Bethlehem, P.A., June 30, 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 first quarter ended March 31, 2020.

Company Highlights

• Reaffirms 2020 revenue guidance of $34 million.
• First quarter in company history with positive Earnings Per Share (“EPS”). EPS was $0.16 compared to a negative $0.25 for the comparable period.
• Appointment of Media Industry Leader Mary Ann Halford to the Company’s Board of Directors
• Relaunch of Edison Nation Medial division (“EN Medical), distributing personal protective equipment (“PPE”) and ancillary medical supplies to hospitals, government agencies, and distributors.
• Creation of Global Clean Solutions, producing proprietary sanitizer stands with subscription-based refills of our in-house sanitizer, Purple Mountain Clean.
• 4 Keeps Roses has developed Artist Versions of our Single Rose that will be rolled out for Day of The Dead and Halloween this fall, available for sale at 7-Eleven and other convenience stores nationwide.
• Common stock shares outstanding of 9,210,401 at March 31, 2020.
• Further balance sheet improvement with the sale of Cloud B, Inc.
• Acquisition of HMNRTH, a leading producer of cannabidiol health and wellness products.
• 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

• First quarter 2020 revenue decreased to $3.6 million, compared to $5.7 million in the first quarter of 2019. The decrease was primarily the result of a decrease in business operations due to the COVID-19 pandemic in China and the US. The full impact of the COVID-19 outbreak to the Company's operations remains uncertain. Some of our larger customers, such as amusement parks remain closed or operating in a limited capacity. After operating at lower than planned production levels during most of the first quarter due to COVID-19, the Company's third-party manufacturing facilities in China are currently operating at planned capacity for this time of year. Manufacturing and warehouse partners outside of China are operating at varying levels of productivity depending on local government and safety considerations, with some markets operating at lower than normal production levels while other facilities have been closed entirely. The COVID-19 situation continues to be fluid, but we currently expect all manufacturing facilities to reopen in the third quarter, based upon our understanding of local governments’ directions at this time.

Net Income (Loss)

• Net income in the first quarter of 2020 was $1.2 million, or $0.16 per basic and $0.13 per diluted share, compared to a net loss of $1.4 million, or ($0.25) per basic and diluted share in the first quarter of 2019.
• Gain on divestiture of $4,911,760 related to the deconsolidation of liabilities in connection with the sale of Cloud B, Inc. on February 17, 2020. The table below shows the assets and liabilities that the Company was relieved of in the transaction:

		February 17, 2020
Accounts payable			4,005,605
Accrued Expenses			370,289
Income Tax Payable			14,473
Notes Payable			900,000
Non-Controlling Interest			26,393
Shares to be issued to Buyer			(405,000	)
Gain on divestiture		$	4,911,760

Adjusted EBITDA

• Adjusted EBITDA, a non-GAAP measure, totaled negative $0.9 million in the first quarter of 2020, compared to negative $0.2 million in the first quarter 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”).

		For the Three Months Ended March 31,
		2020				2019
Net income (loss)		$	1,269,492			$	(1,378,397	)
Interest expense, net			723,957				124,696
Income tax gain (expense)			-				23,195
Depreciation and amortization			316,298				301,383
EBITDA			2,309,747				(929,123	)
Stock-based compensation			1,319,511				309,919
Other non-cash stock-based charges			-				52,500
Restructuring and severance costs			242,136				36,385
Transaction and acquisition costs			82,736				223,538
Other non-recurring costs			40,860				104,174
Gain on divestiture			(4,911,760	)			-
Adjusted EBITDA		$	(916,770	)		$	(202,607	)

Management Commentary

Chris Ferguson, Chief Executive, commented, “The beginning of 2020 has been a testament to the ingenuity and capacity for innovation within the Edison Nation team and community, and allows us to confidently reaffirm 2020 revenue guidance of $34mm. We are looking forward to a year of continued growth and expansion of our product lines and related media and SaaS efforts.”

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. (formerly known as Xspand Products Lab, Inc.) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2020 (Unaudited)				December 31, 2019
Assets
Current assets:
Cash and cash equivalents		$	532,062			$	412,719
Accounts receivable, net			2,043,739				2,108,099
Inventory			1,300,136				1,369,225
Prepaid expenses and other current assets			883,992				917,433
Income tax receivable			147,889				147,889
Total current assets			4,907,818				4,955,365
Property and equipment, net			922,861				931,968
Right of use assets, net			654,277				732,100
Intangible assets, net			11,322,789				11,598,063
Goodwill			5,392,123				5,392,123
Total assets		$	23,199,868			$	23,609,619
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	3,176,725			$	7,397,650
Accrued expenses and other current liabilities			1,978,295				1,594,669
Deferred revenues			154,489				159,591
Current portion of operating leases liabilities			282,689				272,215
Income tax payable			8,446				22,919
Line of credit, net of debt issuance costs of $0 and $15,573, respectively			585,430				456,995
Current portion of convertible notes payable, net of debt issuance costs of $855,555			244,445				-
Current portion of notes payable, net of debt issuance costs of $245,819 and $212,848, respectively			1,341,079				1,365,675
Current portion of notes payable – related parties			1,118,751				1,686,352
Due to related party			9,138				17,253
Total current liabilities			8,899,487				12,973,319
Operating leases liabilities –net of current portion			396,962				482,212
Convertible notes payable – related parties, net of current portion, net of debt discount of $341,667 and $366,666, respectively			1,086,494				1,061,495
Notes payable, net of current portion			38,842				42,492
Notes payable – related parties, net of current portion			1,548,762				1,595,669
Total liabilities			11,970,547				16,155,187
Commitments and Contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.001 par value, 30,000,000 shares authorized; 0 and 0 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		$	-			$	-
Common stock, $0.001 par value, 250,000,000 shares authorized; 8,676,501 and 8,015,756 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively			8,677				8,016
Additional paid-in-capital			28,790,704				26,259,575
Accumulated deficit			(17,225,970	)			(18,495,461	)
Total stockholders’ equity attributable to Edison Nation, Inc.			11,573,411				7,772,130
Noncontrolling interests			(344,090	)			(317,698	)
Total stockholders’ equity			11,229,321				7,454,432
Total liabilities and stockholders’ equity		$	23,199,868			$	23,609,619

Edison Nation, Inc. (formerly known as Xspand Products Lab, Inc.) and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended March 31,
		2020 (Unaudited)				2019 (Unaudited)
Revenues, net		$	3,667,110			$	5,738,534
Cost of revenues			2,418,412				3,945,558
Gross profit			1,248,698				1,792,976
Operating expenses:
Selling, general and administrative			4,192,713				3,049,188
Operating loss			(2,944,015	)			(1,256,212	)
Other (expense) income:
Rental income			25,704				25,704
Interest expense			(723,957	)			(124,694	)
Gain on divestiture			4,911,760				-
Total other income (expense), net			4,213,507				(98,990	)
Income (loss) before income taxes			1,269,492				(1,355,202	)
Income tax expense			-				23,195
Net income (loss)		$	1,269,492			$	(1,378,397	)
Net (loss) income attributable to noncontrolling interests			-				56,893
Net income (loss) attributable to Edison Nation, Inc.			1,269,492				(1,435,290	)
Net income (loss) per share - basic		$	0.16			$	(0.25	)
Net income (loss) per share - diluted		$	0.13			$	(0.25	)
Weighted average number of common shares outstanding – basic			8,181,470				5,661,380
Weighted average number of common shares outstanding – diluted			9,637,421				5,661,380

Edison Nation, Inc. (formerly known as Xspand Products Lab, Inc.) and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three Months Ended March 31,
		2020 (Unaudited)				2019 (Unaudited)
Cash Flow from Operating Activities
Net income (loss) attributable to Edison Nation, Inc.		$	1,269,492			$	(1,435,290	)
Net income attributable to noncontrolling interests			-				56,893
Net income (loss)			1,269,492				(1,378,397	)
Adjustments to reconcile net (income) loss to net cash used in operating activities:
Depreciation and amortization			316,299				301,383
Amortization of financing costs			570,636				56,022
Stock-based compensation			1,319,511				362,419
Amortization of right of use asset			77,823				77,704
Gain on divestiture			(4,911,760	)			-
Changes in assets and liabilities:
Accounts receivable			64,359				(776,057	)
Inventory			69,089				(437,635	)
Prepaid expenses and other current assets			33,441				(1,004,133	)
Accounts payable			(215,320	)			840,943
Accrued expenses and other current liabilities			335,815				381,714
Operating lease liabilities			(74,776	)			(73,473	)
Due from related party			(8,115	)			(42,686	)
Net cash used in operating activities			(1,153,505	)			(1,692,196	)
Cash Flows from Investing Activities
Purchases of property and equipment			(31,918	)			(72,955	)
Net cash used in investing activities			(31,918	)			(72,955	)
Cash Flows from Financing Activities
Net borrowings under line of credit			112,862				(15,035	)
Borrowings under convertible notes payable			1,100,000				-
Borrowings under notes payable			950,000				500,000
Repayments under notes payable			(672,773	)			(3,336	)
Repayments under notes payable- related parties			(14,508	)			(27,263	)
Fees paid for financing costs			(170,815	)			(22,500	)
Net cash provided by financing activities			1,304,766				431,866
Net increase (decrease) in cash and cash equivalents			119,343				(1,333,285	)
Cash and cash equivalents - beginning of period			412,719				2,052,731
Cash and cash equivalents - end of period		$	532,062				719,446
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest		$	127,504			$	52,640
Income taxes		$	-			$	235,275
Noncash investing and financing activity:
Shares issued to note holders		$	368,000			$	74,100

Investor Relations:
Aimee Carroll, Edison Nation, Inc.
Phone: (484) 893-0060
Email: investors@edisonnation.com