Q3 2021 Vinco Ventures Inc Earnings Call

Critics.

Welcome to Winco ventures third quarter, 2021 earnings call.

At this time all participants are in a listen only mode.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Greg Mcniff Investor Relations for Banco Ventures. Please go ahead.

Good morning, and welcome to Banco Ventures third quarter of 2021 financial results Conference call I'm, Greg Mcniff Investor Relations for being co ventures.

So on the call today will be Mr. King been co Chief Executive Officer, and Phil Jones, <unk> incoming Chief Financial Officer.

Today's call is being webcast live and will be archived on the Investor Relations section of the <unk>.

<unk> website at investors <unk> Bingo ventures Dot Com, where our earnings press release is currently available.

The matters, we will be discussing today, including our growth strategies and expected growth opportunities and performance centered around the whole motive platform as well as certain transactions, we expect to complete to pure growth are forward looking statements.

Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. These risks and uncertainties are discussed in our documents filed with the SEC, including our annual report on Form 10-K for the period ended December 31, 2020 filed on April 15.

2021, and quarterly reports on Form 10-Q filed thereafter.

Our quarterly report for the quarter ended September 30th 2021 filed today in.

In addition to U S. GAAP reporting Winco reports certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance reconciliations between these GAAP and non-GAAP measures are included in the tables found in today's press release and with that I'd like to turn the call over to.

Elisa.

Good morning, everyone and thank you for joining today.

We used to report our third quarter myself before I discuss some of the highlights of the quarter I'd like to take a few moments to review the progress we made on our strategy of building a global media and content platform hearings.

During the quarter, along with our joint venture partners Ash Global media, we completed the acquisition of an 80% interest in the market one of the global pure play video sharing social networking platform.

We believe the motive is one of the fastest selling video sharing social networking platform in its category over the last three years with over 225 million installations of the limo. The FAP globally. That's a bunch over 10 billion atomic clips user generated content have been used to create more than.

750 million videos on the platform since its launch.

We bring the motive is the centerpiece of our strategy to become a pure play media and Entertainment company.

We intend to monetize the platform to our planned acquisition of advisor screen.

Media partners LLC, our joint venture with Bash Global media the planned acquisition, we announced in early October.

Adviser run themselves real time programmatic AD transaction and has direct agreements with agencies and advertisers and its own proprietary AI focused platform. We believe the advisor is position for rapid growth in digital advertising and we expect its capability, which will enable us to monetize the modus growing brand awareness.

Through advertising and sponsorship.

As the parties are still in negotiations to enter into a definitive agreement for the advisor acquisition will share more about the strategy later as we progress with this transaction.

In addition, we expect to build our unique media platform by working with our joint venture partner Bash Global media to combine its content creation and distribution initiatives with some modest potential for our flywheel growth model, which we believe can drive significant revenue growth.

We believe that la mode, if an adviser will be complemented by our honey Badger media and Edison nation brands, which will remain with pimco.

Honey Badger is a digital commerce company that designs digital campaigns and Leverages its network of millions of followers and an impressive catalogs of celebrities and influencers to grow advertising revenue.

Honey Badger brings a proprietary monetization process that converts traffic $10 employees content arbitrage to capitalize on that for traffic and leverages the power plants that.

Edison Nation allows inventors to create distribute market and monetize their products the licensing agreement.

What I've described above is the V.

We have for the transformation of <unk> to a media and entertainment company.

<unk> to complete our transformation, we announced the planned spin off of our block chain subsidiary CRIP type, which is expected to be completed by early next year.

To give you a sense of our operational progress I'd like to briefly touch on some notable developments.

Just last month, the motive partnered with E D C. Las Vegas to extend with the motive brand in the U S. Through a three day event that reached an engaged a large audience.

It's typically the motive activated over 150, Influencers and the law motive brand received over 51 million views that kicked off.

Over 40 million Instagram story views.

Not only did the scale exceed our expectations, but the cross platform pollination with other social media suggests what motive is on its way to becoming a recognizable brand in the U S.

This made us believe that la motive has the potential of becoming a leading content platform.

We also recently announced the launch of La motive, India, a channel focus on local trends, where subscribers can collaborate and engage with content creators initial feedback has been very positive.

We're very excited about the potential of this market and we expect to roll out more features soon.

We're currently pursuing opportunities to expand our la motive brand in other markets can be expect to be able to share more details of our progress on our next update.

In summary, I'm encouraged by our execution in the third quarter, we believe our strategy to focus the company on the large and growing media and entertainment market, coupled with a robust social media platform will position us well for long term growth.

With that I'll now.

Now I'll turn the call over to Phil to discuss our financial results in more detail Bill.

Thank you Lisa.

Very excited to join the team and I'd like to thank Brett Perlman for ensuring a seamless transition.

We will continue to consult with the company until the spin off of Krypton, where he is now also serving as CFO.

Before I discuss the results of the third quarter I'd like to highlight a few of the recent corporate developments since our last update first and foremost the completion of the acquisition of the motif in July.

D V media partners, our joint venture with that's global media was a significant milestone when the company on a culmination of a lot of hard work by many.

Plus during the quarter, we began to consolidate the results of the motif.

The C V V media partners, our consolidated variable interest entity.

During the quarter La <unk> continued to focus its efforts on expanding its brand and user base across its markets and we are thrilled to have them in winco.

Secondly, during the third quarter, we raised $193 million.

Which 93 million was from common stock sales and issuances for the exercise of warrants along with $100 million from the proceeds.

Invertible note offering which were used to fund the cash component of the acquisition of our membership interest in T V Media partners.

Of $92 million.

As of September 30th we had approximately $150 million in cash of which $100 million restricted deposit account control agreement under the provisions of the convertible notes.

During the quarter and subsequent to quarter end, we successfully raised significant capital through the exercise of issued warrants I believe that this source of capital provides the funding needed to continue to build out our business and help fund future potential acquisitions as of today, we have approximately $165 million in cash which is.

<unk> the $100 million in restricted cash.

The biggest impact to our third quarter nine month results is the loss recognized on the issuance of warrants and the change in estimated fair value of outstanding warrants at the end of September.

Specifically as of September 30th Company had warrants outstanding for the purchase of approximately 93 million shares of common stock, which if fully exercised for cash could raise approximately $377 million of funds for the company.

Associated with these warrants is a 469 9 million warrant liability reported on the balance sheet as of September 30th 2021.

It is important to understand that this warrant liability is a noncash liability and will change in value of company's share price fluctuation.

And we will eventually be eliminated due to either the exercise or exploration of the underlying warrants.

However, our warrant liability and its impact on our financial results will be significant.

It will be a significant element for the company. During this stage of its evolution. So I wanted to highlight it here.

As we saw in the third quarter. The total loss from warrant activity was $494 million or 91% of our net loss for the quarter.

After consideration for the impact of the warrant related loss remaining results of operations reflect the early stage of the transition with Winco too rich media and content future.

During the third quarter the company continued to ramp it focus on implementing the steps necessary to build its internal resources and work with its legal teams and advisors to execute its capital races.

Business strategy, the due diligence related to a number of potential acquisition transactions necessary to complete the continuing work with that and finally, the spin out over a cliff type business.

Revenue for the quarter decreased 11, 5%, which was mainly attributable to a revenue decrease Edison nation Medical division due to the reduction in demand for personal protective equipment.

The company incurred operating expenses of 25 $9 million during the third quarter of 2021.

Which $6 2 million was stock based compensation $5 6 million was due to legal and professional fees related to the transactions.

A total of $11 3 million.

Related to the operating expenses on D V media partners in the motive respectively.

<unk> transaction on July 23.

Operating expenses for the same period, a year ago I'm not directly comparable given the significant changes the business has undergone over the past year.

As described earlier, our net our net loss was significantly impacted by the $494 million in losses related to the issuance and revaluation of the warrant liabilities during the quarter.

Our net loss for the quarter was $542 million or $7 59 per share.

On a non-GAAP basis net loss for the quarter without the nine 494 million of losses due to the warrant activity was $48 million or 68 cents per share.

Please refer to our press release announcing our third quarter results for the corresponding GAAP reconciliation.

When looking at the cash flow statement or use of cash I like just the significant impact of noncash related expenses on our net income for the nine months ended September 30th our net use of cash for operations was approximately $19 million of which $9.

4 million was used during the third quarter.

In addition, we provided loan shore joint venture partners that in anticipation of the business combination totaling $18 million for the nine months ended September 30th of which 13 months occurred during the third quarter.

When viewed in this perspective, I believe that the company's current operations or commiserate with the cash and capital resources. It has available to it.

Moving to the balance sheet. The company I believe is in a strong position highlighted by cash and restricted cash balance.

Balance sheet also reflects the increase in assets as a result of the consolidation of law motif, most notably its intangible asset associated with the La Motiva application.

As of September 30th company had $337 million as.

Compared to $28 million at the beginning of the year.

The liability section of the balance sheet reflects the increased working capital requirements related to the growth in the company's operations.

Along with the impact of the convertible note, which is listed net of debt issuance cost. He finally, the aforementioned warrant liability of $468 million.

Strongly encourage everyone to review our Form 10-Q filed yesterday with the SEC for further details on our results along with other information important to understand the company.

Yeah.

Lastly, I wanted to update everyone on the proposed spin off the cliff type business.

November eight the preliminary form 10 for the quick type spin off was filed with the SEC.

We currently expect that the distribution will occur.

Early 2022.

<unk> recently announced a new business arrangements CW machines with Wharton global supplier of Bitcoin mining equipment and services joint effort will be focused on simplifying consumer ownership of mining equipment through the integration of smart contract technology.

That I'd like to turn the call back to Lisa for closing remarks.

Thank you for joining us on the call today, we're excited about the growth opportunities ahead of us and we appreciate your interest and support.

To updating you on our progress next quarter.

This.

Today's conference you may disconnect your lines at this time, thank you for your participation.

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