The following is a discussion of the interim unaudited consolidated financial
condition and results of operations for the Company and its subsidiaries for the
three and nine months ended
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain "forward-looking" statements
as such term is defined in Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Such
forward looking statements relating to the Company and its subsidiaries are
based on the beliefs of the Company's management as well as information
currently available to the Company's management. When used in this report, the
words "anticipate," "believe," "estimate," "expect" and "intend" and words or
phrases of similar import, as they relate to the Company or Company management,
are intended to identify forward-looking statements. Such statements reflect the
current risks, uncertainties and assumptions related to certain factors
including, without limitation, competitive factors, general economic conditions,
the interest rate environment, governmental regulation and supervision,
seasonality, changes in industry practices, one-time events and other factors
described herein and in other filings made by the Company with the
OVERVIEW
The primary business of Wilhelmina is fashion model management. These business
operations are headquartered in
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Trends and Opportunities
The Company expects that the combination of Wilhelmina's main operating base in
With total annual advertising expenditures on major media (newspapers,
magazines, television, cinema, outdoor and Internet) estimated to have exceeded
In recent periods, traditional retail clients in the fashion and beauty industry have had increased competition from digital, social, and new media, reducing their budgets for advertising and model talent. Wilhelmina reviews the mix of talent and resources available to best operate in the changing environment.
Although Wilhelmina has a large and diverse client base, it is not immune to global economic conditions. The Company closely monitors economic conditions, client spending, and other industry factors and continually evaluates opportunities to increase its market share and further expand its geographic reach. There can be no assurance as to the effects on Wilhelmina of current or future economic circumstances, client spending patterns, client creditworthiness and other developments and whether, or to what extent, Wilhelmina's efforts to respond to them will be effective.
Strategy
Management's long-term strategy is to increase value to shareholders through the following initiatives:
• increase Wilhelmina's brand awareness among advertisers and potential talent;
• expand the women's high end fashion board;
• expand the Aperture division's representation in commercials, film, and television;
• expand celebrity and social media influencer representation;
• expand the Wilhelmina network through strategic geographic market development; and
• promote model search contests and events and partner on media projects (television, film, books, etc.).
The Company makes use of digital technology to effectively connect with clients and talent, utilizing video conferencing and other digital tools to best position our team to identify opportunities to grow the careers of the talent we represent and expand our business. The Company has made significant investments in technology, infrastructure, and personnel, to support our clients and talent.
Key Financial Indicators
In addition to net income, the key financial indicators that the Company reviews to monitor its business are revenues, model costs, operating expenses and cash flows.
The Company analyzes revenue by reviewing the mix of revenues generated by the different "boards," each a specific division of the fashion model management operations which specializes by the type of model it represents, by geographic locations and from significant clients. Within its fashion model management business, Wilhelmina's primary source of service revenue is from model fees and service charges paid by the client for bookings directly negotiated by the Company. The Company also receives commissions paid on bookings by third-party agencies. See "Critical Accounting Policies - Revenue Recognition."
Wilhelmina provides professional services. Therefore, salary and service costs represent the largest part of the Company's operating expenses. Salary and service costs are comprised of payroll and related costs and travel, meals and entertainment ("T&E") to deliver the Company's services and to enable new business development activities.
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