Edison Nation, Inc. Reports Financial Results for the Second Quarter Ended June 30, 2020
August 18 2020 - 9:53AM
Edison Nation, Inc. (NASDAQ:EDNT), a multifaceted ecosystem that
fosters innovation and drives IP, media and consumer products,
today announced results for the second quarter ended June 30, 2020.
Company Highlights
- Company announces record quarterly
revenue of $6.8 million.
- Relaunch of Edison Nation Medial
division (“EN Medical), distributing personal protective equipment
(“PPE”) and ancillary medical supplies to hospitals, government
agencies, educational facilities and distributors.
- Formation of Global Clean Solutions
(“Global”), producing proprietary sanitizer stands with
subscription-based refills of our in-house sanitizer, Purple
Mountain Clean. Global secured a three-year contract with an
additional two-year option to supply a large municipality with its
Purple Mountain Clean hand sanitizer.
- EN Medical/Global revenue for the
second quarter was $3.0M. Additionally, EN Medical has deferred
revenue of $0.9M, which is net revenue based on fees for
facilitating the shipment of goods and not the actual dollar value
of the goods that were shipped to customers.
- EN Medical purchase orders received
in the second quarter that are pending shipment total $9.9M and the
total open purchase orders for EN Medical as of today’s date are
$44.4M.
- Edison Nation product sales for its
core operations were $3.8M for the second quarter including
increased sales on marketplaces such as Amazon.
- Beta version of ENovation ENgine, a
SaaS platform to engage early stage businesses and
entrepreneurs.
- Expansion of Pressix licensing
agreement, and licensing of Table-to-Go from Edison Nation
community.
- Return of Emmy-Award winning
television show, Everyday Edisons, streaming on Crackle.
First Quarter 2020 Financial Summary
Revenue
- Second quarter 2020 revenue
increased to $6.8 million as compared to $5.9 million revenue in
the second quarter of 2019, an increase of 15.28%. The increase in
revenue was primarily the result of an increase in business and new
customers under the Company’s Edison Nation Medical
operations.
- First six months revenue of $10.5
million was a decrease of $1.16 million as compared to revenue of
$11.7 million for the first six months of 2019.
Net Loss
- Net loss in the second quarter of
2020 was $1.6 million, or ($0.18) per basic and diluted share,
compared to a net loss of $1.7 million, or ($0.30) per basic and
diluted share in the second quarter of 2019.
- Net loss for the first six months
of 2020 was $.33 million, or ($0.04) per basic and diluted share,
compared to a net loss of $3.1 million, or ($0.55) per basic and
diluted share in the second quarter of 2019.
Adjusted EBITDA
- Adjusted EBITDA, a non-GAAP measure, totaled a negative $0.006
million in the second quarter of 2020, compared to a positive
$0.009 million in the second quarter of 2019.
- Adjusted EBITDA, a non-GAAP measure, totaled negative $0.917
million in the first six months of 2020, compared to negative
$0.193 million in the first six months of 2019.
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 June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net (loss) |
|
$ |
(1,602,139 |
) |
|
$ |
(1,775,065 |
) |
|
$ |
(332,647 |
) |
|
$ |
(3,153,462 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
841,529 |
|
|
|
401,170 |
|
|
|
1,571,111 |
|
|
|
525,864 |
|
Income tax expense |
|
|
- |
|
|
|
51,005 |
|
|
|
- |
|
|
|
74,200 |
|
Depreciation and
amortization |
|
|
296,108 |
|
|
|
332,187 |
|
|
|
612,406 |
|
|
|
633,570 |
|
EBITDA |
|
|
(458,877 |
) |
|
|
(990,703 |
) |
|
|
1,850,870 |
|
|
|
(1,919,828 |
) |
Stock-based compensation |
|
|
268,916 |
|
|
|
346,071 |
|
|
|
1,588,427 |
|
|
|
708,490 |
|
Restructuring and severance
costs |
|
|
189,009 |
|
|
|
134,597 |
|
|
|
431,145 |
|
|
|
170,982 |
|
Transaction and acquisition
costs |
|
|
- |
|
|
|
- |
|
|
|
82,736 |
|
|
|
223,538 |
|
Other non-recurring costs |
|
|
- |
|
|
|
519,191 |
|
|
|
40,860 |
|
|
|
623,365 |
|
Gain on divestiture |
|
|
- |
|
|
|
- |
|
|
|
(4,911,760 |
) |
|
|
- |
|
Adjusted EBITDA
(1) |
|
$ |
(952 |
) |
|
$ |
9,156 |
|
|
$ |
(917,722 |
) |
|
$ |
(193,453 |
) |
|
(1) |
On June 8, 2020 the Company entered into a binding memorandum of
understating (the “Agreement”) with Office Mart, Inc. (the
“Customer”) and Zaaz Medical, Inc. (the “Sourcing Partner”)
(collectively “the Parties”) to deliver certain goods to a third
party (the “Transaction”). The Company was responsible for bringing
the parties together and satisfied its performance obligation under
the agreement. On August 10, 2020, the Company entered into an
amendment to the Agreement (the “Amendment”) related to the
Transaction whereas the Company and the Customer agreed to the
settlement of the fees earned related to the Transaction of
$907,500 as of June 30, 2020. The Transaction was recorded in
accounts receivable and deferred revenues as of June 30, 2020 on
the balance sheet with no impact to the condensed consolidated
statement of operations. The Company has elected to defer the
revenues until cash collection, but had the Company recognized the
revenues adjusted EBITDA would have been $906,548 and $(10,222) for
the three and six months ended June 30, 2020, respectively. |
Management Commentary
Chris Ferguson, Chief Executive, commented,
“During a challenging time in the world, our team has performed
above and beyond expectations in both the core product business and
the relaunch of Edison Nation Medical. The third quarter of 2020
will be the first full fiscal quarter for the new EN Medical, and
we are excited for the continued validation and expansion of the
Edison Nation business model.” About Edison Nation, Inc.
Edison Nation, Inc. 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. and
SubsidiariesCONDENSED CONSOLIDATED BALANCE SHEETS
|
|
June 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,762,337 |
|
|
$ |
412,719 |
|
Accounts receivable, net |
|
|
3,086,195 |
|
|
|
2,108,099 |
|
Inventory |
|
|
1,190,998 |
|
|
|
1,369,225 |
|
Prepaid expenses and other current assets |
|
|
1,884,542 |
|
|
|
917,433 |
|
Income tax receivable |
|
|
147,889 |
|
|
|
147,889 |
|
Total current assets |
|
|
8,071,961 |
|
|
|
4,955,365 |
|
Property and equipment,
net |
|
|
932,027 |
|
|
|
931,968 |
|
Right of use assets, net |
|
|
578,280 |
|
|
|
732,100 |
|
Intangible assets, net |
|
|
11,047,515 |
|
|
|
11,598,063 |
|
Goodwill |
|
|
5,392,123 |
|
|
|
5,392,123 |
|
Total assets |
|
$ |
26,021,906 |
|
|
$ |
23,609,619 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,047,197 |
|
|
$ |
7,397,650 |
|
Accrued expenses and other current liabilities |
|
|
1,704,484 |
|
|
|
1,594,669 |
|
Deferred revenues |
|
|
1,061,989 |
|
|
|
159,591 |
|
Current portion of operating leases liabilities |
|
|
279,427 |
|
|
|
272,215 |
|
Income tax payable |
|
|
8,446 |
|
|
|
22,919 |
|
Line of credit, net of debt issuance costs of $0 and $15,573,
respectively |
|
|
2,151,108 |
|
|
|
456,995 |
|
Current portion of convertible notes payable, net of debt issuance
costs of $535,235 |
|
|
900,765 |
|
|
|
- |
|
Current portion of notes payable, net of debt issuance costs of
$86,349 and $212,848, respectively |
|
|
970,710 |
|
|
|
1,365,675 |
|
Current portion of notes payable – related parties |
|
|
1,166,365 |
|
|
|
1,686,352 |
|
Due to related party |
|
|
26,784 |
|
|
|
17,253 |
|
Total current liabilities |
|
|
11,317,275 |
|
|
|
12,973,319 |
|
Operating leases liabilities
–net of current portion |
|
|
326,482 |
|
|
|
482,212 |
|
Convertible notes payable –
related parties, net of current portion, net of debt discount of
$316,667 and $366,666, respectively |
|
|
1,111,495 |
|
|
|
1,061,495 |
|
Notes payable, net of current
portion |
|
|
825,004 |
|
|
|
42,492 |
|
Notes payable – related
parties, net of current portion |
|
|
1,501,148 |
|
|
|
1,595,669 |
|
Total liabilities |
|
|
15,081,404 |
|
|
|
16,155,187 |
|
Commitments and Contingencies
(Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value, 30,000,000 shares authorized; 0 shares issued and
outstanding as of June 30, 2020 and December 31, 2019,
respectively |
|
$ |
- |
|
|
$ |
- |
|
Common stock, $0.001 par
value, 250,000,000 shares authorized; 9,618,401 and 8,015,756
shares issued and outstanding as of June 30, 2020 and December 31,
2019, respectively |
|
|
9,618 |
|
|
|
8,016 |
|
Additional
paid-in-capital |
|
|
30,802,083 |
|
|
|
26,259,575 |
|
Accumulated deficit |
|
|
(18,850,350 |
) |
|
|
(18,495,461 |
) |
Total stockholders’ equity attributable to Edison Nation, Inc. |
|
|
11,961,351 |
|
|
|
7,772,130 |
|
Noncontrolling interests |
|
|
(1,020,849 |
) |
|
|
(317,698 |
) |
Total stockholders’ equity |
|
|
10,940,502 |
|
|
|
7,454,432 |
|
Total liabilities and stockholders’ equity |
|
$ |
26,021,906 |
|
|
$ |
23,609,619 |
|
Edison Nation, Inc. and
SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
For the Three MonthsEnded June 30, |
|
|
For the Six MonthsEnded June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues,
net |
|
$ |
6,880,026 |
|
|
$ |
5,968,255 |
|
|
$ |
10,547,136 |
|
|
$ |
11,706,789 |
|
Cost of revenues |
|
|
4,889,784 |
|
|
|
3,924,252 |
|
|
|
7,308,196 |
|
|
|
7,869,810 |
|
Gross profit |
|
|
1,990,242 |
|
|
|
2,044,003 |
|
|
|
3,283,940 |
|
|
|
3,836,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
2,770,930 |
|
|
|
3,392,596 |
|
|
|
6,963,643 |
|
|
|
6,441,784 |
|
Operating loss |
|
|
(780,688 |
) |
|
|
(1,348,593 |
) |
|
|
(3,724,703 |
) |
|
|
(2,604,805 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
|
25,703 |
|
|
|
25,703 |
|
|
|
51,407 |
|
|
|
51,407 |
|
Interest expense |
|
|
(847,154 |
) |
|
|
(401,170 |
) |
|
|
(1,571,111 |
) |
|
|
(525,864 |
) |
Gain on divestiture |
|
|
- |
|
|
|
- |
|
|
|
4,911,760 |
|
|
|
- |
|
Total other (expense) income |
|
|
(821,451 |
) |
|
|
(375,467 |
) |
|
|
3,392,056 |
|
|
|
(474,457 |
) |
Loss before income taxes |
|
|
(1,602,139 |
) |
|
|
(1,724,060 |
) |
|
|
(332,647 |
) |
|
|
(3,079,262 |
) |
Income tax expense |
|
|
- |
|
|
|
51,005 |
|
|
|
- |
|
|
|
74,200 |
|
Net loss |
|
$ |
(1,602,139 |
) |
|
$ |
(1,775,065 |
) |
|
$ |
(332,647 |
) |
|
$ |
(3,153,462 |
) |
Net income (loss) attributable to noncontrolling
interests |
|
|
22,241 |
|
|
|
(39,648 |
) |
|
|
22,241 |
|
|
|
17,245 |
|
Net loss attributable to Edison Nation, Inc. |
|
$ |
(1,624,380 |
) |
|
$ |
(1,735,417 |
) |
|
$ |
(354,888 |
) |
|
$ |
(3,170,707 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – basic and diluted |
|
$ |
(0.18 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.55 |
) |
Weighted average number of common shares outstanding – basic and
diluted |
|
|
8,920,554 |
|
|
|
5,702,693 |
|
|
|
8,551,012 |
|
|
|
5,682,150 |
|
Edison Nation, Inc. and
SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
Six Months Ended June 30, |
|
|
|
2020 |
|
|
2019 |
|
Cash Flow from Operating
Activities |
|
|
|
|
|
|
|
|
Net loss attributable to Edison Nation, Inc. |
|
$ |
(354,888 |
) |
|
$ |
(3,170,707 |
) |
Net income attributable to noncontrolling interests |
|
|
22,241 |
|
|
|
17,245 |
|
Net loss |
|
|
(332,647 |
) |
|
|
(3,153,462 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
612,406 |
|
|
|
633,570 |
|
Amortization of financing costs |
|
|
1,227,046 |
|
|
|
391,223 |
|
Stock-based compensation |
|
|
1,588,427 |
|
|
|
708,490 |
|
Amortization of right of use asset |
|
|
153,820 |
|
|
|
155,408 |
|
Gain on divestiture |
|
|
(4,911,760 |
) |
|
|
- |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(978,097 |
) |
|
|
(1,215,155 |
) |
Inventory |
|
|
178,227 |
|
|
|
(336,544 |
) |
Prepaid expenses and other current assets |
|
|
(967,109 |
) |
|
|
(561,331 |
) |
Accounts payable |
|
|
(344,847 |
) |
|
|
1,191,252 |
|
Accrued expenses and other current liabilities |
|
|
1,425,622 |
|
|
|
480,928 |
|
Operating lease liabilities |
|
|
(148,518 |
) |
|
|
(144,132 |
) |
Due from related party |
|
|
9,532 |
|
|
|
(65,600 |
) |
Net cash used in operating activities |
|
|
(2,487,898 |
) |
|
|
(1,915,353 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(61,917 |
) |
|
|
(106,770 |
) |
Net cash used in investing activities |
|
|
(61,917 |
) |
|
|
(106,770 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities |
|
|
|
|
|
|
|
|
Borrowings under lines of credit, net |
|
|
1,678,540 |
|
|
|
240,000 |
|
Borrowings under convertible notes payable |
|
|
1,436,000 |
|
|
|
1,111,111 |
|
Borrowings under notes payable |
|
|
1,767,352 |
|
|
|
1,110,000 |
|
Repayments under lines of credit |
|
|
- |
|
|
|
(31,542 |
) |
Repayments under notes payable |
|
|
(824,472 |
) |
|
|
(566,710 |
) |
Repayments under notes payable – related parties |
|
|
(14,508 |
) |
|
|
(40,997 |
) |
Fees paid for financing costs |
|
|
(143,479 |
) |
|
|
(427,411 |
) |
Net cash provided by financing activities |
|
|
3,899,433 |
|
|
|
1,394,451 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
1,349,618 |
|
|
|
(627,672 |
) |
Cash and cash equivalents –
beginning of period |
|
|
412,719 |
|
|
|
2,052,731 |
|
Cash and cash equivalents –
end of period |
|
$ |
1,762,337 |
|
|
|
1,425,059 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of
Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
144,740 |
|
|
$ |
74,908 |
|
Income taxes |
|
$ |
235,725 |
|
|
$ |
- |
|
Noncash investing and financing activity: |
|
|
|
|
|
|
|
|
Shares issued to note holders |
|
$ |
- |
|
|
$ |
173,300 |
|
Conversion under notes payable |
|
$ |
424,000 |
|
|
$ |
- |
|
Investor Relations:
Aimee Carroll, Edison Nation,
Inc.Phone: (484)
893-0060Email: investors@edisonnation.com
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