Seller Note. For the current nine months and the prior year nine months, the Company incurred interest expense of approximately $29,000 and $53,000, respectively, under the IM Seller Note. Ripka Seller Note As of September 30, 2018, the remaining discounted balance of the non-interest bearing note relating to the acquisition of the Ripka Brand (the “Ripka Seller Note”) was approximately $573,000. An aggregate $600,000 principal amount of the Ripka Seller Note is due at maturity (April 1, 2019). For the current and prior year quarter, the Company incurred interest expense of approximately $10,000 in each period, under the Ripka Seller Note, which consisted solely of amortization of the discount on the Ripka Seller Note. For the current nine months and the prior year nine months, the Company incurred interest expense of approximately $31,000 and $28,000, respectively, under the Ripka Seller Note, which consists solely of amortization of the discount on the Ripka Seller Note. Contingent Obligation - JR Seller (Ripka Earn-Out) The Ripka earn-out is contingent upon the Ripka Brand achieving at least $6,000,000 of net royalty income from QVC during each of the 12-month periods ending on March 31, 2018 and 2019, and is payable in equal cash payments on each of May 15, 2018 and 2019. As of September 30, 2018, and December 31, 2017, the Ripka Earn-Out was $0.1 million and $0.2 million, respectively. The Ripka Brand achieved the above-indicated threshold of net royalty income from QVC during the 12-month period ended March 31, 2018, and on May 15, 2018 the Company settled the $100,000 earnout due by reducing the principal amount owed by Judith Ripka to the Company under a promissory note (included in prepaid expenses and other current assets on the Unaudited Condensed Consolidated Balance Sheets as of September 30, 2018). As of September 30, 2018, the remaining expected value (which approximates fair value) of the Ripka Earn-Out of $0.1 million was recorded in the current portion of long-term debt in the accompanying condensed consolidated balance sheet. As of December 31, 2017, the remaining expected value (which approximated fair value) of the Ripka Earn-Out of $0.2 million was recorded as long-term debt in the accompanying condensed consolidated balance sheets, of which $0.1 million was presented in the current portion of long-term debt. Contingent Obligations - CW Seller (C Wonder Earn-Out) In connection with the purchase of the C Wonder Brand, the Company agreed to pay the seller additional consideration (the “C Wonder Earn-Out”), which would be payable, if at all, in cash or shares of common stock of the Company, at the Company’s sole discretion, after June 30, 2019, with a value based on the royalties related directly to the assets the Company acquired pursuant to the purchase agreement. The value of the earn-out shall be calculated as the positive amount, if any, of (i) two times (A) the maximum net royalties as calculated for any single twelve month period commencing on July 1 and ending on June 30 between the closing date and June 30, 2019 (each, a “Royalty Target Year”) less (B) $4,000,000, plus (ii) two times the maximum royalty determined based on a percentage of retail and wholesale sales of C Wonder branded products by the Company as calculated for any single Royalty Target Year. The C Wonder Earn-Out of $2.85 million is recorded in the current portion of long-term debt in the accompanying condensed consolidated balance sheet as of September 30, 2018 and in long-term debt December 31, 2017, based on the probability of the C Wonder Brand achieving certain net royalty income targets within the earn-out periods and then calculating the present value of the weighted average payment amount. In accordance with ASC Topic 480, the C Wonder Earn-Out obligation is classified as a liability in the accompanying condensed consolidated balance sheets because of the variable number of shares payable under the agreement. As of September 30, 2018, and December 31, 2017, total contingent obligations were $2.95 million and $3.05 million, respectively. The September 30, 2018 contingent obligation balance of $2.95 million was recorded as a current portion of long-term debt. The December 31, 2017 contingent obligation balance of $3.05 million was recorded as a $0.1 million and $2.95 million current portion of long-term debt and long-term debt, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | 5. Stockholders’ Equity 2011 Equity Incentive Plan The Company’s 2011 Equity Incentive Plan, as amended and restated (the “Plan”), is designed and utilized to enable the Company to provide its employees, officers, directors, consultants, and others whose past, present, and/or potential contributions to the Company have been, are, or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. A total of 13,000,000 shares of common stock are eligible for issuance under the Plan. The Plan provides for the grant of any or all of the following types of awards: stock options, restricted stock, deferred stock, stock appreciation rights, and other stock-based awards. The Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board. The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation - Stock Compensation,” by recognizing the fair value of stock-based compensation as an operating expense over the service period of the award or term of the corresponding contract, as applicable. The fair value of options and warrants is estimated on the date of grant using the Black-Scholes option pricing model. The valuation determined by the Black-Scholes option pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The risk-free rate is based on the U.S. Treasury rate for the expected life at the time of grant, volatility is based on the average long-term implied volatilities of peer companies, and expected life is based on the estimated average of the life of options and warrants using the simplified method. The Company utilizes the simplified method to determine the expected life of the options and warrants due to insufficient exercise activity during recent years as a basis from which to estimate future exercise patterns. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. Restricted stock awards are valued using the fair value of the Company’s stock at the date of grant. The Company accounts for non-employee awards in accordance with ASC Topic 505-50, “Equity-Based Payments to Non-Employees”. For stock option awards for which vesting is contingent upon the achievement of certain performance targets, the timing and amount of compensation expense recognized is based upon the Company’s projections and estimates of the relevant performance metric(s). Forfeitures are accounted for as a reduction of compensation cost in the period when such forfeitures occur. Stock Options Options granted under the Plan expire at various times - either five, seven, or ten years from the date of grant, depending on the particular grant. On March 30, 2018, the Company granted options to purchase an aggregate of 50,000 shares of common stock to a certain key employee. The exercise price of the options is $5.50 per share, and all options vested immediately on the date of grant. On April 2, 2018, the Company granted options to purchase an aggregate of 150,000 shares of common stock to non-management directors. The exercise price of the options is $3.00 per share, and 50% of the options will vest on each of April 2, 2019 and April 2, 2020. The Company did not grant any options during the quarter ended September 30, 2018. A summary of the Company’s stock options activity for the current nine months is as follows: 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 200,000 3.63 Canceled - - Exercised - - Expired/Forfeited (392,624 ) 3.89 Outstanding at September 30, 2018, and expected to vest 3,276,209 $ 5.45 3.41 $ - Exercisable at September 30, 2018 1,728,630 $ 5.60 2.72 $ - Compensation expense related to stock options for the current quarter and the prior year quarter was approximately $319,000 and $313,000, respectively. Compensation expense related to stock options for the current nine months and the prior year nine months was approximately $867,000 and $887,000, respectively. Total unrecognized compensation expense related to unvested stock options at September 30, 2018 amounts to approximately $1,088,000 and is expected to be recognized over a weighted average period of 1.87 years. The following table summarizes the Company’s stock option activity for non-vested options for the current nine months: Number of Options Weighted Average Grant Date Fair Value Balance at January 1, 2018 2,613,497 $ 1.23 Granted 200,000 0.56 Vested (908,586 ) 1.26 Forfeited or Canceled (357,332 ) .71 Balance at September 30, 2018 1,547,579 $ 1.24 Warrants Warrants granted under the Plan expire at various times - either five, seven, or ten years from the date of grant, depending on the particular grant. A summary of the Company’s warrants activity for the current nine months is as follows: 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 September 30, 2018 1,214,815 $ 9.32 1.22 $ - No compensation expense was recognized in the current nine months or prior year nine months related to warrants. Restricted Stock On March 14, 2018, the Company issued an aggregate of 90,209 shares of stock to certain non-executive employees, which vested immediately. On April 2, 2018, the Company issued an aggregate of 48,000 shares of stock to certain non-management directors, which will vest evenly over two years, whereby 50% shall vest on April 2, 2019, and 50% shall vest on April 2, 2020. On April 3, 2018, the Company issued an aggregate of 25,599 shares of stock to certain non-executive employees, which vested immediately. On May 31, 2018, the Company issued an aggregate of 1,664 shares of stock to certain non-executive employees, which vested immediately. On June 5, 2018, the Company issued an aggregate of 7,000 shares of stock to a consultant, which vested immediately. A summary of the Company’s restricted stock activity for the current nine months is as follows: Number of Restricted Shares Weighted Average Grant Date Fair Value Outstanding at January 1, 2018 2,143,088 $ 5.35 Granted 172,472 3.14 Canceled - - Vested (592,639 ) 6.80 Expired/Forfeited - - Outstanding at September 30, 2018 1,722,921 $ 4.63 Compensation expense related to restricted stock grants for the current and prior year quarter was approximately $128,000 and $377,000, respectively. Compensation expense related to restricted stock grants for the current and prior year nine months, was approximately $548,000 and $1,609,000, respectively. Total unrecognized compensation expense related to unvested restricted stock grants at September 30, 2018 amounts to approximately $393,000 and is expected to be recognized over a weighted average period of 1.05 years. Shares Available Under the Company’s 2011 Equity Incentive Plan At September 30, 2018, there were 5,668,029 shares of common stock available for issuance under the Plan. Shares Reserved for Issuance At September 30, 2018, there were 10,159,053 shares of common stock reserved for issuance pursuant to unexercised warrants and stock options, or available for issuance under the Plan. Dividends The Company has not paid any dividends to date. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | 6. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period, including stock options and warrants, using the treasury stock method. Diluted EPS excludes all potentially dilutive shares of common stock if their effect is anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic 18,266,202 18,470,977 18,304,608 18,530,963 Effect of exercise of warrants 841 364,340 866 364,247 Effect of exercise of stock options - 37,436 5,180 1,208 Diluted 18,267,043 18,872,753 18,310,654 18,896,418 The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Stock options and warrants 4,491,024 4,465,584 4,491,024 4,485,584 |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | 7. Income Tax The effective income tax rate for the current quarter and the prior year quarter was approximately 14% and 73%, respectively, resulting in an income tax provision of $158,000 and $691,000, respectively. The effective income tax rate for the current nine months and the prior year nine months was approximately 56% and 96%, respectively, resulting in an income tax provision of $1,717,000 and $1,704,000, respectively. In the current quarter the federal statutory rate differs from the effective tax rate primarily due to state taxes and recurring permanent differences, which increased (decreased) the effective tax rate by approximately 3.64% and (11.15%), respectively. The effective tax rate was also attributable to the tax impact from the vesting of restricted common stock, which was treated as a discrete item for tax purposes. This item increased the effective tax rate by 0.34%. In the current nine-month period the federal statutory rate differs from the effective tax rate primarily due to state taxes and recurring permanent differences, which increased the effective tax rate by approximately 9.49% and 4.75%, respectively. The effective tax rate was also attributable to the tax impact from the vesting of restricted common stock, which was treated as a discrete item for tax purposes. This item increased the effective tax rate by 20.37%. In the prior year quarter and prior year nine months, the effective tax rate was primarily attributable to recurring permanent differences. Based on the amount of income before income taxes compared to the recurring permanent differences, the effective tax rate increased by approximately 34% and 33%, respectively. The effective tax rate was also impacted by the tax impact from the vesting of restricted shares of common stock. The excess tax deficiencies were treated as a discrete item for tax as required by ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting . This item increased the effective rate by 5% for the prior year quarter and 30% for the prior year nine months, respectively. On December 22, 2017 the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 118, which provides guidance on accounting for the tax effects of the Tax Cuts and Job Act ("TCJA"). The purpose of SAB No. 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes, in the reporting period in which the TCJA was enacted. SAB No. 118 addresses situations where the accounting is incomplete for certain income tax effects of the TJCA upon issuance of a company’s financial statements for the reporting period that includes the enactment date. SAB No. 118 allows for a provisional amount to be recorded if it is a reasonable estimate of the impact of the TCJA. Additionally, SAB No. 118 allows for a measurement period to finalize the impacts of the TCJA, not to extend beyond one year from the date of enactment. The Company’s accounting for the certain elements of the TCJA was incomplete as of the period ended December 31, 2017, and remains incomplete as of September 30, 2018. However, the Company was able to make reasonable estimates of the effects and, therefore, recorded provisional estimates for these items at December 31, 2017. There have been no changes to the provisional estimates recorded as of December 31, 2017 during the quarter and nine months ended September 30, 2018. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | 8. Related Party Transactions Benjamin Malka Concurrent with the acquisition of the H Halston Brand on December 22, 2014, the Company and The H Company IP, LLC (“HIP”) entered into a license agreement (the “HIP License Agreement”), which was subsequently amended September 1, 2015. Benjamin Malka, a director of the Company, is a 25% equity holder of HIP’s parent company, House of Halston LLC (“HOH”), and is Chief Executive Officer of HOH. The HIP license agreement provides for royalty payments including guaranteed minimum royalties to be paid to the Company during the initial term that expires on December 31, 2019. On September 1, 2015, the Company entered into a license agreement with Lord and Taylor, LLC (the “L&T License”) and simultaneously amended the HIP License Agreement eliminating HIP’s minimum guaranteed royalty obligations, provided the L&T License is in effect. In addition, the Company entered into a sublicense agreement with HIP (the “HIP Sublicense Agreement”), obligating the Company to pay HIP a fee on an annual basis the greater of (i) 50% of royalties received under the L&T License from H Halston products or (ii) guaranteed minimum royalties. Provided that Lord & Taylor, LLC is paying the Company at least $1,000,000 per quarter under the L&T License, the remaining contractually required guaranteed minimum royalties are equal to $0.75 million, $1.5 million, and $1.75 million for the twelve months ending January 31, 2019, 2020, and 2021, respectively. On December 12, 2016, the Company entered into another license agreement for the H Halston Brand with Dillard’s Inc and affiliates (the “Dillard’s License”, and together with the L&T License, the “DRT Licenses”). Through October 26, 2018, the Company was negotiating proposed new arrangements and operated under those terms as an at-will license as set forth below: The HIP Trademark Usage and Royalty Participation Agreement, which has an initial term that expires on December 31, 2020 unless sooner terminated or renewed. 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. A license and supply agreement with the Halston Operating Company, LLC (“HOC”), a subsidiary of HOH, with an initial term of 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 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, 2017, subsequent design fees of $2.4 million for the contractual periods ending on January 31, 2019, 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 addition, the Company and HOC entered into an arrangement whereby HOC pays the Company a license fee for branded products related to categories not included in the HOC license and supply agreement. Effective October 26, 2018, the Company and HOH terminated the HIP License Agreement including all amendments, and the HIP Sublicense Agreement. In addition, the at-will license has been terminated and no longer in effect as of October 26, 2018. HOH has also entered into an arrangement with another licensee of the Company to supply Halston-branded apparel for the subsequent sale of such product to end customers. Under the Company’s separate pre-existing licensing agreements in place with the aforementioned other licensee and with HIP as described above, the Company earns royalties on the sales of such Halston-branded products. The HOH license with the Company’s licensee terminated on October 26, 2018. The Company recorded approximately $0.59 million and $0.19 million of revenue from HOC for the current quarter and the prior year quarter, respectively. The Company recorded approximately $1.81 million and $0.19 million of revenue from HOC for the current nine months and the prior nine months, respectively. The Company had a receivable balance of approximately $1.3 million and $0.8 million due from HOC as of September 30, 2018 and December 31, 2017, respectively. The $1.3 million receivable due from HOC includes $0.69 million of past due amounts. In addition, the Company recorded $0 and $9,000 of HIP fees (as a reduction to net revenue) for the current nine months and the prior nine months, respectively. There was no activity in either the current or prior quarter. In September 2018, the Company had a prepaid balance of $0.2 million to HIP to be applied against future fees due to HIP, which is recorded as a prepaid in other assets as of September 30, 2018. |
Facility Exit Costs
Facility Exit Costs | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Activities Disclosure [Text Block] | 9. Facility Exit Costs In June 2016, the Company relocated its corporate offices and operations from 475 Tenth Avenue in New York City to 1333 Broadway in New York City. In connection with the exit from its former office location, the Company recognized a liability at the exit and cease-use date for the remaining lease obligation associated with 475 Tenth Avenue, based on the remaining contractual lease payments less estimated sublease rentals, discounted to present value using a credit-adjusted risk-free rate. The Company recorded a net non-cash charge of approximately $648,000 associated with the recognition of this liability in the second quarter of 2016. The remaining balance of the exit cost liability related to the former office space was approximately $558,000 as of September 30, 2018, of which $244,000 was recorded in other current liabilities and $314,000 was recorded in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets. The balance of this liability will be paid out over a period of approximately 3.4 years, through February 2022. A summary of the activity related to the exit cost liability for the current and prior year nine months, is as follows: ($ in thousands) 2018 2017 Balance as of January 1, $ 624 $ 783 Cash payments, net (78 ) (140 ) Adjustment to liability (revision to estimated cash flows) - (25 ) Accretion 12 15 Balance as of September 30, $ 558 $ 633 |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | 10. Subsequent Event Termination of Halston Agreement Effective October 26, 2018, the Company and HOH terminated the HIP License Agreement including all amendments, the HIP Sublicense Agreement, and the at-will license has been terminated and no longer in effect. See Note 8, Related Party Transactions. |
Trademarks and Other Intangib_2
Trademarks and Other Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | Trademarks and other intangibles, net consist of the following: September 30, 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 (definite-lived) 15 years 15,463 3,263 12,200 Non-compete agreement 7 years 561 301 260 Copyrights and other intellectual property 10 years 190 85 105 Total $ 112,921 $ 3,649 $ 109,272 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 (definite-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 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | The Company’s net carrying amount of debt was comprised of the following: ($ in thousands) September 30, 2018 December 31, 2017 Xcel Term Loan $ 16,500 $ 19,500 Unamortized deferred finance costs related to term loan (234 ) (346 ) IM Seller Note 742 2,201 Ripka Seller Note 573 543 Contingent obligation - JR Seller 100 200 Contingent obligation - CW Seller 2,850 2,850 Total 20,531 24,948 Current portion of long term debt (i) 5,315 5,459 Current Portion of long term debt, contingent obligations (ii) 2,950 100 Long-term debt $ 12,266 $ 19,389 (i) The current portion of long-term debt as of September 30, 2018 consists of (a) $4.0 million related to the Xcel Term Loan, (b) $0.74 million related to the IM Seller Note, and (c) $0.57 million related to the Ripka Seller Note. (ii) The current portion of long-term debt, contingent obligations as of September 30, 2018 consists of (a) $0.1 million related to the contingent obligation - JR Seller and (b) $2.85 million related to the C Wonder contingent obligation in connection with the purchase of the C Wonder Brand. |
Schedule of Maturities of Long-term Debt [Table Text Block] | As of September 30, 2018, the aggregate remaining scheduled annual principal payments under the Second Amendment to the Loan Agreement were as follows: ($ in thousands) Year Ending December 31, Amount of Principal Payment 2018 (October 1 through December 31) $ 1,000 2019 4,000 2020 4,000 2021 7,500 Total $ 16,500 |
Debt Instrument Principal Payments [Table Text Block] | As of September 30, 2018, the aggregate remaining annual principal payment under the IM Seller Note was as follows: ($ in thousands) Year Ending December 31, Amount of Principal Payment 2018 (October 1 through December 31) $ - 2019 742 Total $ 742 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the Company’s stock options activity for the current nine months is as follows: 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 200,000 3.63 Canceled - - Exercised - - Expired/Forfeited (392,624 ) 3.89 Outstanding at September 30, 2018, and expected to vest 3,276,209 $ 5.45 3.41 $ - Exercisable at September 30, 2018 1,728,630 $ 5.60 2.72 $ - |
Schedule of Stock Options Roll Forward [Table Text Block] | The following table summarizes the Company’s stock option activity for non-vested options for the current nine months: Number of Options Weighted Average Grant Date Fair Value Balance at January 1, 2018 2,613,497 $ 1.23 Granted 200,000 0.56 Vested (908,586 ) 1.26 Forfeited or Canceled (357,332 ) .71 Balance at September 30, 2018 1,547,579 $ 1.24 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | A summary of the Company’s restricted stock activity for the current nine months is as follows: Number of Restricted Shares Weighted Average Grant Date Fair Value Outstanding at January 1, 2018 2,143,088 $ 5.35 Granted 172,472 3.14 Canceled - - Vested (592,639 ) 6.80 Expired/Forfeited - - Outstanding at September 30, 2018 1,722,921 $ 4.63 |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the Company’s warrants activity for the current nine months is as follows: 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 September 30, 2018 1,214,815 $ 9.32 1.22 $ - |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Diluted EPS excludes all potentially dilutive shares of common stock if their effect is anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic 18,266,202 18,470,977 18,304,608 18,530,963 Effect of exercise of warrants 841 364,340 866 364,247 Effect of exercise of stock options - 37,436 5,180 1,208 Diluted 18,267,043 18,872,753 18,310,654 18,896,418 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Stock options and warrants 4,491,024 4,465,584 4,491,024 4,485,584 |
Facility Exit Costs (Tables)
Facility Exit Costs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs [Table Text Block] | A summary of the activity related to the exit cost liability for the current and prior year nine months, is as follows: ($ in thousands) 2018 2017 Balance as of January 1, $ 624 $ 783 Cash payments, net (78 ) (140 ) Adjustment to liability (revision to estimated cash flows) - (25 ) Accretion 12 15 Balance as of September 30, $ 558 $ 633 |
Nature of Operations, Backgro_2
Nature of Operations, Background, and Basis of Presentation (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory, Net | $ 924 | $ 0 |
Jewelry Wholesale and Ecommerce Operations [Member] | ||
Inventory, Net | $ 920 |
Trademarks and Other Intangib_3
Trademarks and Other Intangibles (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount, Total | $ 112,921 | $ 112,921 |
Accumulated Amortization | 3,649 | 2,801 |
Net Carrying Amount, Total | $ 109,272 | $ 110,120 |
Non-compete agreement [Member] | ||
Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period (Years) | 7 years | 7 years |
Gross Carrying Amount (definite-lived) | $ 561 | $ 561 |
Accumulated Amortization | 301 | 240 |
Net Carrying Amount | $ 260 | $ 321 |
Copyrights and other intellectual property [Member] | ||
Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period (Years) | 10 years | 10 years |
Gross Carrying Amount (definite-lived) | $ 190 | $ 190 |
Accumulated Amortization | 85 | 71 |
Net Carrying Amount | $ 105 | $ 119 |
Trademarks [Member] | ||
Finite and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period (Years) | 15 years | 15 years |
Gross Carrying Amount (indefinite-lived) | $ 96,707 | $ 96,707 |
Gross Carrying Amount (definite-lived) | 15,463 | 15,463 |
Accumulated Amortization | 3,263 | 2,490 |
Net Carrying Amount | 12,200 | 12,973 |
Net Carrying Amount, Total | $ 96,707 | $ 96,707 |
Trademarks and Other Intangib_4
Trademarks and Other Intangibles (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets [Line Items] | ||||
Amortization of Intangible Assets | $ 280 | $ 280 | $ 850 | $ 850 |
Revenue Recognition and Signi_2
Revenue Recognition and Significant Contracts (Details Textual) - Royalty Agreement With QVC [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | |||||
QVC Net Revenue | $ 6,420 | $ 6,320 | $ 19,900 | $ 20,330 | |
QVC Net Revenue, Percentage | 80.00% | 80.00% | 80.00% | 82.00% | |
QVC Accounts Receivable, Gross | $ 6,450 | $ 6,450 | $ 5,470 | ||
Accounts Receivables, Percentage | 67.00% | 67.00% | 64.00% |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | ||||
Unamortized deferred finance costs related to term loan | $ (234) | $ (346) | ||
Total | 20,531 | 24,948 | ||
Current portion of long term debt | 5,315 | [1] | 5,459 | |
Current Portion of long term debt, contingent obligations | [2] | 2,950 | 100 | |
Long-term debt | 12,266 | 19,389 | ||
Xcel Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Term Loan | 16,500 | 19,500 | ||
Current portion of long term debt | 4,000 | |||
IM Seller Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Seller Note | 742 | 2,201 | ||
JR Seller [Member] | ||||
Debt Instrument [Line Items] | ||||
Contingent obligation | 100 | 200 | ||
Ripka Seller Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Seller Note | 573 | 543 | ||
Current portion of long term debt | 570 | |||
CW Seller [Member] | ||||
Debt Instrument [Line Items] | ||||
Contingent obligation | $ 2,850 | $ 2,850 | ||
[1] | The current portion of long-term debt as of September 30, 2018 consists of (a) $4.0 million related to the Xcel Term Loan, (b) $0.74 million related to the IM Seller Note, and (c) $0.57 million related to the Ripka Seller Note. | |||
[2] | The current portion of long-term debt, contingent obligations as of September 30, 2018 consists of (a) $0.1 million related to the contingent obligation - JR Seller and (b) $2.85 million related to the C Wonder contingent obligation in connection with the purchase of the C Wonder Brand. |
Debt (Details 1)
Debt (Details 1) - Xcel Term Loan [Member] - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
2018 (October 1 through December 31) | $ 1,000 | |
2,019 | 4,000 | |
2,020 | 4,000 | |
2,021 | 7,500 | |
Total | $ 16,500 | $ 19,500 |
Debt (Details 2)
Debt (Details 2) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Total | $ 20,531 | $ 24,948 |
I M Ready Made L L C [Member] | ||
Debt Instrument [Line Items] | ||
2018 (October 1 through December 31) | 0 | |
2,019 | 742 | |
Total | $ 742 |
Debt (Details Textual)
Debt (Details Textual) | May 15, 2018USD ($) | Sep. 19, 2016 | Feb. 26, 2016USD ($) | Dec. 24, 2013$ / shares | Sep. 29, 2011USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | ||
Debt Instrument [Line Items] | |||||||||||||||
Long-term Debt, Contingent Payment of Principal or Interest | the Company shall pay an early termination fee equal to the principal amount outstanding under the Xcel Term Loan on the date of prepayment, multiplied by: (i) two percent (2.00%) if the Xcel Term Loan is prepaid on or after the closing date and on or before the second anniversary of the closing date; or (ii) one percent (1.00%) if the Xcel Term Loan is prepaid after the second anniversary of the closing date and on or before the third anniversary of the closing date. | ||||||||||||||
Interest Expense, Debt | $ 224,000 | $ 273,000 | $ 706,000 | $ 905,000 | |||||||||||
Earn Out Obligation, Long Term Portion Fair Value | 2,950,000 | 2,950,000 | $ 3,050,000 | ||||||||||||
Long-term Debt, Current Maturities | 5,315,000 | [1] | 5,315,000 | [1] | 5,459,000 | ||||||||||
Other Long-term Debt, Noncurrent | 2,950,000 | ||||||||||||||
Settlement of Ripka earnout through offset to note receivable | 100,000 | 0 | |||||||||||||
Current portion of long-term debt, contingent obligations | 2,950,000 | 2,950,000 | $ 100,000 | ||||||||||||
Ripka Seller Notes [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Interest Expense, Debt | 10,000 | 10,000 | 31,000 | 28,000 | |||||||||||
Debt Instrument, Amount at Maturity | 600,000 | 600,000 | |||||||||||||
Long-term Debt, Current Maturities | 570,000 | 570,000 | |||||||||||||
Settlement of Ripka earnout through offset to note receivable | $ 100,000 | ||||||||||||||
Accounts Payable, Interest-bearing, Current | $ 573,000 | $ 573,000 | |||||||||||||
Xcel Term Loan [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 5.10% | 5.10% | |||||||||||||
Minimum Fixed Charge Ratio, End Range | 1 | 1 | |||||||||||||
Minimum Liquidity Covenants | $ 5,000,000 | $ 5,000,000 | |||||||||||||
Debt Instrument, Periodic Payment, Principal | $ 27,875,000 | ||||||||||||||
Minimum Liquidity Covenant Requirement In Case of Ratio of Indebtedness to EBITDA is Less Than One | 3,000,000 | 3,000,000 | |||||||||||||
Interest Expense, Senior Term Loan | 215,000 | 257,000 | 677,000 | 852,000 | |||||||||||
Long-term Debt, Current Maturities | $ 4,000,000 | $ 4,000,000 | |||||||||||||
Xcel Term Loan [Member] | Second Amendment [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt Instrument, Increase (Decrease) in Periodic Payment, Principal | $ 750,000 | ||||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 6.05% | 6.05% | |||||||||||||
Xcel Term Loan [Member] | First Amendment [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt Instrument, Increase (Decrease) in Periodic Payment, Principal | 1,000,000 | ||||||||||||||
Xcel Term Loan [Member] | Fiscal Year 2017 [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Minimum Earning Before Interest Taxes Depreciation And Amortization Before Amendment | not less than $7,000,000 | ||||||||||||||
Xcel Term Loan [Member] | Fiscal Year 2018 [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Minimum Earning Before Interest Taxes Depreciation And Amortization After Amendment | not less than $8,000,000 | ||||||||||||||
Xcel Term Loan [Member] | Fiscal Year 2019 [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Minimum Earning Before Interest Taxes Depreciation And Amortization After Amendment | not less than $8,000,000 | ||||||||||||||
Xcel Term Loan [Member] | Fiscal Year 2020 and thereafter [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Minimum Earning Before Interest Taxes Depreciation And Amortization Before Amendment | not less of $9,000,000 | ||||||||||||||
Xcel Term Loan [Member] | Scenario, Forecast [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum Capital Expenditures of Guarantor and its Subsidiaries | $ 1,700,000 | ||||||||||||||
Maximum Capital Expenditures of Guarantor and its Subsidiaries in Subsequent Years | $ 700,000 | ||||||||||||||
Xcel Term Loan [Member] | Scenario, Forecast [Member] | Second Amendment [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt Instrument, Increase (Decrease) in Periodic Payment, Principal | $ 750,000 | ||||||||||||||
Xcel Term Loan [Member] | Scenario, Forecast [Member] | First Amendment [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt Instrument, Increase (Decrease) in Periodic Payment, Principal | $ 1,000,000 | ||||||||||||||
JR Term Loan [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Current portion of long-term debt, contingent obligations | $ 100,000 | $ 100,000 | |||||||||||||
CW Term Loan [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Current portion of long-term debt, contingent obligations | 2,850,000 | 2,850,000 | |||||||||||||
C Wonder Earn-Out [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Earn Out Obligation, Long Term Portion Fair Value | 2,850,000 | 2,850,000 | |||||||||||||
Fixed Threshold to be Used in Computation of Earnout | 4,000,000 | ||||||||||||||
Ripka Earnout and C Wonder Earnout [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Earn Out Obligation, Long Term Portion Fair Value | 2,950,000 | 2,950,000 | 3,050,000 | ||||||||||||
Ripka Earn-Out [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Earn-Out Consideration Payable in Cash | 100,000 | 100,000 | 200,000 | ||||||||||||
Ripka Earn-Out [Member] | Long-term Debt [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Business Combination, Contingent Consideration, Liability | 200,000 | ||||||||||||||
Business Combination, Contingent Consideration, Liability, Current | 100,000 | 100,000 | $ 100,000 | ||||||||||||
Ripka Earn-Out [Member] | Scenario, Forecast [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Royalty Income, Threshold | $ 6,000,000 | ||||||||||||||
IM Seller Notes [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt Instrument, Face Amount | $ 7,377,000 | ||||||||||||||
Stated Interest Rate on Note Payable | 0.25% | ||||||||||||||
Subordinated Borrowing, Interest Rate | 9.25% | ||||||||||||||
Debt Instrument, Unamortized Discount | $ 1,740,000 | ||||||||||||||
Imputed Annual Interest Rate | 9.00% | ||||||||||||||
Initial Outstanding Value of Long-term Debt or Borrowing | $ 5,637,000 | ||||||||||||||
Initial Prepaid Interest | $ 123,000 | ||||||||||||||
Exercise Price of Common Stock | $ / shares | $ 4.50 | ||||||||||||||
Interest Expense, Debt | 8,000 | $ 16,000 | 29,000 | $ 53,000 | |||||||||||
Debt Instrument Amended Description | (1) revise the maturity date to March 31, 2019, (2) require six semi-annual principal and interest installment payments of $750,000, commencing on September 30, 2016 and ending on March 31, 2019, (3) revise the stated interest rate to 2.236% per annum, (4) allow for optional prepayments at any time at the Company's discretion without premium or penalty, and (5) require that all payments of principal and interest be made in cash. Management assessed and determined that this amendment represented a debt modification and, accordingly, no gain or loss was recorded. | (1) revise the maturity date to September 30, 2016, (2) revise the date to which the maturity date may be extended to September 30, 2018, (3) provide the Company with a prepayment right with its common stock, subject to remitting in cash certain required cash payments and a minimum common stock price of $4.50 per share, and (4) require interim scheduled payments. | |||||||||||||
Long-term Debt, Current Maturities | $ 740,000 | $ 740,000 | |||||||||||||
[1] | The current portion of long-term debt as of September 30, 2018 consists of (a) $4.0 million related to the Xcel Term Loan, (b) $0.74 million related to the IM Seller Note, and (c) $0.57 million related to the Ripka Seller Note. |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding | 3,468,833 | |
Number of Options, Granted | 200,000 | |
Number of Options, Canceled | 0 | |
Number of Options, Exercised | 0 | |
Number of Options, Expired/Forfeited | (392,624) | |
Number of Options, Outstanding, and expected to vest | 3,276,209 | 3,468,833 |
Number of Options, Exercisable | 1,728,630 | |
Weighted Average Exercise Price, Outstanding | $ 5.38 | |
Weighted Average Exercise Price, Granted | 3.63 | |
Weighted Average Exercise Price, Canceled | 0 | |
Weighted Average Exercise Price, Exercised | 0 | |
Weighted Average Exercise Price, Expired/Forfeited | 3.89 | |
Weighted Average Exercise Price, Outstanding, and expected to vest | 5.45 | $ 5.38 |
Weighted Average Exercise Price, Exercisable | $ 5.60 | |
Outstanding Weighted Average Remaining Contractual Life (in Years) | 2 years 8 months 19 days | 4 years 1 month 20 days |
Exercisable Weighted Average Remaining Contractual Life (in Years) | 3 years 4 months 28 days | |
Aggregate Intrinsic Value, Outstanding | $ 0 | $ 0 |
Aggregate Intrinsic Value, Exercisable | $ 0 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Number of Options | |
Granted | 200,000 |
Employee Stock Option [Member] | |
Number of Options | |
Beginning Balance | 2,613,497 |
Granted | 200,000 |
Vested | (908,586) |
Forfeited or Canceled | (357,332) |
Ending Balance | 1,547,579 |
Weighted Average Grant Date Fair Value | |
Beginning Balance | $ / shares | $ 1.23 |
Granted | $ / shares | 0.56 |
Vested | $ / shares | 1.26 |
Forfeited or Canceled | $ / shares | 0.71 |
Ending Balance | $ / shares | $ 1.24 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - Warrant [Member] - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Warrants, Outstanding and exercisable, Beginning Balance | 1,891,743 | |
Number of Warrants, Granted | 0 | |
Number of Warrants, Canceled | 0 | |
Number of Warrants, Exercised | 0 | |
Number of Warrants, Expired/Forfeited | (676,928) | |
Number of Warrants, Outstanding and exercisable, Ending Balance | 1,214,815 | 1,891,743 |
Weighted Average Exercise Price, Outstanding and exercisable, Beginning Balance | $ 6.81 | |
Weighted Average Exercise Price, Granted | 0 | |
Weighted Average Exercise Price, Canceled | 0 | |
Weighted Average Exercise Price, Exercised | 0 | |
Weighted Average Exercise Price, Expired/Forfeited | 2.31 | |
Weighted Average Exercise Price, Outstanding and exercisable, Ending Balance | $ 9.32 | $ 6.81 |
Weighted Average Remaining Contractual Life (in Years), Outstanding and exercisable | 1 year 2 months 19 days | 1 year 11 months 1 day |
Aggregate Intrinsic Value, Outstanding and exercisable | $ 0 | $ 0 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Restricted Shares, Outstanding, Beginning Balance | shares | 2,143,088 |
Number of Restricted Shares, Granted | shares | 172,472 |
Number of Restricted Shares, Canceled | shares | 0 |
Number of Restricted Shares, Vested | shares | (592,639) |
Number of Restricted Shares, Expired/Forfeited | shares | 0 |
Number of Restricted Shares, Outstanding, Ending Balance | shares | 1,722,921 |
Weighted Average Grant Date Fair Value, Outstanding, Beginning Balance | $ / shares | $ 5.35 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 3.14 |
Weighted Average Grant Date Fair Value, Canceled | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 6.80 |
Weighted Average Grant Date Fair Value, Expired/Forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Outstanding, Ending Balance | $ / shares | $ 4.63 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | Apr. 02, 2020 | Apr. 02, 2019 | Jun. 05, 2018 | May 31, 2018 | Apr. 03, 2018 | Apr. 02, 2018 | Mar. 14, 2018 | Mar. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 200,000 | |||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 3.63 | |||||||||||
Equity Option [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Allocated Share-based Compensation Expense | $ 319,000 | $ 313,000 | $ 867,000 | $ 887,000 | ||||||||
Key Employees [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 150,000 | 50,000 | ||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 3 | $ 5.50 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 50.00% | |||||||||||
Non Executive Employees [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | 7,000 | 1,664 | ||||||||||
Stock Issued During Period Shares Restricted Stock Award Net Of Forfeitures 1 | 25,599 | |||||||||||
Non Management Directors [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | 48,000 | |||||||||||
Employee Stock Option [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 1,088,000 | $ 1,088,000 | ||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 10 months 13 days | |||||||||||
Restricted Stock [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 393,000 | $ 393,000 | ||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 18 days | |||||||||||
Restricted Stock or Unit Expense | $ 128,000 | $ 377,000 | $ 548,000 | $ 1,609,000 | ||||||||
Restricted Stock [Member] | Non Executive Employees [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | 90,209 | |||||||||||
2011 Equity Incentive Plan [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 5,668,029 | 5,668,029 | ||||||||||
Common Stock, Capital Shares Reserved for Future Issuance | 10,159,053 | 10,159,053 | ||||||||||
Common Stock, Eligible for Issuance | 13,000,000 | 13,000,000 | ||||||||||
Scenario, Forecast [Member] | Non Management Directors [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 50.00% | 50.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share Basic And Diluted [Line Items] | ||||
Basic | 18,266,202 | 18,470,977 | 18,304,608 | 18,530,963 |
Diluted | 18,267,043 | 18,872,753 | 18,310,654 | 18,896,418 |
Employee Stock Option [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of exercise of options and Warrants | 0 | 37,436 | 5,180 | 1,208 |
Warrant [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Effect of exercise of options and Warrants | 841 | 364,340 | 866 | 364,247 |
Earnings Per Share (Details 1)
Earnings Per Share (Details 1) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Stock Option [Member] | Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock options and warrants | 4,491,024 | 4,465,584 | 4,491,024 | 4,485,584 |
Income Tax (Details Textual)
Income Tax (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes [Line Items] | ||||
Effective Income Tax Rate, Continuing Operations | 14.00% | 73.00% | 56.00% | 96.00% |
Income Tax Expense (Benefit) | $ 158 | $ 691 | $ 1,717 | $ 1,704 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent | 0.34% | 5.00% | 20.37% | 30.00% |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 3.64% | 9.49% | ||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | (11.15%) | 34.00% | 4.75% | 33.00% |
Related Party Transactions (Det
Related Party Transactions (Details Textual) - USD ($) | Jul. 01, 2017 | Dec. 22, 2014 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | |||||||
Due from Related Parties | $ 1,300,000 | $ 1,300,000 | |||||
Royalty payment description | 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. | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 0 | ||||||
License and Services Revenue (HOC) | 8,267,000 | $ 7,890,000 | $ 25,520,000 | $ 24,690,000 | |||
Lord and Taylor, LLC [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Minimum Royalties Required Per Quarter | 1,000,000 | ||||||
Benjamin Malka [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity Method Investment, Ownership Percentage | 25.00% | ||||||
Royalty Expense | $ 0 | 9,000 | |||||
Benjamin Malka [Member] | Licensing Agreements [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
License Expiration Date | Dec. 31, 2019 | ||||||
Percentage Of Royalties | 50.00% | ||||||
Licensing Agreements, Remaining Contractually Required Guaranteed Minimum Royalties in Two Years | 750,000 | $ 750,000 | |||||
Licensing Agreements, Remaining Contractually Required Guaranteed Minimum Royalties in Three Years | 1,500,000 | 1,500,000 | |||||
Licensing Agreements, Remaining Contractually Required Guaranteed Minimum Royalties in Four Years | 1,750,000 | 1,750,000 | |||||
Halston Operating Company, LLC [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due from Related Parties | 1,300,000 | 1,300,000 | $ 800,000 | ||||
Prepaid Royalties | 200,000 | 200,000 | |||||
Royalty Expiration Date | December 31, 2020 | ||||||
License agrrement initial Term | January 31, 2022 | ||||||
Design fees | $ 1,200,000 | ||||||
Design Fees Contractual Period Due, First Year | 2,400,000 | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 7 | ||||||
License and Services Revenue (HOC) | 590,000 | $ 190,000 | 1,810,000 | $ 190,000 | |||
Financing Receivable, Recorded Investment, Past Due | $ 690,000 | $ 690,000 |
Facility Exit Costs (Details)
Facility Exit Costs (Details) - Facility Exit Costs [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Balance at Beginning | $ 624 | $ 783 |
Cash payments, net | (78) | (140) |
Adjustment to liability (revision to estimated cash flows) | 0 | (25) |
Accretion | 12 | 15 |
Balance as Ending | $ 558 | $ 633 |
Facility Exit Costs (Details Te
Facility Exit Costs (Details Textual) - Facility Exit Costs [Member] - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2016 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and Related Cost, Incurred Cost | $ 648,000 | ||||
Restructuring Reserve | $ 558,000 | $ 624,000 | $ 633,000 | $ 783,000 | |
Restructuring Reserve, Current | 244,000 | ||||
Restructuring Reserve, Noncurrent | $ 314,000 | ||||
Facility Exit Costs Payable period | approximately 3.4 years, through February 2022. |