Archytas Ventures voluntarily agreed to reduce the effective interest rate on its $600,000 term loan to XS Financial from 18% to 12%, effective May 2020 until maturity. XS Financial anticipates savings to be realized in 2020 with annualized savings of $36,000.
In addition, in consultation with XS Financial’s board and management, the monthly Archytas management fees (for CEO and COO) were reduced or waived for the second and third quarters this year. This decision reflects management’s focus on bottom-line performance and as significant owners of XS Financial (~23% of diluted shares outstanding), reflects shareholder alignment. XS Financial estimates annualized cash savings to be realized in 2020 in excess of $200,000.
In conjunction with expanding XS Financial’s equipment vendor network, XS Financial reduced its role in post-purchase equipment service, which is now provided directly by the company’s vendor partners. In light of scaled-back inventory needs, the company implemented specific staffing changes. XS Financial anticipates annualized savings to be $240,000.
Without the need to maintain warehouse space, XS Financial closed its Florida facilities. The company anticipates savings to be realized in 2020 to be on the order of $20,000
“We remain steadfast in our goals of growing revenues while streamlining costs to improve bottom line results,” David Kivitz, CEO of XS Financial, said. “As such, management has agreed to a reduction in cash compensation. Combined with additional savings from a reduction of the interest rate on our term loan, the restructuring of certain staff and the closure of the Florida facility, we expect to realize annualized savings of over US$500,000. This represents cash savings of almost 50% from our prior operating budget. We anticipate that these cost saving initiatives, combined with our current portfolio of leases, and new leases under review, will result in significant earnings, cash flow and profitability improvement in the months ahead.
“We continue to aggressively seek new opportunities and remain well capitalized to enact on new leases supported by our current pipeline. We are confident we will see additional new lease contract announcements in the coming weeks.”
Founded in 2017, XS Financial specializes in providing equipment leasing solutions in the United States to owner/operators of cannabis and hemp companies, including cultivators, oil processors, manufacturers and testing laboratories.
