Reed’s Inc. (Nasdaq:REED), owner of the nation’s leading portfolio
of handcrafted, all-natural beverages, today announced financial
results for the fiscal third quarter ended September 30, 2019.
Highlights for the Third Quarter of
2019
- Consistent with the preliminary net
sales results released on September 30, 2019, third quarter net
sales were $8.7 million, a 19% decrease compared with the prior
year due to the sale of the private label business at the end of
2018 and the discontinuation of non-core products, which
collectively contributed $2.3 million of net sales in the prior
year period;
- Core brand gross sales increased
5%, driven by 22% volume growth of the Virgil’s brand;
- Gross margin increased 380 basis
points to 29% from 25% in the prior year period, reflecting the
discontinuation of lower margin non-core products and the
elimination of idle plant costs as a result of the Company’s
transition to an asset-light sales and marketing business
model;
- New leadership has identified
numerous opportunities across the supply chain to improve margins
and other areas of savings to significantly improve the cash flow
profile while supporting continued investment in core brands and
innovation. These margin improvements should be realized as
new copackers are qualified and begin production by early
2020;
- Operating loss was $4.4 million
compared with $2.1 million in the third quarter of 2018. Third
quarter 2019 operating loss included $1.1 million of incremental
investment in sales and marketing compared to the prior year,
increased delivering and handling as a result of short-term supply
chain deficiencies as well as severance-related G&A costs as a
result of recent organizational changes;
- Net loss was $4.6 million or $0.14
per share compared to $2.7 million or $0.10 per share in the prior
year period; and
- Modified EBITDA was a loss of $3.3
million compared to a loss of $1.5 million in the prior year
period.
Management Commentary
“Third quarter net sales of $8.7 million and
core brand gross sales growth of 5% each came in modestly above the
preliminary third quarter results we issued at the end of
September. However, third quarter results were significantly
inhibited by supply chain deficiencies, which negatively impacted
sales by approximately $1.2 million as a result of orders that were
unshipped and not recovered. In addition, a lack of production
capacity led to the delay of planned innovation launched for Reed’s
Mules and Ginger Shots, which led to additional unrealized sales.
Despite these challenges, we continued to generate strong volume
growth of the Virgil’s brand following last year’s launch of
Virgil’s Zero Sugar and brand refresh efforts. Production issues
delayed the broad market introduction of our Reed’s Zero Sugar
offering, which had a negative impact on planned growth during the
third quarter. However, we are pleased to report that we saw
improved fulfillment rates as the quarter progressed, successfully
expanded our contract manufacturing relationships and are
progressing with each of our initiatives to broaden production and
support for our planned product innovation efforts. We have now
identified numerous opportunities in the supply chain to improve
margins and other areas of savings to reduce cash burn while still
investing in our core brands and innovation
initiatives. These savings will be realized as new
packers are qualified and in production as we enter 2020,” stated
John Bello, Chairman and Interim Chief Executive Officer of Reed’s,
Inc.
“We are in the process of enhancing the
leadership team with the skills and experience to successfully
execute our growth strategies, including the recent addition of
Norm Snyder as Chief Operating Officer. Additionally, in late
October, we completed a successful public equity offering, raising
$8.1 million of gross proceeds that provides the capital to
effectively execute our strategic growth plans. We have the brands,
the innovation pipeline, and the enhanced sales and marketing
capabilities to drive growth and expand our sales opportunities
across categories and channels. We remain focused on the continued
expansion of our supply chain capabilities to increase our
production flexibility and redundancy. The recent announcement of
our partnership with Full Sail Brewing for the launch of
ready-to-drink Reed’s Craft Ginger Mules is a reflection of our
supply chain initiatives and provides us a highly efficient model
to rapidly develop a promising brand extension opportunity into a
rapidly growing category. In addition, we have just introduced a
line of ginger and ginger-based energy shots to compete in the in
the large and growing energy category, including broadening our
distribution opportunity into the convenience store channel. We are
very pleased with the strong initial reception to our launch of
ginger shots,” continued Mr. Bello.
“We remain highly confident with our positioning
and brand portfolio, are driving costs savings and margin
improvements across the supply chain and are committed to
effectively and efficiently growing our business and delivering
shareholder value,” concluded Mr. Bello.
Financial Overview for the Third Quarter
of 2019 Compared to the Third Quarter of 2018
During the third quarter of 2019, net sales
decreased 19% to $8.7 million compared with $10.8 million in the
prior year. The decrease in gross sales was 15% compared to the
same period in 2018. Core brand gross sales increased 5%
compared to the same period in 2018. The core brand growth was
driven by 22% volume growth of the Virgil’s brand, partially offset
by a 5% decline of the Reed’s brand. The decline in consolidated
net sales reflected the sale of the private label business at end
of fiscal 2018 and planned discontinued sales of exited and
non-core products. Additionally, reflecting the supply chain
challenges during the third quarter, net sales were negatively
impacted by approximately $1.2 million as a result of orders that
we not shipped during the period.
Gross profit during the third quarter of 2019
decreased 7% to $2.5 million compared to the same period in 2018.
The decrease in gross profit primarily relates to discontinuation
of non-core and private label sales, and an increase in trade
discounts including slotting associated with new distribution and
new product launches. Gross margin was 29% of net sales during the
third quarter of 2019 compared to 25% of net sales in the same
period in 2018.
Delivery and handling costs increased 36% to
$1.9 million during the third quarter of 2019 compared to the same
period in 2018. As a percentage of net sales, delivery and handling
costs increased 880 basis points compared to the prior year,
reflecting additional freight required to rebalance inventory at
the needed warehouse locations, shipping innovation products
produced in limited locations and a higher portion of LTL (less
than truck load) shipments to support new retailer launches. As
copacker production capabilities and available finished inventory
expands, transportation costs are expected to be reduced.
Selling and marketing costs increased 82% to
$2.5 million during the third quarter of 2019. As a percentage of
net sales, selling and marketing costs increased to 29%. The
increase was driven by investment in sales and marketing
initiatives and infrastructure, consistent with the Company’s
strategy to refresh the brands, increase brand awareness, launch
new products into the market, open new retail outlets and channels
and create new pull campaigns to increase core brands sales
velocity and lay the groundwork to re-accelerate growth of the core
brands.
General and administrative expenses (G&A)
increased to $2.5 million during the third quarter of 2019 compared
to $2.0 million in the prior year period. The increase in general
and administrative expenses compared to the prior year period was
largely driven by severance accruals with regards to the recent
management changes announced on September 30, 2019.
Operating loss during the third quarter of 2019
increased to $4.4 million from $2.1 million in the prior year
period.
Interest expense decreased to $0.3 million
during the third quarter of 2019 from $0.6 million during the third
quarter of 2018.
Net loss during the third quarter of 2019 was
$4.6 million, or $0.14 per share, compared to $2.7 million, or
$0.10 per share in the third quarter of 2018.
Modified EBITDA loss was $3.3 million in the
third quarter of 2019 compared to a loss $1.5 million in the third
quarter of 2018.
Liquidity and Cash Flow
During the first nine months of 2019, the
Company used $14.6 million of cash in operating activities compared
to $10.5 million of cash used in operating activities in the prior
year period. In the three months ending September 30, 2019, the
Company used $3.1 million of cash in operating activities compared
to $0.1 million in the prior year period. The increase in cash used
in operating activities during the third quarter of 2019 relates
primarily to the increase in net loss. As of September 30, 2019,
the Company had cash of $1.0 million and $1.0 million of available
borrowing capacity on its revolving line of credit.
Follow-on Offering
On October 25, 2019, the Company closed an
underwritten public offering of 13.4 million shares of common
stock, including 1.75 million shares sold pursuant to the
underwriters’ full exercise of their option to purchase additional
shares to cover over-allotments, at a public offering price of
$0.60 per share. The gross proceeds to the Company from this
offering were approximately $8.1 million, before deducting
commissions and other offering expenses. The company intends to use
the net proceeds from the offering to fund the growth of its
business, new products, sales and marketing efforts, working
capital, and for general corporate purposes.
Full Year 2019 Guidance
The Company is reiterating its 2019 and 2020
annual revenue guidance provided in conjunction with the Company’s
follow-on offering and filed on form 8-K on October 22, 2019. The
Company expects to generate revenue in the range of $34.5 million
to $35.5 million for the full year 2019 and anticipates
year-over-year core brand growth of 7.5% to 10.6%. The Company
anticipates a gross margin of 30% or greater for the fourth quarter
of 2019. For full year 2020, the Company expects to generate
revenue in the range of $38.0 to $42.6 million and anticipates
year-over-year core brand growth of 10.0% to 20.0%. The Company
anticipates a gross margin of 32% or greater for the full year
2020.
Third Quarter 2019 Earnings Call
Details
The Company will conduct a conference call at
4:30 pm Eastern Time today, November 13, 2019 to discuss its third
quarter 2019 results. This conference call can be accessed via a
link on Reed's investor website at http://investor.reedsinc.com/
under the "Events & Presentations" section or directly at
http://public.viavid.com/index.php?id=136865. To listen to the live
call over the Internet, please go to Reed's website at least
fifteen minutes early to register, download and install any
necessary audio software. Additionally, the call may be accessed
with the toll-free dial-in number, 1-(877) 425-9470 (U.S.); or
1-(201) 389-0878 (International). Please dial in at least five
minutes before the start of the conference call.
A replay of the webcast will be archived on the
Company’s website at http://investor.reedsinc.com/ under the
"Events & Presentations" section for approximately 90 days.
About Reed’s, Inc.
Established in 1989, Reed's is America's
best-selling Ginger Beer brand and has been the leader and
innovator in the ginger beer category for decades. Virgil's is
America's best-selling independent, full line of natural craft
sodas. The Reed's Inc. portfolio is sold in over 35,000 retail
doors nationwide. Reed's Ginger Beers are unique due to the
proprietary process of using fresh ginger root combined with a
Jamaican inspired recipe of natural spices and fruit juices. The
Company uses this same handcrafted approach in its award-winning
Virgil's line of great tasting, bold flavored craft sodas.
For more information about Reed’s, please visit
the Company’s website at: http://www.drinkreeds.com or call
800-99-REEDS. Follow Reed’s on Twitter, Instagram, and Facebook
@drinkreeds.
For more information about Virgil’s please visit
Virgil’s website at: http://www.virgils.com. Follow Virgil’s on
Twitter and Instagram @drinkvirgils and on Facebook
@drinkvirgilssoda.
Safe Harbor Statement
Some portions of this press release,
particularly those describing Reed’s goals and strategies, contain
“forward-looking statements.” These forward-looking statements can
generally be identified as such because the context of the
statement will include words, such as “expects,” “should,”
“believes,” “anticipates” or words of similar import. Similarly,
statements that describe future plans, objectives or goals are also
forward-looking statements. While Reed’s is working to achieve
those goals and strategies, actual results could differ materially
from those projected in the forward-looking statements as a result
of a number of risks and uncertainties. These risks and
uncertainties include difficulty in marketing its products and
services, maintaining and protecting brand recognition, the need
for significant capital, dependence on third party distributors,
dependence on third party brewers, increasing costs of fuel and
freight, protection of intellectual property, competition and other
factors, any of which could have an adverse effect on the business
plans of Reed’s, its reputation in the industry or its expected
financial return from operations and results of operations. In
light of significant risks and uncertainties inherent in
forward-looking statements included herein, the inclusion of such
statements should not be regarded as a representation by Reed’s
that they will achieve such forward-looking statements. For further
details, please see our most recent reports on Form 10-K and Form
10-Q, as filed with the Securities and Exchange Commission, as they
may be amended from time to time. Reed’s undertakes no obligation
to publicly update any forward-looking statement, whether as a
result of new information, future events, or otherwise.
CONTACTS:
Investor RelationsScott Van Winkle, ICR(800) 997-3337 Ext 6Or
(617) 956-6736Email: ir@reedsinc.comwww.reedsinc.com
Public Relations and MediaCarina Troy, 360PR+(347)
763-6555Email: ctroy@360pr.plus
REED’S, INC.CONDENSED
STATEMENTS OF OPERATIONSFor the Three Months and
Nine Months Ended September 30, 2019 and
2018(Unaudited)(Amounts in
thousands, except share and per share amounts)
|
Three Months Ended |
|
Nine Months Ended |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net
Sales |
$ |
8,740 |
|
|
$ |
10,796 |
|
|
$ |
26,669 |
|
|
$ |
28,473 |
|
Cost of goods sold |
|
6,238 |
|
|
|
8,115 |
|
|
|
19,390 |
|
|
|
20,447 |
|
Gross
profit |
|
2,502 |
|
|
|
2,681 |
|
|
|
7,279 |
|
|
|
8,026 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Delivery and handling
expense |
|
1,902 |
|
|
|
1,395 |
|
|
|
4,369 |
|
|
|
3,598 |
|
Selling and marketing
expense |
|
2,508 |
|
|
|
1,378 |
|
|
|
7,718 |
|
|
|
3,601 |
|
General and administrative
expense |
|
2,470 |
|
|
|
1,987 |
|
|
|
6,587 |
|
|
|
6,853 |
|
Gain on sale of assets |
|
- |
|
|
|
- |
|
|
|
(30 |
) |
|
|
- |
|
Total operating
expenses |
|
6,880 |
|
|
|
4,760 |
|
|
|
18,644 |
|
|
|
14,052 |
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(4,378 |
) |
|
|
(2,079 |
) |
|
|
(11,365 |
) |
|
|
(6,026 |
) |
|
|
|
|
|
|
|
|
Interest expense |
|
(318 |
) |
|
|
(621 |
) |
|
|
(947 |
) |
|
|
(1,542 |
) |
Change in fair value of
warrant liability |
|
131 |
|
|
|
26 |
|
|
|
23 |
|
|
|
(97 |
) |
|
|
|
|
|
|
|
|
Net loss |
|
(4,565 |
) |
|
|
(2,674 |
) |
|
|
(12,289 |
) |
|
|
(7,665 |
) |
|
|
|
|
|
|
|
|
Dividends on Series A
Convertible Preferred Stock |
|
- |
|
|
|
- |
|
|
|
(5 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
Net Loss Attributable
to Common Stockholders |
$ |
(4,565 |
) |
|
$ |
(2,674 |
) |
|
$ |
(12,294 |
) |
|
$ |
(7,670 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share – basic
and diluted |
$ |
(0.14 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding – basic and diluted |
|
33,716,359 |
|
|
|
25,587,191 |
|
|
|
32,179,119 |
|
|
|
25,242,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REED’S, INC.BALANCE
SHEETSAs of September 30, 2019 and December 31,
2018(Amounts in thousands)
|
September 30, 2019 |
|
December 31, 2018 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
1,016 |
|
|
$ |
624 |
|
Accounts receivable, net of
allowance for doubtful accounts and returns and discounts of $223
and $623, respectively |
|
4,129 |
|
|
|
2,608 |
|
Receivable from related
party |
|
- |
|
|
|
195 |
|
Inventory, net of reserve for
obsolescence of $522 and $197, respectively |
|
9,575 |
|
|
|
7,380 |
|
Prepaid expenses and other
current assets |
|
470 |
|
|
|
131 |
|
Total Current Assets |
|
15,190 |
|
|
|
10,938 |
|
|
|
|
|
Property and equipment, net of
accumulated depreciation of $438 and $342, respectively |
|
1,053 |
|
|
|
896 |
|
Equipment held for sale, net
of impairment reserves of $118 and $118, respectively |
|
82 |
|
|
|
82 |
|
Intangible assets |
|
576 |
|
|
|
576 |
|
Total
Assets |
$ |
16,901 |
|
|
$ |
12,492 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ DEFICIT |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
5,525 |
|
|
$ |
5,721 |
|
Accrued expenses |
|
1,141 |
|
|
|
1,483 |
|
Revolving line of credit |
|
7,079 |
|
|
|
6,980 |
|
Current portion of leases
payable |
|
51 |
|
|
|
51 |
|
Total Current Liabilities |
|
13,796 |
|
|
|
14,235 |
|
|
|
|
|
Leases payable, less current
portion |
|
747 |
|
|
|
801 |
|
Convertible note to a related
party |
|
4,551 |
|
|
|
4,161 |
|
Warrant liability |
|
15 |
|
|
|
38 |
|
Total
Liabilities |
|
19,109 |
|
|
|
19,235 |
|
|
|
|
|
Stockholders’
deficit: |
|
|
|
Series A Convertible Preferred
stock, $10 par value, 500,000 shares authorized, 9,412 shares
issued and outstanding |
|
94 |
|
|
|
94 |
|
Common stock, $.0001 par
value, 70,000,000 shares authorized, 33,720,044 and 25,729,461
shares issued and outstanding, respectively |
|
3 |
|
|
|
3 |
|
Additional paid in
capital |
|
70,420 |
|
|
|
53,591 |
|
Accumulated deficit |
|
(72,725 |
) |
|
|
(60,431 |
) |
Total stockholders’
deficit |
|
(2,208 |
) |
|
|
(6,743 |
) |
Total liabilities and
stockholders’ deficit |
$ |
16,901 |
|
|
$ |
12,492 |
|
|
|
|
|
REED’S, INC.CONDENSED
STATEMENTS OF CASH FLOWSFor the Nine Months Ended
September 30, 2019 and
2018(Unaudited)(Amounts in
thousands)
|
September 30, 2019 |
|
September 30, 2018 |
Cash flows from operating
activities: |
|
|
|
Net loss |
$ |
(12,289 |
) |
|
$ |
(7,665 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
Depreciation |
|
12 |
|
|
|
492 |
|
(Gain)/loss on sale of property & equipment |
|
(30 |
) |
|
|
- |
|
(Gain)/loss on termination of leases |
|
2 |
|
|
|
94 |
|
Amortization of debt discount |
|
225 |
|
|
|
- |
|
Amortization of right of use assets |
|
96 |
|
|
|
82 |
|
Stock options issued to employees for services |
|
1,077 |
|
|
|
864 |
|
Common stock issuable for services |
|
- |
|
|
|
655 |
|
Common stock issued for services |
|
520 |
|
|
|
100 |
|
Decrease in allowance for doubtful accounts |
|
(400 |
) |
|
|
(37 |
) |
Increase in inventory reserve |
|
325 |
|
|
|
126 |
|
Increase/(decrease) in fair value of warrant liability |
|
(23 |
) |
|
|
97 |
|
Accrual of interest on convertible note to a related party |
|
390 |
|
|
|
346 |
|
Lease liability |
|
(10 |
) |
|
|
- |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(1,121 |
) |
|
|
(1,707 |
) |
Inventory |
|
(2,520 |
) |
|
|
(1,236 |
) |
Prepaid expenses and other assets |
|
(339 |
) |
|
|
(239 |
) |
Accounts payable |
|
(196 |
) |
|
|
(4,100 |
) |
Accrued expenses |
|
(347 |
) |
|
|
1,648 |
|
Other long term obligations |
|
- |
|
|
|
(16 |
) |
Net cash used in
operating activities |
|
(14,628 |
) |
|
|
(10,496 |
) |
Cash flows from investing
activities: |
|
|
|
Proceeds from sale of property and equipment |
|
30 |
|
|
|
52 |
|
Purchase of property and equipment |
|
(273 |
) |
|
|
(102 |
) |
Net cash used in
investing activities |
|
(243 |
) |
|
|
(50 |
) |
Cash flows from financing
activities: |
|
|
|
Borrowings on line of credit |
|
42,179 |
|
|
|
13,495 |
|
Repayments of line of credit |
|
(42,175 |
) |
|
|
(14,107 |
) |
Capitalization of financing cost |
|
(130 |
) |
|
|
- |
|
Principal repayments on capital expansion loan |
|
- |
|
|
|
(907 |
) |
Principal repayments on long term financial obligation |
|
- |
|
|
|
(174 |
) |
Advances from officers |
|
- |
|
|
|
50 |
|
Repayment of amounts due to/from officers |
|
195 |
|
|
|
(277 |
) |
Principal repayments on capital lease obligation |
|
(38 |
) |
|
|
(187 |
) |
Exercise of warrants |
|
365 |
|
|
|
714 |
|
Proceeds from sale of common stock |
|
14,867 |
|
|
|
- |
|
Net cash provided by
(used in) financing activities |
|
15,263 |
|
|
|
(1,393 |
) |
|
|
|
|
Net increase/(decrease) in
cash |
|
392 |
|
|
|
(11,939 |
) |
Cash at beginning of
period |
|
624 |
|
|
|
12,127 |
|
Cash at end of period |
$ |
1,016 |
|
|
$ |
188 |
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
Cash paid for interest |
$ |
408 |
|
|
$ |
971 |
|
Non Cash Investing and
Financing Activities |
|
|
|
Dividends on Series A Convertible Preferred Stock |
$ |
5 |
|
|
$ |
5 |
|
Vendor credits issued for fixed asset purchases |
$ |
- |
|
|
$ |
108 |
|
|
|
|
|
|
|
|
|
Modified EBITDA
In addition to our GAAP results, we present
Modified EBITDA as a supplemental measure of our performance.
However, Modified EBITDA is not a recognized measurement under GAAP
and should not be considered as an alternative to net income,
income from operations or any other performance measure derived in
accordance with GAAP, or as an alternative to cash flow from
operating activities as a measure of liquidity. We define Modified
EBITDA as net income (loss), plus interest expense, depreciation
and amortization, stock-based compensation, changes in fair value
of warrant expense, and one-time restructuring-related costs
including employee severance and asset impairment.
Management considers our core operating
performance to be that which our managers can affect in any
particular period through their management of the resources that
affect our underlying revenue and profit generating operations that
period. Non-GAAP adjustments to our results prepared in accordance
with GAAP are itemized below. You are encouraged to evaluate these
adjustments and the reasons we consider them appropriate for
supplemental analysis. In evaluating Modified EBITDA, you should be
aware that in the future we may incur expenses that are the same as
or similar to some of the adjustments in this presentation. Our
presentation of Modified EBITDA should not be construed as an
inference that our future results will be unaffected by unusual or
non-recurring items.
Set forth below is a reconciliation of net loss
to Modified EBITDA for the three months ended September 30, 2019
and 2018 (unaudited; in thousands):
|
Three Months Ended September 30 |
|
|
2019 |
|
|
|
2018 |
|
Net loss |
$ |
(4,565 |
) |
|
$ |
(2,674 |
) |
|
|
|
|
Modified EBITDA adjustments: |
|
|
|
Depreciation and amortization |
|
38 |
|
|
|
155 |
|
Interest expense |
|
318 |
|
|
|
621 |
|
Stock option and other noncash compensation |
|
368 |
|
|
|
443 |
|
Change in fair value of warrant liability |
|
(131 |
) |
|
|
(26 |
) |
Severance |
|
643 |
|
|
|
- |
|
Total EBITDA adjustments |
$ |
1,236 |
|
|
$ |
1,193 |
|
|
|
|
|
Modified EBITDA |
$ |
(3,329 |
) |
|
$ |
(1,481 |
) |
|
|
|
|
We present Modified EBITDA because we believe it
assists investors and analysts in comparing our performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our core operating performance. In
addition, we use Modified EBITDA in developing our internal
budgets, forecasts and strategic plan; in analyzing the
effectiveness of our business strategies in evaluating potential
acquisitions; and in making compensation decisions and in
communications with our board of directors concerning our financial
performance. Modified EBITDA has limitations as an analytical tool,
which includes, among others, the following:
- Modified EBITDA does not reflect
our cash expenditures, or future requirements, for capital
expenditures or contractual commitments;
- Modified EBITDA does not reflect
changes in, or cash requirements for, our working capital
needs;
- Modified EBITDA does not reflect
future interest expense, or the cash requirements necessary to
service interest or principal payments, on our debts; and
- Although depreciation and
amortization are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and
Modified EBITDA does not reflect any cash requirements for such
replacements.
Set forth below is a reconciliation of net
income (loss) to Modified EBITDA for the nine months ended
September 30, 2019 and 2018 (unaudited; in thousands):
|
Nine Months Ended September 30 |
|
|
2019 |
|
|
|
2018 |
|
Net loss |
$ |
(12,289 |
) |
|
$ |
(7,665 |
) |
|
|
|
|
Modified EBITDA adjustments: |
|
|
|
Depreciation and amortization |
|
108 |
|
|
|
492 |
|
Interest expense |
|
947 |
|
|
|
1,542 |
|
Stock option and other noncash compensation |
|
1,597 |
|
|
|
1,619 |
|
Change in fair value of warrant liability |
|
(23 |
) |
|
|
97 |
|
Severance |
|
682 |
|
|
|
642 |
|
Total EBITDA adjustments |
$ |
3,311 |
|
|
$ |
4,392 |
|
|
|
|
|
Modified EBITDA |
$ |
(8,978 |
) |
|
$ |
(3,273 |
) |
|
|
|
|
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