Q2 2021 Vinco Ventures Inc Earnings Call
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Good day, ladies and gentlemen, and welcome to the venture venture second quarter 2021 earnings conference call.
This time it is my pleasure to turn the floor over to your host of income interest CEO, Mr. Chris Ferguson, Sir the floor is yours.
Thank you operator.
I am Chris Ferguson.
Oh, Thank adventures and with me on the call today is Bryan Mcfadden, Chief strategy Officer, and Brett <unk>, Chief Financial Officer to review the second quarter 2021 results as well as provide a business update.
During this call management.
Forward looking statements forward looking statements include but are not limited to statements regarding expectations intentions and strategies regarding the future.
Forward looking statements are based on management's current expectations and assumptions and are subject to known and unknown risks uncertainties and other.
Factors that could cause actual results to differ materially from the projected results.
These uncertainties listeners are cautioned not to place undue reliance on any forward looking statements contained in this conference call.
Please refer to the cautionary text regarding forward looking statements contained in the earnings release.
Which also applies to the content of this call additional risk disclosures can be found in the company's filings with the Securities and Exchange Commission.
On today's call management will make comments on certain GAAP based and non-GAAP pro forma financial information for further information regarding the company.
Historical financial performance.
We refer you to our filings with the SEC.
<unk>.
Our Form 10-Q filed on August 23, 2021.
We may have taken a long way to get here, but we have officially arrived at the starting line of an exciting opportunity with low motif.
And our partners at fast Global media and entertainment.
I would like to say a special thanks to Paul Yeah, He's the founder and CEO of Lamar teeth.
We set out with a vision for its business and exceeded expectations at every level.
We are truly thrilled to have Paul as a partner and excited to execute on his vision for the future of Momo team.
Sure subsidiary DVD Media partners LLC, the company invest on an 80% equity interest in low motif private limited a social media music and dance platform that competes with Tic Toc entire show.
Upon closing the transaction with little notice, we also completed a licensing agreement.
With the Universal music.
<unk> access to music library with some of the world's top artist.
The growth of the loan most peak user base has been impressive the current sensor tower data indicate the monthly active user base for little motif to be 30 million users one of the fastest growing markets for.
<unk> is India, a country, where tictoc is band we will continue our efforts to grow India as well as North America with unique programming such as you've been scout I encourage all of our shareholders to download the app and see the unique elements that low motif as launch.
As I mentioned earlier this is.
As only the beginning of what Youll see from the company and our plans for expanding the motif.
Sure have a monthly active user base of 30 million users can be illustrated in a variety of ways.
Recent example is how low motif assisted R. E N F T platform with its first launch of the Tory lanes album, when it's dark.
Our Chief strategy Officer, Bryan Mcfadden will give an overview of our platform and the upcoming spin off of <unk> T platform LLC.
We're delighted that Brian has accepted the role of CEO for the new company and with that I will turn it over to Brian.
Sure.
Thanks, Chris The addition.
Of reimbursement team to Winco has been excited with the recent launch of the Dash <unk> Dot com platform, we are poised to disrupt the music industry by providing a cost effective distribution solution to artists of all genres and audience size.
From the AOS, there's we're currently engaging to the independents, making music in their houses EBITDAX.
<unk> dot com will empower the content creator and ensure that they retain both the intellectual and monetary rights of their work. Additionally, our expanding SaaS model has led us into discussions with leading global record companies, providing additional revenue streams as we scale.
Our initial product launch on the platform was pushed through lebow cheaply.
Keith with great success, the first out and to launch Tory lanes. When it's dark opened to a complete sellout of 1 million copies within the first official launch minute.
This makes toward the first artist to go platinum on the blockchain building on this initial launch we will continue to add artists of all sizes to the platform and focus on driving user adoption.
With the continued disruption of the music industry. The Winco Ventures Board has determined that the shareholders are best served with diversified holdings could this benefit we are in process of moving immersive entertainment into a newly formed publicly traded company focused on disruptive blockchain technology.
Target date of record for the New company is estimated to.
In September and we look forward to having this deal closed during Q4 2021.
Thanks, Brian.
After completing the acquisition of 80% of <unk>. The company has a cash position of more than $80 million as of today.
Financing partners hold approximately 44 million registered.
That if and when exercised will provide the company with additional funds of approximately $141 million.
We would like to thank our financing partners for the trust. They have placed in our team and we will continue to seek to drive value for our shareholders.
With that I will turn it over to our CFO Brett.
<unk>.
Thanks, Kris and good evening everyone.
Before moving into our second quarter results I would like to highlight a few significant events some of which were covered by Chris and Brian that are expected to have an impact on our results going forward.
During the second quarter of 2021, we disposed of the assets.
Warrants one of our large legacy brands cloud B, we received gross proceeds of $2.5 million and are reinvesting the capital received from the sale to facilitate the future growth of our other businesses. The results of those operations as well as the results of SRM Entertainment have been presented as discontinued operations and are no longer included in.
Our continuing operations for both 4041.
We raised an additional $80 million in the second quarter net of fees paid to placement agents through the exercise of warrants by holders in connection with those exercises we issued additional inducement warrants to purchase common stock shares of $45.7 million.
In the second quarter, which could generate approximately $149.1 million in proceeds if exercised by the holders. This has the potential for additional liquidity, allowing us access to additional capital to invest in our future growth.
The warrants have a cash settlement feature that requires the warrants to be classified as a liability on our balance.
She's.
The company acquired the immersive Entertainment platform in April 2021, and announced the planned spin out of the company as its own Standalone publicly traded entity, the resulting immersive entertainment public company will be led by current income ventures, Chief strategy Officer Bryan Mcfadden.
As mentioned previously in July 2000.
One of our joint ventures, DVD media partners acquired an 80% interest in limbo teeth, using the proceeds from the debt raise of $100 million.
These two events occurred subsequent to the quarter and are not included in our consolidated balance sheets and consolidated statements of operations.
I will now move on to our second quarter results.
'twenty one please note that I'll be referring to certain non-GAAP financial measures such as adjusted EBITDA, which we believe may be important to investors to assess our operating performance rec.
Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our quarterly and annual filings. In addition, I will be discussing our results as it relates to.
Our continuing operations.
The discontinued operations are presented separately in the consolidated statement of operations for both years presented.
In the.
Quarter, our revenues totaled $2.7 million for the three months ended June 32021 versus $5.2 million for the same period in the prior year.
Which is a decrease of 48% versus a year ago.
The decrease in revenues is mainly attributed to the decrease in revenues of personal protective equipment and the Edison Nation Medical Division.
The revenues do not include any revenues from SRM Entertainment, our cloud <unk> branded products as mentioned previously.
Second quarter gross margin.
With six 1% versus 22, 6% a year ago lower margins in the prior period are due to revenues in the prior year from the lower margin personal protective equipment and the Edison Nation Medical Division.
SG&A in the quarter came in at $5.9 million, an increase of approximately $3.6 million.
Dollars versus the prior year. This was primarily the result of noncash stock based compensation increase of 1 million professional fees of <unk> 9 million payroll and related benefits of <unk> 7 million and depreciation and amortization of $4 million the.
The increase in payroll and related benefits as due to the hiring of new employees related to our app.
Acquisition.
We expect to make additional investments to grow our business going forward, including investing capital to build out our media platform and NSP platform for users, while also improving our advertising platform.
As a result, we plan to continue growing our talent base in the second half of 2021 in addition to making targeted investments.
In media content and marketing to support the growth of our community and advertisers we.
We will continue to be focused on scaling our business efficiently to drive operating leverage.
We view the recent investments that we have made and that we will make in the future is a key part of our growth and the path towards profitability and positive free cash.
From an earnings perspective basic and diluted net loss per share was a loss of $5.13 per share. The net loss from continuing operations was $178.9 million. The net loss included a loss of $170.9 million related to the issuance and revaluation of warrant liabilities during the second quarter.
<unk>, our adjusted EBITDA was a loss of approximately $3.3 million for the three months ended June 32021.
Included in adjusted EBITDA as add backs for stock based compensation losses on the issuance and revaluation of warrant liabilities.
And deal related costs and gains and losses on divestitures.
Moving.
So the balance sheet. We ended the second quarter was $74.8 million of cash and cash equivalents total debt net of unamortized discounts of $6.8 million was $5.6 million in the warrant liability was $139.7 million as of June 30th.
We will continue to monitor our cash balances and outstanding debt as the year progresses at.
At this time, we believe we have sufficient liquidity to allow us to focus on scaling our newest endeavors, the motif and immersive and to drive the company towards profitability and positive free cash flow into the future with that I would now like to turn the call back over to Chris to close out.
Thanks, Brett.
We look forward to what the future holds for the combined.
<unk> entity zinc low motif in dash.
To address the questions that we received at investors at bank of <unk> Dot com.
Common theme is what are the next steps in the closing of <unk> transaction to answer that.
We must next move to the shareholder vote and the proxy.
Which we anticipate the record date being September 14th 2021.
We thank everybody for their time today, and we look forward to the bright future ahead.
Ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time and have a great day.
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