Cool Holdings Earnings 2020-05-02

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

10-Q 1 awsm-10q_20200502.htm 10-Q awsm-10q_20200502.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 May 2, 2020

☐	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)

(786) 254-6709

(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 July 31, 2020, the Registrant had 110,536,882 shares outstanding of its $0.001 par value common stock.

Cool Holdings, Inc.

FORM 10-Q

For the 13 weeks ended May 2, 2020

Table of Contents

	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited)	5
	Condensed Consolidated Statements of Cash Flows (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 4.	Controls and Procedures	24
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 6.	Exhibits	29

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Cool Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Amounts in thousands, except per share data)

(unaudited)

	13 Weeks Ended May 2, 2020			Three Months Ended March 31, 2019			Transition Period January 1 to February 1, 2020
Net sales	$	13,943		$	2,529		$	5,285
Cost of sales		9,448			2,168			3,777
Gross profit		4,495			361			1,508
Selling, general and administrative expenses		7,126			2,713			2,358
Operating loss		(2,631	)		(2,352	)		(850	)
Other income (expense):
Interest		(924	)		(728	)		(532	)
Decrease (increase) in fair value of derivative liability		543			—			(807	)
Gain (loss) on extinguishment of debt		13,642			(9	)		—
Other income (expense), net		(56	)		8			—
Income (loss) from continuing operations before provision for income taxes		10,574			(3,081	)		(2,189	)
Provision for income taxes		—			(1	)		—
Income (loss) from continuing operations		10,574			(3,082	)		(2,189	)
Income (loss) from discontinued operations		(236	)		(577	)		66
Net income (loss)	$	10,338		$	(3,659	)	$	(2,123	)
Basic income (loss) per share:
Continuing operations	$	0.16		$	(0.39	)	$	(0.05	)
Discontinued operations		(0.00	)		(0.07	)		0.00
Total	$	0.16		$	(0.46	)	$	(0.05	)
Diluted income (loss) per share:
Continuing operations	$	0.16		$	(0.39	)	$	(0.05	)
Discontinued operations		(0.00	)		(0.07	)		0.00
Total	$	0.16		$	(0.46	)	$	(0.05	)
Weighted-average number of common shares outstanding:
Basic		65,728			7,963			43,777
Diluted		65,943			7,963			43,777
Comprehensive income (loss):
Net income (loss)	$	10,338		$	(3,659	)	$	(2,123	)
Foreign currency translation adjustments		128			(36	)		(85	)
Comprehensive income (loss)	$	10,466		$	(3,695	)	$	(2,208	)

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)

	May 2, 2020			December 31, 2019			February 1, 2020
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,236		$	2,638		$	1,972
Restricted cash		650			1,196			1,197
Trade accounts receivable, net of allowance for doubtful accounts of $0, $39 and $17, respectively		461			1,151			706
Other accounts receivable		503			1,701			1,735
Inventory		5,298			7,396			7,652
Prepaid assets		664			846			877
Current assets of discontinued operations		185			1,560			713
Total current assets		11,997			16,488			14,852
Property and equipment, net		669			858			808
Operating lease right-of-use assets		8,369			7,504			8,760
Intangibles, net		2,009			2,055			2,044
Goodwill		699			699			699
Other assets		280			245			245
Total assets	$	24,023		$	27,849		$	27,408
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,776		$	6,040		$	6,080
Accrued expenses and other current liabilities		2,377			5,408			5,286
Current portion of operating lease liabilities		2,770			2,577			2,768
Notes payable		1,608			13,227			13,685
Derivative liability		—			1,721			2,527
Current liabilities of discontinued operations		1,528			3,792			2,225
Total current liabilities		13,059			32,765			32,571
Long-term liabilities:
Notes payable		3,315			85			—
Operating lease liabilities		5,819			5,023			6,109
Total liabilities		22,193			37,873			38,680
Commitments and Contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000 shares authorized; 25 shares issued and outstanding as of all periods presented.		—			—			—
Common stock, $0.001 par value, 150,000 shares authorized; 106,465, 43,777 and 43,777 shares issued and outstanding as of May 2, 2020, December 31, 2019 and February 1, 2020, respectively.		107			44			44
Additional paid-in capital common stock		51,490			49,074			49,081
Accumulated other comprehensive loss		91			(1,069	)		(201	)
Accumulated deficit		(49,858	)		(58,073	)		(60,196	)
Total stockholders’ equity (deficit)		1,830			(10,024	)		(11,272	)
Total liabilities and stockholders’ equity (deficit)	$	24,023		$	27,849		$	27,408

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		Income (Loss)			Deficit			Total
Balance, December 31, 2019		25	$	—		43,777	$	44	$	49,074	$	(1,069	)	$	(58,073	)	$	(10,024	)
Stock-based compensation		—		—		—		—		7		—			—			7
Elimination of other comprehensive loss from sale of foreign subsidiary		—		—		—		—		—		953			—			953
Foreign currency translation		—		—		—		—		—		(85	)		—			(85	)
Net loss		—		—		—		—		—		—			(2,123	)		(2,123	)
Balance, February 1, 2020		25		—		43,777		44		49,081		(201	)		(60,196	)		(11,272	)
Stock-based compensation		—		—		3,000		3		148		—			—			151
Debt exchange		—		—		59,688		60		2,261		—			—			2,321
Elimination of other comprehensive loss from sale of foreign subsidiary		—		—		—		—		—		164			—			164
Foreign currency translation		—		—		—		—		—		128			—			128
Net income		—		—		—		—		—		—			10,338			10,338
Balance, May 2, 2020		25	$	—		106,465	$	107	$	51,490	$	91		$	(49,858	)	$	1,830

	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	)

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)

	13 Weeks Ended May 2, 2020			Three Months Ended March 31, 2019			Transition Period January 1 to February 1, 2020
Cash flows from operating activities:
Net income (loss)	$	10,338		$	(3,659	)	$	(2,123	)
Less: income (loss) from discontinued operations		(236	)		(577	)		66
Income (loss) from continuing operations		10,574			(3,082	)		(2,189	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		180			63			62
Accretion of debt discount		666			521			373
Non-cash interest		232			—			—
Provision for (recovery of) bad debts		(16	)		6			(22	)
Stock-based compensation		151			30			8
Loss (gain) on debt conversion		(13,642	)		9			—
Provision for obsolete inventory		3			—			36
Loss (gain) on derivative liability		(543	)		—			807
Impairment of right of use assets		53			—			—
Change in operating assets and liabilities:
Trade accounts receivable		261			104			467
Other accounts receivable		1,006			270			(34	)
Inventory		2,351			297			(293	)
Prepaid assets		213			(48	)		(32	)
Other assets		(35	)		(1	)		—
Accounts payable		(1,136	)		(343	)		40
Accrued expenses		(1,388	)		120			(122	)
Operating lease right of use assets and lease liabilities		50			32			20
Net cash used in continuing operating activities		(1,020	)		(2,022	)		(879	)
Net cash provided by (used in) discontinued operating activities		(232	)		(67	)		299
Net cash used in operating activities		(1,252	)		(2,089	)		(580	)
Cash flows from investing activities:
Purchase of property and equipment		(7	)		(1	)		—
Sale of investment securities		—			23			—
Net cash provided by (used in) investing activities		(7	)		22			—
Cash flows from financing activities:
Proceeds from issuance of notes payable, net of debt issuance costs		3,098			—			—
Payment of notes payable		(250	)		(284	)		—
Proceeds from warrant exercises		—			1,154			—
Net cash provided by financing activities		2,848			870			—
Effect of exchange rate changes on cash		128			(36	)		(85	)
Net increase (decrease) in cash and cash equivalents		1,717			(1,233	)		(665	)
Cash, cash equivalents and restricted cash, beginning of period		3,169

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	2020-05-02	Filed 2020-07-31
10-K	2019-12-31	Filed 2020-05-29
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	2020-07-31	Earnings, Exhibits
8-K	2020-06-15
8-K	2020-06-05
8-K	2020-04-16
8-K	2020-04-06
8-K	2020-03-30
8-K	2020-03-27
8-K	2020-03-11
8-K	2020-01-31
8-K	2020-01-15
8-K	2019-12-30
8-K	2019-11-29
8-K	2019-11-14
8-K	2019-10-31
8-K	2019-10-24
8-K	2019-10-21
8-K	2019-10-21
8-K	2019-10-01
8-K	2019-09-20
8-K	2019-09-11
8-K	2019-07-09
8-K	2019-07-08
8-K	2019-06-05
8-K	2019-05-16
8-K	2019-05-09
8-K	2019-05-09
8-K	2019-04-23
8-K	2019-01-04
8-K	2018-12-27
8-K	2018-12-19
8-K	2018-12-14
8-K	2018-11-29
8-K	2018-10-24
8-K	2018-09-27
8-K	2018-09-13
8-K	2018-08-17
8-K	2018-08-15
8-K	2018-07-09
8-K	2018-06-08
8-K	2018-06-01
8-K	2018-04-11
8-K	2018-04-06
8-K	2018-03-27
8-K	2018-03-08
8-K	2018-03-05
8-K	2018-02-12
8-K	2018-01-19
8-K	2017-12-31

EX-31.1	awsm-ex311_7.htm
EX-31.2	awsm-ex312_6.htm
EX-32.1	awsm-ex321_9.htm

AWSM 10Q Quarterly Report

Cool Holdings Earnings 2020-05-02