Cool Holdings Earnings 2019-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

10-Q 1 awsm-10q_20190930.htm 10-Q awsm-10q_20190930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to __________

Commission File Number—001-32217

Cool Holdings, Inc.

(Exact name of registrant as specified in its charter)

Maryland

33-0599368

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification Number)

2001 NW 84^th Avenue, Miami, FL 33122

(Address of principal executive offices including zip code)

(858) 373-1675

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

AWSM

OTC Markets Group Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2019, the Registrant had 25,740,746 shares outstanding of its $0.001 par value common stock.

Cool Holdings, Inc.

FORM 10-Q

For quarterly period ended September 30, 2019

Table of Contents

	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018 (unaudited)	3
	Condensed Consolidated Balance Sheets at September 30, 2019 (unaudited) and December 31, 2018	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2019 and 2018 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 6.	Exhibits	32

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Cool Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Amounts in thousands, except per share data)

(unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net sales	$	7,057		$	5,378		$	17,211		$	15,682
Cost of sales		5,087			4,153			12,695			12,366
Gross profit		1,970			1,225			4,516			3,316
Selling, general and administrative expenses		3,903			4,108			13,860			11,217
Operating loss		(1,933	)		(2,883	)		(9,344	)		(7,901	)
Other income (expense):
Interest		(1,479	)		(506	)		(3,166	)		(1,078	)
Other income (expense), net		94			509			(77	)		991
Loss from continuing operations before provision for income taxes		(3,318	)		(2,880	)		(12,587	)		(7,988	)
Provision for income taxes		—			(220	)		(1	)		(220	)
Loss from continuing operations		(3,318	)		(3,100	)		(12,588	)		(8,208	)
Loss from discontinued operations		(6	)		(631	)		(9	)		(1,233	)
Net loss	$	(3,324	)	$	(3,731	)	$	(12,597	)	$	(9,441	)
Loss per share (basic and diluted):
Continuing operations	$	(0.37	)	$	(0.59	)	$	(1.48	)	$	(2.82	)
Discontinued operations		(0.00	)		(0.12	)		(0.00	)		(0.42	)
Total	$	(0.37	)	$	(0.71	)	$	(1.48	)	$	(3.24	)
Basic and diluted weighted-average number of common shares outstanding		8,949			5,270			8,506			2,909
Comprehensive loss:
Net loss	$	(3,324	)	$	(3,731	)	$	(12,597	)	$	(9,441	)
Foreign currency translation adjustments		34			—			—			(788	)
Comprehensive loss	$	(3,290	)	$	(3,731	)	$	(12,597	)	$	(10,229	)

Accompanying notes are an integral part of these condensed consolidated financial statements.

Cool Holdings, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share data)

	September 30, 2019			December 31, 2018
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,149		$	1,281
Restricted cash		1,196			2,012
Trade accounts receivable, net of allowance for doubtful accounts of $168 and $73, respectively		2,206			2,287
Other accounts receivable		1,330			1,262
Inventory		9,493			3,623
Prepaid assets		988			314
Current assets of discontinued operations		524			788
Total current assets		16,886			11,567
Property and equipment, net		1,398			1,009
Operating lease right-of-use assets		7,279			—
Goodwill		984			—
Intangibles, net		2,783			883
Other assets		241			232
Total assets	$	29,571		$	13,691
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,053		$	5,013
Accrued expenses and other current liabilities		6,784			1,555
Notes payable		16,544			4,464
Derivative liability		4,091			—
Current liabilities of discontinued operations		1,832			2,543
Total current liabilities		33,304			13,575
Long-term liabilities:
Notes payable		2,715			2,873
Operating lease liabilities		5,055			—
Total liabilities		41,074			16,448
Commitments and Contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000 shares authorized; 25 and 322 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.		—			—
Common stock, $0.001 par value, 150,000 shares authorized; 9,246 and 7,793 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.		9			8
Additional paid-in capital common stock		39,153			35,303
Accumulated other comprehensive loss		(1,011	)		(1,011	)
Accumulated deficit		(49,654	)		(37,057	)
Total stockholders’ deficit		(11,503	)		(2,757	)
Total liabilities and stockholders’ deficit	$	29,571		$	13,691

Accompanying notes are an integral part of these condensed consolidated financial statements.

Cool Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Amounts in thousands)

(unaudited)

	Preferred Stock						Common Stock					Additional Paid-In		Accumulated Other Comprehensive			Accumulated
	Shares			Amount			Shares			Amount		Capital		Loss			Deficit			Total
Balance, December 31, 2018		322		$	—			7,793		$	8	$	35,303	$	(1,011	)	$	(37,057	)	$	(2,757	)
Debt exchange		—			—			93			—		173		—			—			173
Warrant exercises		—			—			382			—		1,154								1,154
Foreign currency translation		—			—			—			—		—		(35	)		—			(35	)
Net loss		—			—			—			—		—		—			(3,659	)		(3,659	)
Balance, March 31, 2019		322			—			8,268			8		36,630		(1,046	)		(40,716	)		(5,124	)
Stock-based compensation		—			—			681			1		1,749		—			—			1,750
Issuance of warrants and beneficial conversion feature with convertible debt		—			—			—			—		750		—			—			750
Foreign currency translation		—			—			—			—		—		1			—			1
Net loss		—			—			—			—		—		—			(5,614	)		(5,614	)
Balance, June 30, 2019		322			—			8,949			9		39,129		(1,045	)		(46,330	)		(8,237	)
Stock-based compensation		—			—			—			—		24		—			—			24
Issuance of warrants and beneficial conversion feature with convertible debt		—			—			—			—		—		—			—			—
Conversion of preferred stock to common stock		(297	)		—			297			—		—		—			—			—
Foreign currency translation		—			—			—			—		—		34			—			34
Net loss		—			—			—			—		—		—			(3,324	)		(3,324	)
Balance, September 30, 2019		25		$	—			9,246		$	9	$	39,153	$	(1,011	)	$	(49,654	)	$	(11,503	)

	Preferred Stock						Common Stock					Additional Paid-In		Accumulated Other Comprehensive			Accumulated
	Shares			Amount			Shares			Amount		Capital		Loss			Deficit			Total
Balance, December 31, 2017		4,408		$	—			5,781		$	1	$	7,578	$	(129	)	$	(9,786	)	$	(2,336	)
Exchange of shares in connection with reverse merger		(3,644	)		—			(3,994	)		2		6,181		—			—			6,183
Sale of common stock		—			—			175			—		1,750		—			—			1,750
Foreign currency translation		—			—			—			—		—		(132	)		—			(132	)
Net loss		—			—			—			—		—		—			(2,766	)		(2,766	)
Balance, March 31, 2018		764			—			1,962			3		15,509		(261	)		(12,552	)		2,699
Stock-based compensation		—			—			42			—		200		—			—			200
Sale of common and preferred stock		298			1			885			—		3,584		—			—			3,585
Conversion of preferred stock to common stock		(404	)		—			404			—		—		—			—			—
Foreign currency translation		—			—			—			—		—		(656	)		—			(656	)
Net loss		—			—			—			—		—		—			(2,944	)		(2,944	)
Balance, June 30, 2018		658			1			3,293			3		19,293		(917	)		(15,496	)		2,884
3(a)(9) debt exchange		—			—			3,110			3		11,442		—			—			11,445
Unitron option exercise		—			—			625			1		1,790		—			—			1,791
4(a)(2) debt exchange		—			—			290			1		1,023		—			—			1,024
Conversion of preferred stock to common stock		(220	)		(1	)		220			—		—		—			—			(1	)
Exercise of common stock warrants		—			—			81			—		—		—			—			—
Equity grant		—			—			59			—		260		—			—			260
Foreign currency translation		—			—			—			—		—		(63	)		—			(63	)
Net loss		—			—			—			—		—		—			(3,731	)		(3,731	)
Balance, September 30, 2018		438		$	—			7,678		$	8	$	33,808	$	(980	)	$	(19,227	)	$	13,609

Accompanying notes are an integral part of these condensed consolidated financial statements.

Cool Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(unaudited)

Price	1.29	EPS	-1
Shares	9	P/E	-1
MCap	12	P/FCF	-3
Net Debt	22	EBIT	-13
TEV	34	TEV/EBIT	-3
TTM 2019-09-30, in MM, except price, ratios

10-Q	2019-09-30	Filed 2019-11-19
10-Q	2019-06-30	Filed 2019-08-14
10-Q	2019-03-31	Filed 2019-05-15
10-K	2018-12-31	Filed 2019-04-16
10-Q	2018-09-30	Filed 2018-11-14
10-Q	2018-06-30	Filed 2018-08-14
10-Q	2018-03-31	Filed 2018-05-21
10-K	2017-12-31	Filed 2018-03-08
10-Q	2017-09-30	Filed 2017-11-13
10-Q	2017-06-30	Filed 2017-08-11
10-Q	2017-03-31	Filed 2017-05-12
10-K	2016-12-31	Filed 2017-03-10
10-Q	2016-09-30	Filed 2016-11-10
10-Q	2016-06-30	Filed 2016-08-05
10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-03-11
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-10
10-Q	2014-09-30	Filed 2014-11-14
10-Q	2014-06-30	Filed 2014-08-14
10-Q	2014-03-31	Filed 2014-05-14
10-K	2013-12-31	Filed 2014-03-14
10-Q	2013-09-30	Filed 2013-11-07
10-Q	2013-06-30	Filed 2013-08-14
10-Q	2013-03-31	Filed 2013-05-14
10-K	2012-12-31	Filed 2013-03-22
10-Q	2012-09-30	Filed 2012-11-14
10-Q	2012-06-30	Filed 2012-08-14
10-Q	2012-03-31	Filed 2012-05-04
10-K	2011-12-31	Filed 2012-03-16
10-Q	2011-09-30	Filed 2011-11-10
10-Q	2011-06-30	Filed 2011-08-12
10-Q	2011-03-31	Filed 2011-05-16
10-K	2010-12-31	Filed 2011-03-31
10-Q	2010-09-30	Filed 2010-11-12
10-Q	2010-06-30	Filed 2010-08-16
10-Q	2010-03-31	Filed 2010-05-14
10-K	2009-12-31	Filed 2010-03-31

8-K	2020-04-16	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2020-04-06	Enter Agreement, M&A, Exhibits
8-K	2020-03-30	Enter Agreement, Leave Agreement, Sale of Shares, Regulation FD, Exhibits
8-K	2020-03-27	Enter Agreement
8-K	2020-03-11	Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K	2020-01-31	Enter Agreement, M&A, Exhibits
8-K	2020-01-15	Off-BS Arrangement, Exhibits
8-K	2019-12-30	Enter Agreement, Sale of Shares, Exhibits
8-K	2019-11-29	Enter Agreement, Shareholder Vote, Exhibits
8-K	2019-11-14	Enter Agreement, Exhibits
8-K	2019-10-31	Enter Agreement, Sale of Shares, Exhibits
8-K	2019-10-24	Enter Agreement, Sale of Shares, Exhibits
8-K	2019-10-21	Other Events
8-K	2019-10-21	Enter Agreement, Sale of Shares, Exhibits
8-K	2019-10-01	Enter Agreement, Sale of Shares, Exhibits
8-K	2019-09-20	Enter Agreement, M&A, Off-BS Arrangement, Sale of Shares, Exhibits
8-K	2019-09-11	Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K	2019-07-09	Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K	2019-07-08	Enter Agreement, Exhibits
8-K	2019-06-05	Officers, Regulation FD, Exhibits
8-K	2019-05-16	Enter Agreement, Off-BS Arrangement, Sale of Shares, Regulation FD, Exhibits
8-K	2019-05-09	Enter Agreement, Regulation FD, Exhibits
8-K	2019-05-09	Other Events
8-K	2019-04-23
8-K	2019-01-04
8-K	2018-12-27	Accountant, Officers, Exhibits
8-K	2018-12-19
8-K	2018-12-14	Officers, Shareholder Vote
8-K	2018-11-29	Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K	2018-10-24	Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K	2018-09-27	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-09-13	Enter Agreement, Leave Agreement, Sale of Shares, Exhibits
8-K	2018-08-17	Enter Agreement, Sale of Shares, Regulation FD, Exhibits
8-K	2018-08-15	Enter Agreement, Sale of Shares, Regulation FD, Exhibits
8-K	2018-07-09	Other Events, Exhibits
8-K	2018-06-08	Amend Bylaw, Regulation FD, Exhibits
8-K	2018-06-01	Enter Agreement, Sale of Shares, Regulation FD, Officers, Exhibits
8-K	2018-04-11	Off-BS Arrangement, Exhibits
8-K	2018-04-06	Officers, Exhibits
8-K	2018-03-27	Accountant, Exhibits
8-K	2018-03-08	M&A, Sale of Shares, Shareholder Rights, Control, Officers, Amend Bylaw, Exhibits
8-K	2018-03-05	Officers, Shareholder Vote, Other Events
8-K	2018-02-12	Other Events, Exhibits
8-K	2018-01-19	Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K	2017-12-31	Enter Agreement, Exhibits

EX-31.1	awsm-ex311_7.htm
EX-31.2	awsm-ex312_8.htm
EX-32.1	awsm-ex321_6.htm
EX-4.2	awsm-ex42_135.htm

AWSM 10Q Quarterly Report

Cool Holdings Earnings 2019-09-30