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spk01: Greetings, and welcome to Vinco Ventures 2020 year-end conference 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 management.
spk03: Thank you, operator, and welcome. I am Chris Ferguson, CEO of Vinco Ventures, and with me on the call today is Brett Broman, Chief Financial Officer to review the fourth quarter and full year 2020 results and provide a business update. During this call, management will make 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. Given 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 for a form of financial information. The non-GAAP financial measure the company uses is adjusted EBITDA. Management believes that adjusted EBITDA provides useful information in that it excludes amounts that are not indicative of the company's core operating results and ongoing operations and provides a more consistent basis for comparison between periods. The earnings release contains a reconciliation of adjusted EBITDA to net income or loss, which is most directly comparable gap measure. For further information regarding the company's historical financial performance, we refer you to our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2020. We all faced unprecedented challenges during 2020. I am extremely proud of our team and their ability to adapt to the new environment of a COVID world and see the opportunities. Growing revenue and evolving our business model in such a short period of time is a worthy accomplishment that exceeded my expectations. One of our main goals at the start of 2020 was to determine ways to leverage the intersection between digital media and consumer products. We launched with the Honey Badger platform. during Q4 2020 was the first meaningful step in that direction, and now the pending merger with ZASH will springboard us into being a leader in the global media space. During the short time that we have been engaged with the team from ZASH, the two organizations have identified low-hanging fruit opportunities for developing synergies that will provide growth for the respective businesses. Currently, we're focused on how Honey Badger and its ability to drive traffic can possibly impact ZASH and its digital media operations. Additionally, ZASH's team is helping Vinco discover new outlets for its media properties, including the Emmy Award-winning program Everyday Innocence. Recently, we updated the timing of the anticipated closing date for the merger with ZASH to be on or before May 28, 2021. As we sit here today, we are confident that we can achieve that timing for the ZASH transaction. I can speak for the entire Vinco team when I say that we are eager to complete this merger and look forward to all we can achieve through this combination of two unique organizations. With that, I will turn it over to our CFO, Brent Broman.
spk02: Thanks, Chris, and good afternoon, everyone. The Vinco team, along with the rest of the world, had a challenging year in 2020, as we all know. Although we faced significant challenges and headwinds due to the COVID-19 pandemic, the team was able to remain focused and execute on the launch of our new VBIG strategy in Q4, while making some tough decisions on how best to move the company forward into the future. We believe the licensing and launch of our Honey Badger Media Division and the acquisition of PBD Safety LLC will allow us the opportunity to bring greater returns while we look to divest some lower-performing brands and companies. such as our divestiture of our 100% owned subsidiary, SRM Entertainment Limited. We made the decision to divest our amusement park business due to the sluggish reopenings of amusement parks around the world and the investment that would have been needed to remain open and the even greater investment to relaunch as the amusement parks begin to get back to full capacity. In addition, as previously mentioned by Chris, We began the year with positive momentum as we announced our planned merger with Zash Global Media to further execute on our strategy. Please note that I will 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. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release and our quarterly and annual filing. 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 and Consolidated Balance Sheets for both years presented. In addition, we are still working to finalize our audit for fiscal 2020, and the numbers being presented are considered unaudited until which time we receive the opinion from our independent accounting firm. For the 2020 fiscal year, total revenues were $15.8 million compared to $12.5 million in fiscal 2019. The increase is primarily attributable to the increase in revenues from the sale of personal protective equipment through our medical division. Sales were negatively impacted in our brand business due to sourcing and capital restraints from the impacts of COVID-19 in 2020. Gross profit for the full year decreased $613,000, or 12%, due to lower margins in the medical division business. SG&A decreased $1.8 million, or 13%, due to reductions in workforce during the year and reductions in professional fee spend. Our interest expense increased by $2.1 million, or 160%, due to increased borrowings in 2020. A large portion of our interest expense is non-cash and was related to the amortization of fees for the issuance of shares and warrants. The gain on divestiture of 4.9 was related to the release of liabilities from our consolidated financial statements due to our divestiture of CloudBee Inc. in Q1 of 2020. In addition, a gain on divestiture of 1.2 million was included in discontinued operations due to our sale of SRM Entertainment Limited in Q4 of 2020. Net loss for the year from continuing operations was 6.3 million in fiscal 2020 compared to 14.2 million in fiscal 2019. Income from discontinued operations was $599,000 in fiscal 2020 compared to a loss from discontinued operations of $10,000 in 2019. Income from discontinued operations in 2020 included the gain from divestiture of $1.2 million offset by a net loss of $630,000. For the fourth quarter 2020, total revenues were $3.4 million compared to $3 million in Q4 2019. The increase is primarily attributable to the launch of Honey Badger Media and our digital media monetization strategy. Gross profit for the quarter was $7,000 compared to $1.7 million for the same quarter in the prior year. The decrease of $1.7 million or 100% was primarily due to lower margin business sales in Q4, as well as the full reserve of a deposit made by the company of $800,000 for personal protective equipment, which we are currently working with the recipient on a plan to recover those funds. SG&A decreased $2.5 million, or 46%, due to the closure of our California warehouse and the relocation of those operations to Florida, as well as reduced spending related to professional service fees. Our interest expense decreased by $497,000, or 38%, due to the conversion of some of our outstanding debt into shares. A gain of divestiture of $1.2 million was included in discontinued operations and, as previously mentioned, was related to our divestiture of SRM Entertainment Limited in Q4. The gain was driven by the receipt of 200,000 common shares or approximately $1 million from a NASDAQ-listed company and the buyer's assumption of certain liabilities offset by the assets acquired. Net loss for the year from continuing operations was $3.7 million in Q4 2020 compared to a net loss of $8 million in Q4 2019. Income from discontinued operations was $1.2 million in the fourth quarter of 2020 compared to a loss from discontinued operations of $435,000 for the same quarter in 2019. From an earnings perspective, our adjusted EBITDA was a loss of approximately $2.7 million for the year ended December 31, 2020, compared to $2.4 million for the year ended December 31, 2019. Included in adjusted EBITDA is approximately $1.1 million of transaction and non-recurring costs, which includes restructuring and severance costs for headcount and rent reductions in 2020. In addition, we have added back stock-based compensation of $3.2 million in fiscal 2020. The add-backs include restructuring and severance costs from the date of communication and are not necessarily the full year's impact of the company's anticipated savings. Turning to the balance sheet, at year-end, total cash was $249,000 compared to $234,000 in the prior year and $385,000 in the prior quarter. Total debt net of unameritized discounts remained flat at $7.6 million as compared to the previous quarter ended September 30, 2020. and up $1.4 million or $6.2 million at December 31, 2019. Inventory totaled $1.7 million, up 36% versus the prior year, primarily due to the inventory we acquired in the TBD safety acquisition, and up 11% from September 30, 2020. In January and February, we were able to raise additional funds of $25 million through the issuance of debt and equity. The use of proceeds was to pay off existing debt as well as fund our new joint venture, ZVV Media Partners. We continue facing uncertainty due to the COVID-19 pandemic and are closely monitoring the vaccination rollouts around the world as well as the resurgence of COVID-19 infections. Retail outlets around the world are still open and available to consumers, but sales to consumers through e-commerce portals continues to increase significantly into 2020 and beyond. We are optimistic about the upcoming year as we work to close on our announced merger with Dash Global Media and the opportunity to continue executing on our Be Big strategy as we look to acquire new assets that can deliver significant growth potential to the company. Due to the continued uncertainties and fluid impacts of COVID-19, these expectations could be affected by heightened effects from the pandemic as we move into 2021. We continue to manage cash and liquidity and continue efforts in controlling our spend. We believe the actions we are taking will enable us to continue navigating the effects of the pandemic. We appreciate your time this afternoon. And with that, I will now turn the call back over to the operator.
spk01: Thank you. Ladies and gentlemen, this will conclude tonight's conference. You may disconnect to your lines at this time. Thank you for your participation.
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