Greetings, and welcome to Vinco Ventures Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. 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 Vinco Ventures. Please go ahead. .
Good morning, and welcome to Vinco Ventures third quarter 2021 financial results conference call. I'm Greg McNiff, Investor Relations for Vinco Ventures. Also on the call today will be Lisa King, Vinco's Chief Executive Officer; and Philip Jones, Vinco's incoming Chief Financial Officer.
Today's call is being webcast live and will be archived on the Investor Relations section of Vinco's Web site at investors.vincoventures.com where our earnings press release is currently available.
Certain matters we will be discussing today, including our growth strategies and expected growth opportunities and performance centered around the automotive platform as well as certain transactions we expect to complete to fuel our 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, including our quarterly report for the quarter ended September 30, 2021 filed today. In addition to U.S.
GAAP reporting, Vinco 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. Reconciliation 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 Lisa..
Good morning, everyone, and thank you for joining today. We're pleased to report our third quarter results. 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.
During the quarter, along with our joint venture partner, ZASH Global Media, we completed the acquisition of an 80% interest in Lomotif, one of the global, pure play video-sharing social networking platforms.
We believe Lomotif is one of the fastest growing video-sharing social networking platforms in its category over the last three years, with over 225 million installations of the Lomotif app globally since its launch.
Over 10 billion atomic clips of user generated content have been used to create more than 750 million videos on the platform since its launch. We view Lomotif as the centerpiece of our strategies to become a pure play media and entertainment company.
We intend to monetize the platform to our planned acquisition of AdRizer through ZVV Media Partners LLC, our joint venture with ZASH Global Media, the planned acquisition we announced in early October.
AdRizer runs both real-time programmatic ad transactions and has direct agreements with agencies and advertisers on its own proprietary AI-focused platform.
We believe AdRizer is positioned for rapid growth in digital advertising and we expect its capabilities will enable us to monetize Lomotif's growing brand awareness through advertising and sponsorship.
As the parties are still in negotiations to enter into a definitive agreement for the AdRizer acquisition, we'll share more about this 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, ZASH Global Media, to combine its content creation and distribution initiatives with Lomotif's potential for a flywheel growth model, which we believe can drive significant revenue growth.
We believe that Lomotif and AdRizer will be complemented by our Honey Badger Media and Edison Nation brands, which will remain with Vinco. Honey Badger is a digital commerce company that designs digital campaigns and leverages its network of millions of followers and an impressive catalogue of celebrities and influencers to grow advertising revenue.
Honey Badger brings a proprietary monetization process that converts traffic to dollars, employs content arbitrage to capitalize on network traffic and leverages a powerful ad stack. Edison Nation allows inventors to create, distribute, market and monetize their products to licensing agreements.
What I've described above is the vision we have for the transformation of Vinco to a media and entertainment company. Finally, to complete our transformation, we announced the planned spin-off of our blockchain subsidiary, Cryptyde, 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, Lomotif partnered with EDC Las Vegas to extend the Lomotif brand in the U.S. through a three-day event that reached and engaged a large audience.
Specifically, Lomotif activated over 150 influencers and the Lomotif brand received over 51 million views on TikTok and over 40 million Instagram story views. Not only did the scale exceed our expectations, but the cross platform pollination with other social media suggests Lomotif is on its way to becoming a recognizable brand in the U.S.
This made us believe that Lomotif has the potential of becoming a leading content platform. We also recently announced the launch of Lomotif India, a channel focused 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 Lomotif brand in other markets and we 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 a 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 turn the call over to Phil to discuss our financial results in more detail.
Phil?.
Thank you, Lisa. I'm very excited to join the team, and I'd like to thank Brett Vroman for ensuring a seamless transition as he will continue to consult for the company until the spin-off of Cryptyde, 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 Lomotif in July through ZVV Media Partners, our joint venture with ZASH Global Media, was a significant milestone for the company and a culmination of a lot of the hard work by many.
First, during the quarter, we began to consolidate the results of Lomotif through ZVV Media Partners, our consolidated variable interest entity. During the quarter, Lomotif continued to focus its efforts on expanding its brand and user base across its markets, and we are thrilled to have them in Vinco.
Secondly, during the third quarter, we raised $193 million, of which $93 million was from common stock sales and issuances for the exercise of warrants, along with $100 million from the proceeds from a convertible note offering which were used to fund the cash component of the acquisition of our membership interest in ZVV Media Partners of $92 million.
As of September 30, we had approximately 150 million in cash, of which 100 million is restricted in a 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 issuing warrants.
We 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 includes 100 million in restricted cash.
The biggest impact to our third quarter and 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 30, the 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 $459 million warrant liability reported on the balance sheet as of September 30, 2021.
It is important to understand that this warrant liability is a non-cash liability that will change in value as company share price fluctuates, and will eventually be eliminated due to either the exercise or expiration of the underlying warrants.
However, our warrant liability and its impact on our financial results 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 of Vinco to its media and content future.
During the third quarter, the company continued to ramp its focus on implementing the steps necessary to build its internal resources, and work with its legal teams and advisors to execute its capital raises, business strategy, and the due diligence related to a number of potential acquisition transactions necessary to complete the continuing work [ph] and finally the spin-out of our Cryptyde business.
Revenue for the quarter decreased 11.5%, which was mainly attributable to a revenue decrease in our 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, of which 6.2 million was stock-based compensation, 5.6 million was due to legal and professional fees relating to the transactions and a total of 11.3 million related to the operating expenses of ZVV Media Partners and Lomotif, respectively, since the close of the transaction on July 23.
Operating expenses for the same period a year ago are not directly comparable given the significant changes the business has undergone over the past year. As described earlier, 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 494 million of losses due to the warrant activity, was 48 million or $0.68 per share. Please refer to our press release announcing our third quarter results for the corresponding GAAP reconciliations.
When looking at the cash flow statement, our use of cash [indiscernible] significant impact of non-cash related expenses on our net income. For the nine months ended September 30, 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 a loan to our joint venture partner, ZASH, in anticipation of the business combination totaling 18 million for the nine months ended September 30, of which 13 months occurred during the third quarter.
When viewed in this perspective, I believe that the company's current operations are commensurate 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 its cash and restricted cash balance.
Balance sheet also reflects the increase in assets as a result of a consolidation of Lomotif, most notably its intangible assets associated with the Lomotif application. As of September 30, the company had 337 million in assets 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, and finally, the aforementioned warrant liability of 458 million.
I 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. Lastly, I wanted to update everyone on the proposed spin-off of the Cryptyde business.
On November 8, the preliminary Form 10 for the Cryptyde spin-off was filed with the SEC. We currently expect that the distribution will occur in early 2022. Cryptyde recently announced the new business arrangement, CW Machines with Wattum, a global supplier of bitcoin mining equipment and services.
The joint effort will be focused on simplifying consumer ownership of mining equipment through the integration of smart contract technologies. And with that, I'd like to turn the call back to Lisa for closing remarks..
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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. We look forward to updating you on our progress next quarter..
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..