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Larry Thomas

LuxeYard revenue tops $700,000 in second quarter

LOS ANGELES — LuxeYard, an Internet retailer that operates flash-sale websites, reported revenue of $705,963 for the quarter ended June 30, but had an operating loss of more than $7 million.

The publicly traded company, which began operations in April 2011, reported net income of $10.03 million, or 8 cents per share, for the quarter. However, the bottom line included a non-cash gain of $19.8 million from derivatives that was triggered by a drop in the market value of its common stock and the recent issuance of convertible debentures.

In a statement announcing the financial results, CEO Braden Richter called the most recent quarter "extraordinary" due to the growth of the brand and operational improvements.

"We devoted significant time and resources toward focusing on member conversion metrics instead of member count growth, and as a result, saw a commensurate increase in the number of transactions and growth in total online sales," Richter said.

In a report filed with the Securities and Exchange Commission, the retailer said its history of operating losses and negative cash flow raises "substantial doubt as to our ability to continue as a going concern."

"(W)e will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs," the company said in the filing.

For the six months ended June 30, the company had revenues of $861,052 and an operating loss of more than $9.1 million.

Six-month net income, including a $13.5 million non-cash gain from derivatives, was $1.51 million or 2 cents per share.

The company had no revenue for the comparable period in 2011.

Richter said the company is projecting revenue of $1.5 million to $2.2 million for the current quarter, which ends Sept. 30.

"As we move forward, our efforts to syndicate the LuxeYard site, acquire additional e-commerce properties, and launch new separately branded sites, will help further drive revenue growth and solidify our foothold as a leader in the flash sales industry," he said.

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