GlobeNewswire Inc | Aug 18, 2020 09:53AM EDT

August 18, 2020

Company Announces Record Quarterly Revenue

Bethlehem, P.A., Aug. 18, 2020 (GLOBE NEWSWIRE) -- 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 todays 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 Companys 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 Six Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Net (loss) $ (1,602,139 ) $ (1,775,065 ) $ (332,647 ) $ (3,153,462 ) Interest 841,529 401,170 1,571,111 525,864 expense, netIncome tax - 51,005 - 74,200 expenseDepreciationand 296,108 332,187 612,406 633,570 amortizationEBITDA (458,877 ) (990,703 ) 1,850,870 (1,919,828 )Stock-based 268,916 346,071 1,588,427 708,490 compensationRestructuringand severance 189,009 134,597 431,145 170,982 costsTransactionand - - 82,736 223,538 acquisitioncostsOthernon-recurring - 519,191 40,860 623,365 costsGain on - - (4,911,760 ) - divestitureAdjusted $ (952 ) $ 9,156 $ (917,722 ) $ (193,453 )EBITDA (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 (1) ?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 Companys 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 Companys 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 Companys Board of Directors concerning Edison Nations financial performance. The Companys 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 Companys 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 Companys 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 Companys products, any difficulty in marketing the Companys products in global markets, competition in the market for consumer products and inability to raise capital to fund operations and service the Companys debt. Additional information that could lead to material changes in the Companys 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 1,704,484 1,594,669 liabilitiesDeferred revenues 1,061,989 159,591 Current portion of operating leases 279,427 272,215 liabilitiesIncome tax payable 8,446 22,919 Line of credit, net of debt issuance costs 2,151,108 456,995 of $0 and $15,573, respectivelyCurrent portion of convertible notespayable, net of debt issuance costs of 900,765 - $535,235Current portion of notes payable, net ofdebt issuance costs of $86,349 and 970,710 1,365,675 $212,848, respectivelyCurrent portion of notes payable ? related 1,166,365 1,686,352 partiesDue to related party 26,784 17,253 Total current liabilities 11,317,275 12,973,319 Operating leases liabilities ?net of 326,482 482,212 current portionConvertible notes payable ? relatedparties, net of current portion, net of 1,111,495 1,061,495 debt discount of $316,667 and $366,666,respectivelyNotes payable, net of current portion 825,004 42,492 Notes payable ? related parties, net of 1,501,148 1,595,669 current portionTotal 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, 2020and December 31, 2019, respectivelyCommon stock, $0.001 par value, 250,000,000shares authorized; 9,618,401 and 8,015,756shares issued and outstanding as of June 9,618 8,016 30, 2020 and December 31, 2019,respectivelyAdditional paid-in-capital 30,802,083 26,259,575 Accumulated deficit (18,850,350 ) (18,495,461 )Total stockholders? equity attributable to 11,961,351 7,772,130 Edison Nation, Inc.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 Months For the Six Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Revenues, net $ 6,880,026 $ 5,968,255 $ 10,547,136 $ 11,706,789 Cost of 4,889,784 3,924,252 7,308,196 7,869,810 revenuesGross profit 1,990,242 2,044,003 3,283,940 3,836,979 Operating expenses:Selling,general and 2,770,930 3,392,596 6,963,643 6,441,784 administrativeOperating 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 (847,154 ) (401,170 ) (1,571,111 ) (525,864 )expenseGain on - - 4,911,760 - divestitureTotal other(expense) (821,451 ) (375,467 ) 3,392,056 (474,457 )incomeLoss before (1,602,139 ) (1,724,060 ) (332,647 ) (3,079,262 )income taxesIncome tax - 51,005 - 74,200 expenseNet loss $ (1,602,139 ) $ (1,775,065 ) $ (332,647 ) $ (3,153,462 )Net income(loss)attributable 22,241 (39,648 ) 22,241 17,245 tononcontrollinginterestsNet lossattributable $ (1,624,380 ) $ (1,735,417 ) $ (354,888 ) $ (3,170,707 )to EdisonNation, Inc.Net loss per share:Net loss pershare ? basic $ (0.18 ) $ (0.30 ) $ (0.04 ) $ (0.55 )and dilutedWeightedaverage numberof commonshares 8,920,554 5,702,693 8,551,012 5,682,150 outstanding ?basic anddiluted

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 22,241 17,245 interestsNet 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 1,425,622 480,928 liabilitiesOperating 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 (14,508 ) (40,997 )partiesFees 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 1,349,618 (627,672 )equivalentsCash and cash equivalents ? beginning of 412,719 2,052,731 periodCash and cash equivalents ? end of period $ 1,762,337 1,425,059 Supplemental Disclosures of Cash Flow InformationCash 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