Phoenix Footwear Group Inc. reported unaudited consolidated earnings results for the second quarter and six months ended June 30, 2012. For the quarter, the company's net loss from continuing operations declined to $470,000 or $0.06 per diluted share compared to a net loss of $535,000 or $0.07 per diluted share during the second quarter of fiscal 2011. Net sales from continuing operations decreased $56, 000 or 1.7% to $3.15 million compared to $3.2 million for the second quarter of fiscal 2011. Net loss was $470,000 or $0.06 per diluted share against $215,000 or $0.06 per diluted share a year ago. Operating loss was $285,000 against $355,000 a year ago. Loss before income taxes and discontinued operations was $470,000 against $535,000 a year ago.

For the six months, net loss from continuing operations narrowed to $209,000 or $0.03 per diluted share compared to a net loss of $1.0 million or $0.12 per diluted share for the first six months of fiscal 2011. Net sales for the first six months of fiscal 2012 increased $828,000 or 10.3% to $8.9 million compared to $8.0 million for the first six months of fiscal 2011. Cash provided by operating activities from continuing operations was $253,000 compared to cash used in operating activities of $724,000 for the first six months of fiscal 2011. Earnings before interest, taxes, depreciation and amortization from continuing operations for the first six months of fiscal 2012 was $233,000 compared to a negative EBITDA of $541,000 for the first six months of fiscal 2011. Net loss was $210,000 or $0.03 per basic and diluted share against $554,000 or $0.07 per basic and diluted share a year ago. Operating income was $285,000 against operating loss of $651,000 a year ago. Loss before income taxes and discontinued operations was $209,000 against $1,010,000 a year ago.

On July 30, 2012, the company entered into a new three-year loan and security agreement with AloStar Bank of Commerce that provides for up to $7.25 million in borrowing capacity consisting of a secured first lien revolving credit facility of up to $7.0 million with an initial per annum interest rate of 7.5% and a secured first lien term loan of $250,000 with an initial per annum interest rate of 8.5%, replacing the previous loan and security agreement with Gibraltar Business Capital and Westran Industrial Loan Co, that provided for up to $5.25 million in borrowing capacity consisting of a revolving credit facility of $4.75 million at a per annum interest rate of 11.25% and a term loan of $1.5 million with a per annum interest rate of 16.0%. The new AloStar Loan Agreement provides the company with additional working capital at significantly reduced interest rates. Concurrently with the execution of the AloStar Loan Agreement, and as a condition thereof, the Company also entered into a subordinated Loan and Security Agreement with Gibraltar Business Capital, LLC for a three-year $700,000 term loan with a per annum interest rate of 18.0%.