Nine Months Revenues Up 19% Year-over-Year to
$15.2 million
Initiates 2020 Revenue Guidance of $34
million.
Edison Nation, Inc. (NASDAQ:EDNT), an inventor ecosystem driving
IP, media and innovative consumer products, today announced results
for the third quarter ended September 30, 2019.
Company Highlights
- Initiating 2020 revenue guidance of $34 million.
- Raised $2.4 million subsequent to quarter-end. In addition, the
Company eliminated $1.1 million of convertible debt through the
issuance of 560,185 shares of common stock. The current share count
is now 7.8 million shares.
- Further balance sheet improvement anticipated by year-end 2019
with the removal of $5.6 million of liabilities related to the
previously foreclosed entity, Cloud B, Inc., which is in the
process of dissolution.
- 4Keeps Roses has shipped product
to over 300 retail stores and has received orders from an
additional 1,200 stores. We anticipate fulfilling these orders
before Valentine’s Day 2020.
- Partnered with Über Momto scale
the brand’s children’s essentials and keepsakes product line by
cobranding with our popular children’s brand Cloud B. The collaboration was formed through
Edison Nation’s Entrepreneur Partnership division.
- 129 Edison Nation SKUs currently listed on Amazon compared to
50 SKUs in 2018.
- Pirasta, has grown to become an Omni-channel brand with new
customers Crate and Barrel, Land of Nod and Whole Foods.
- The award-winning “Everyday Edisons” show is being relaunched
Feb 11, 2020, which is both Thomas Edison’s birthday and National
Inventors Day, on a major video-streaming provider. The show will
now feature three inventors presenting three unique products to a
panel of industry respected judges each episode.
- Commenced the development of the subscription-based Everyday
Edisons Academy e-learning and master class offering, which will
work in tandem with the Edison Innovation Platform engine.
Third Quarter and Nine Months 2019 Financial Summary
Revenue
- Third quarter 2019 revenue decreased to $3.5 million, compared
to $4.9 million in the third quarter of 2018. The decrease was
primarily attributable to a $1.1mm shortfall in theme park product
sales due to the following reasons: one of the Company China
factories moved locations; Disney Hong Kong attendance has been
impacted by the recent China protests, which have also disrupted
the Company’s Hong Kong operations in general; customers slowed
purchase orders due to the China tariffs and requests by customers
to quote key items made in America.
- First nine months 2019 revenue of $15.2 million compared to
$12.8 million in the first nine months of 2018. The increase is the
result of Edison Nation product and licensing revenues and product
revenues from the acquisition of Cloud B.
Net Loss
- Net loss in the third quarter of 2019 was $2.6 million, or
($0.44) per basic and diluted share, compared to a net loss of $1.7
million, or ($0.37) per basic and diluted share in the third
quarter of 2018.
- Net loss for the first nine months of 2019 was $5.8 million, or
($1.00) per basic and diluted share, compared to a net loss of $4.0
million, or ($1.11) per basic and diluted share in the first nine
months of 2018.
Adjusted EBITDA
- Adjusted EBITDA, a non-GAAP measure, totaled negative $1.3
million in the third quarter of 2019, compared to positive $0.04
million in the third quarter of 2018.
- Adjusted EBITDA, a non-GAAP measure, totaled negative $1.5
million in the first nine months of 2019, compared to positive $0.6
million in the first nine months of 2018.
See below, under the heading “Use of Non-GAAP Financial
Information,” for a discussion of Adjusted EBITDA and a
reconciliation of such measure to the most comparable measure
calculated under U.S. generally accepted accounting principles
(“GAAP”).
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net (loss) income
$
(2,631,204)
$
(1,679,306)
$
(5,784,666)
$
(3,983,272)
Interest expense, net
349,172
42,130
875,036
407,276
Income tax expense
-
167,813
74,200
312,186
Depreciation and amortization
318,449
40,742
952,019
120,003
EBITDA
(1,963,583)
(1,428,621)
(3,883,411)
(3,143,816)
Stock-based compensation
168,097
639,326
876,585
2,666,576
Change in fair value of put option
contract
732,600
732,600
Restructuring and severance costs
153,182
9,000
324,164
27,000
Transaction and acquisition costs
224,370
84,980
447,908
239,682
Other non-recurring costs
100,772
-
724,137
42,686
Adjusted EBITDA
$
(1,317,162)
$
37,285
$
(1,510,617)
$
564,728
Management Commentary
Chris Ferguson, Chief Executive, commented, “With the successful
foundation-building 2019 year nearly behind us, Edison Nation is
well-positioned for 2020 and is initiating revenue guidance of $34
million. We expect the proliferation of our proprietary Edison
Nation Innovation Platform engine to drive our growth and create
substantial IP asset value in combination with the relaunch of the
“Everyday Edisons” TV show and the development of the Everyday
Edisons Academy inventor-centric master class e-learning service,
which will bring recurring subscription revenue. We are confident
that our brands will gain momentum in 2020 and thrilled that each
of the brands now has products in the market, including our joint
venture with 4Keeps Roses,
Cloud B brand, Lily & Gray,
Pirasta,
911 Help Now, Goodie Gusher,
Smarter Specs, EcoQuest and Trillion
Trees.
About Edison Nation, Inc.
Edison Nation, Inc. (EDNT) is a
multifaceted ecosystem which fosters innovation, driving IP, media
and innovative consumer products. Edison Nation offers innovation
sourcing, design, sales, fulfillment and shipping services. The
Edison Nation Innovation Platform sources innovative ideas for
internal launch or license to brand partners. Edison Nation hopes
to leverage its television property “Everyday Edisons” to become
the recognized leader in the innovator community.
For more information, please visit www.edisonnation.com.
Use of Non-GAAP Financial Information
EBITDA and Adjusted EBITDA is a financial measure that is not
calculated in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”). Management
believes that because Adjusted EBITDA excludes (i) certain non-cash
expenses (such as depreciation, amortization and stock-based
compensation) and (ii) expenses that are not reflective of the
Company’s core operating results over time (such as restructuring
costs, litigation or dispute settlement charges or gains, and
transaction-related costs), this measure provides investors with
additional useful information to measure the Company’s financial
performance, particularly with respect to changes in performance
from period to period. Edison Nation management uses EBITDA and
Adjusted EBITDA (a) as a measure of operating performance; (b) for
planning and forecasting in future periods; and (c) in
communications with the Company’s Board of Directors concerning
Edison Nation’s financial performance. The Company’s presentation
of EBITDA and Adjusted EBITDA are not necessarily comparable to
other similarly titled captions of other companies due to different
methods of calculation and should not be used by investors as a
substitute or alternative to net income or any measure of financial
performance calculated and presented in accordance with U.S. GAAP.
Instead, management believes EBITDA and Adjusted EBITDA should be
used to supplement the Company's financial measures derived in
accordance with U.S. GAAP to provide a more complete understanding
of the trends affecting the business.
Forward-Looking Statements
This press release contains forward-looking statements that
involve substantial risks and uncertainties. All statements, other
than statements of historical facts, included in this press release
regarding strategy, future operations and plans, including
assumptions underlying such statements, are forward-looking
statements, and should not be relied upon as representing the
Company’s views as of any subsequent date. Such forward-looking
statements are based on information available to the Company as of
the date of this release and involve a number of risks and
uncertainties, some beyond the Company’s control, that could cause
actual results to differ materially from those anticipated by these
forward-looking statements, including consumer, regulatory and
other factors affecting demand for the Company’s products, any
difficulty in marketing the Company’s products in global markets,
competition in the market for consumer products and inability to
raise capital to fund operations and service the Company’s debt.
Additional information that could lead to material changes in the
Company’s performance is contained in its filings with the SEC. The
Company is under no obligation to, and expressly disclaims any
responsibility to, update or alter forward-looking statements
contained in this release, whether as a result of new information,
future events or otherwise.
Edison Nation, Inc. (formerly
known as Xspand Products Lab, Inc.) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE
SHEETS
September 30, 2019
(Unaudited)
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
1,214,303
$
2,052,731
Accounts receivable, net
1,889,706
1,877,351
Inventory
1,106,077
923,707
Prepaid expenses and other current
assets
996,968
611,695
Income tax receivable
31,563
-
Total current assets
5,238,617
5,465,484
Property and equipment, net
974,850
998,863
Right of use assets – operating leases,
net
810,017
-
Intangible assets, net
11,873,337
12,687,731
Goodwill
9,736,510
9,736,510
Total assets
$
28,633,331
$
28,888,588
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
6,932,584
$
5,519,159
Accrued expenses and other current
liabilities
1,849,003
1,135,551
Deferred revenues
175,956
175,956
Current portion of operating lease
liabilities
292,800
-
Income tax payable
-
129,511
Line of credit, net of debt issuance costs
of $19,466 and $31,145, respectively
452,087
531,804
Current portion of notes payable, net of
debt issuance costs of $153,793 and $0, respectively
1,270,243
313,572
Current portion of notes payable – related
parties
1,039,330
932,701
Due to related party
22,896
140,682
Total current liabilities
12,034,900
8,878,936
Contingent consideration
520,000
520,000
Operating lease liabilities, net of
current portion
534,817
-
Convertible notes payable – related
parties, net of debt discount of $439,819 and $466,667 related to
the conversion feature, respectively
2,099,455
961,494
Notes payable, net of current portion
46,101
56,688
Notes payable – related parties, net of
current portion
2,342,249
2,531,490
Deferred tax liability
341
341
Total liabilities
17,577,863
12,948,949
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, $0.001 par value,
250,000,000 shares authorized; 6,033,835 and 5,654,830 shares
issued and outstanding as of September 30, 2019 and December 31,
2018, respectively
6,034
5,655
Additional paid-in-capital
21,448,280
20,548,164
Accumulated deficit
(11,318,564
)
(5,565,756
)
Total stockholders’ equity attributable to
Edison Nation, Inc.
10,135,750
14,988,063
Noncontrolling interests
919,718
951,576
Total stockholders’ equity
11,055,468
15,939,639
Total liabilities and stockholders’
equity
$
28,633,331
$
28,888,588
Edison Nation, Inc. (formerly
known as Xspand Products Lab, Inc.) and Subsidiaries
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
Revenues, net
$
3,532,645
$
4,940,188
$
15,239,434
$
12,758,715
Cost of revenues
2,544,058
3,637,000
10,413,868
9,090,215
Gross profit
988,587
1,303,188
4,825,566
3,668,500
Operating expenses:
Selling, general and administrative
3,296,323
2,065,655
9,738,107
6,276,830
Operating loss
(2,307,736
)
(762,467
)
(4,912,541
)
(2,608,330
)
Other (expense) income:
Rental income
25,704
25,704
77,111
77,111
Change in fair value of put option
contract
-
(732,600
)
-
(732,600
)
Interest expense
(349,172
)
(42,130
)
(875,036
)
(407,267
)
Total other (expense) income
(323,468
)
(749,026
)
(797,925
)
(1,062,756
)
Loss before income taxes
(2,631,204
)
(1,511,493
)
(5,710,466
)
(3,671,086
)
Income tax expense
-
167,813
74,200
312,186
Net loss
$
(2,631,204
)
$
(1,679,306
)
$
(5,784,666
)
$
(3,983,272
)
Net loss attributable to noncontrolling
interests
(49,103
)
-
(31,858
)
-
Net loss attributable to Edison Nation,
Inc.
$
(2,582,101
)
$
(1,679,306
)
$
(5,752,808
)
$
(3,983,272
)
Net loss per share
- basic and diluted
$
(0.44
)
$
(0.37
)
$
(1.00
)
$
(1.11
)
Weighted average number of common shares
outstanding – basic and diluted
5,834,167
4,560,607
5,733,379
3,577,942
Edison Nation, Inc. (formerly
known as Xspand Products Lab, Inc.) and Subsidiaries
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Nine Months Ended September
30,
2019
2018
Cash Flow from Operating
Activities
Net loss attributable to Edison Nation,
Inc.
$
(5,752,808
)
$
(3,983,272
)
Net loss attributable to noncontrolling
interests
(31,858
)
-
Net loss
(5,784,666
)
(3,983,272
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
952,019
120,004
Amortization of financing costs
658,126
266,944
Stock-based compensation
876,585
2,666,576
Amortization of right of use asset
217,189
-
Change in fair value of put option
contract
-
732,600
Changes in assets and liabilities:
Accounts receivable
(12,355
)
(1,402,277
)
Inventory
(182,370
)
39,974
Prepaid expenses and other current
assets
(667,836
)
(1,011,586
)
Accounts payable
1,413,425
55,194
Accrued expenses and other current
liabilities
549,072
780,564
Repayment of operating lease
liabilities
(199,589
)
-
Due from related party
(117,786
)
(472,352
)
Net cash used in operating
activities
(2,298,186
)
(2,207,631
)
Cash Flows from Investing
Activities
Purchases of property and equipment
(113,612
)
(121,186
)
Acquisition of Edison Nation Holdings, LLC
and Subsidiaries, net of cash received
-
(881,318
)
Purchase of loan held for investment
-
(500,000
)
Net cash used in investing
activities
(113,612
)
(1,502,504
)
Cash Flows from Financing
Activities
Borrowings under lines of credit
249,370
-
Borrowings under convertible notes
payable
1,111,111
-
Borrowings under notes payable
1,670,000
718,559
Repayments under lines of credit
(340,766
)
-
Repayments under notes payable
(570,587
)
(645,000
)
Repayments under notes payable – related
parties
(82,612
)
(118,779
)
Net proceeds from sale of common stock
-
5,358,570
Fees paid for financing costs
(463,146
)
(99,444
)
Net cash provided by financing
activities
1,573,370
5,213,906
Net (decrease) increase in cash and
cash equivalents
(838,428
)
1,503,771
Cash and cash equivalents -
beginning of period
2,052,731
557,268
Cash and cash equivalents -
end of period
$
1,214,303
2,061,039
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for:
Interest
$
145,324
$
93,044
Income taxes
$
-
$
-
Noncash investing and financing
activity:
Shares issued to note holders
$
309,780
$
167,500
Shares issued for the acquisition of
Edison Nation Holdings, LLC
-
3,760,317
Shares reserved in exchange for the
cancellation of certain non-voting membership interests related to
acquisition of Edison Nation Holdings, LLC
-
6,682,500
Borrowings under note payable for the
purchase of property and equipment
-
73,559
Issuance of 4%, 5 year senior convertible
notes for the acquisition of Edison Nation Holdings, LLC
-
1,428,161
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191115005192/en/
Investor Relations: Aimee Carroll, Edison Nation,
Inc. 215-543-3973 Email:
investors@edisonnation.com
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