$Pistol Pete$, $Mick$ & Friends Stock Picks /news, DD and charts

[$Pistol Pete$]

$PENC PEN Inc. Announces Second Quarter 2017 Financial Results

Source: Marketwired
PEN Inc. Announces Second Quarter 2017 Financial Results

Investor Webcast and Business Update Set for Tuesday, August 29, 1 pm ET

MIAMI, FL--(Marketwired - Aug 22, 2017) - PEN Inc. (OTCQB: PENC) ("PEN" or "the Company"), a global leader in developing, commercializing and marketing consumer and industrial products enabled by nanotechnology, reported financial results for its second quarter ended June 30, 2017.

Scott Rickert, PEN's President, Chairman and CEO, said: "The second quarter was an active one at PEN. We commenced the relocation of our Ohio operations to a smaller facility nearby, a move that will allow us to outsource a good portion of our manufacturing and lower our cost structure while providing the flexibility to quickly meet the diverse and dynamic packaging needs of our customers. More importantly, it will allow PEN to focus on our primary mission of building a consumer products company offering compelling products enabled by nanotechnology.

"We are preparing for upcoming relaunch of our key health and safety products, including our environmentally friendly surface protector, which we expect to kick off in the fourth quarter once the relocation is complete. The PEN Design Center has evolved into a true development partner for industrial and commercial customers, and is making a name for itself as a key supplier of inks and pastes for the printed electronics industry and graphene foils used in medical imaging. I am impressed with the contributions of our team members on each of these fronts as we move forward to position PEN for future success."

Second Quarter 2017 Financial Results

During the second quarter of 2017, PEN experienced typical quarterly variation in sales and margins of its health and safety products. The Company generated a loss for the quarter, primarily due to expenses associated with the upcoming relocation of its Product segment operations. Despite the net loss and buildup of inventory in advance of the move, the Company generated positive cash flow from operations during the quarter.

For the three months ended June 30, 2017, total revenues were $2,002,609, compared to revenues of $2,209,828 in the comparable period in 2016.

For the second quarter of 2017, overall gross profit amounted to $656,257 compared to $793,086 for the second quarter of 2016. Gross margin was 33%, compared to 36% in the year ago period. The decrease in gross margin was attributable lower gross margins from the Product segment and the Contract services segment during the quarter.

Operating expenses totaled $1,019,827 in the second quarter of 2017, relatively unchanged from $1,012,110 in the second quarter of 2016. In the second quarter of 2017, salaries, wages and related benefits decreased by 41% due to personnel reductions related to the Company's ongoing efforts to reduce costs. This was offset by increases in selling and marketing expenses associated with higher social media costs, commissions and trade show expenses, professional fees related to contract services that are part of the relocation of the Product segment operations, and an increase in research and development expenses related to work on specialty coatings for new markets and potential enhancements of the surface protector and fortifier product.

Operating loss was $363,570 in the second quarter of 2017, compared to an operating loss of $219,024 in the second quarter of 2016.

Other income was $42,380 in the second quarter of 2017, compared to $93,333 in the second quarter of 2016.

Net loss for the three months ended June 30, 2017 amounted to $321,190 or ($0.11) per basic and diluted share, as compared to a net loss of $125,691 or ($0.04) per basic and diluted share, for the three months ended June 30, 2016.

Basic and diluted earnings per share were based on 3,046,341 and 3,002,658 weighted average shares outstanding, respectively, for the three months ended June 30, 2017 and 2016.

PEN Brands' Health and Safety Products - Product Segment

Sales from PEN's Product segment for the second quarter of 2017 were $1,754,336, down from $1,916,124 for the three months ended June 30, 2016. The decrease in revenue reflects the normal variation in the timing of purchases of health and safety products by the Company's large customers.

Gross margin in the Product segment in the second quarter of 2017 was 38%, compared to 41% in the year ago period, primarily due to differences in the assortment of products sold.

PEN Design Center - Contract Services Segment

Revenues from the Contract services segment for the second quarter of 2017 were $248,273 compared to $293,704 in the second quarter of 2016.

Gross margin from the Contract services segment in the second quarter of 2017 was negative 7%, compared to 0% in the year ago period.

First Half 2017 Results

For the six months ended June 30, 2017, total revenues were $4,218,959 up slightly from revenues of $4,188,989 in the first half of 2016. Gross profit was $1,589,574 in the first half 2017, up 4% from gross profit of $1,524,210 in the first half of 2016. Gross margin was 38%, up from 36% in the first half of 2016. Net loss for first half of 2017 amounted to $226,778 or ($0.07) per basic and diluted share, as compared to net loss of $245,626, or ($0.08) per basic and diluted share, for the first half of 2016. Basic and diluted earnings per share were based on 3,044,393 and 3,000,152 weighted average shares outstanding, respectively, for the six months ended June 30, 2017 and 2016.

Financial Condition

As of June 30, 2017, PEN held cash and cash equivalents of $176,212 as compared to $189,128 at December 31, 2016. As of June 30, 2017, PEN had a working capital deficit of $1,188,809 compared to a working capital deficit of $1,072,691 at December 31, 2016.

During the first half of 2017, PEN generated $180,244 in cash flow from operations. As of June 30, 2017, the Company had short-term debt of $1,004,577 compared to $1,070,137 as of December 31, 2016.

Investor webcast and business update: Tuesday, August 29th, 1 pm EDT

PEN will host an investor webcast on Tuesday, August 29th at 1 pm EDT to discuss second quarter results, provide a business update and take questions from investors. Participants can register 20 minutes prior to the event at: http://services.choruscall.com/links/penc170829.html.

Questions for the event may be submitted in advance to [e-mail].

About PEN Inc.

PEN Inc. (OTCQB: PENC) is a leader in developing, commercializing, and marketing consumer and industrial products enabled by nanotechnology that solve everyday problems for customers in the health, transportation, military, sports, and safety industries. Through PEN's wholly-owned subsidiary PEN Brands LLC (formerly Nanofilm Ltd.), the Company develops, manufactures and sells products based on nanotechnology including the ULTRA CLARITY® brand eyeglass cleaner, CLARITY DEFOG IT™ brand defogging products, CLARITY ULTRASEAL® nanocoating products for glass and ceramics and an environmentally friendly surface protector, fortifier, and cleaner. The Company's Applied Nanotech, Inc. subsidiary in Austin, Texas functions as the Design Center conducting contract services for government and private customers and new product development for PEN focusing on innovative and advanced product solutions in the areas of safety, health, and sustainability. For more information about PEN, visit www.penc.us.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties concerning our business, products, and financial results. Actual results may differ materially from the results predicted. More information about potential risk factors that could affect our business, products, and financial results are included in our annual report on Form 10-K for the fiscal year ended December 31, 2016, and in reports subsequently filed by us with the Securities and Exchange Commission ("SEC"). All documents are available through the SEC's Electronic Data Gathering Analysis and Retrieval System (EDGAR) at www.sec.gov or from our website listed above. We hereby disclaim any obligation to publicly update the information provided above, including forward-looking statements, to reflect subsequent events or circumstances.


PEN INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS




June 30, 2017


December 31, 2016



(Unaudited)


ASSETS


CURRENT ASSETS:



Cash


$

176,212


$

189,128



Accounts receivable, net


815,405


722,845



Accounts receivable - related party


15,242


10,474



Inventory


1,344,625


1,035,499



Prepaid expenses and other current assets


56,680


75,080



Total Current Assets


2,408,164


2,033,026



OTHER ASSETS:



Property, plant and equipment, net


640,750


709,627



Other assets


111,150


51,078



Total Other Assets


751,900


760,705



Total Assets


$

3,160,064


$

2,793,731



LIABILITIES AND STOCKHOLDERS' DEFICIT



CURRENT LIABILITIES:



Bank revolving line of credit


$

919,068


$

979,688



Current portion of notes payable


85,509


90,449



Accounts payable


1,603,230


1,078,527



Accounts payable - related parties


20,887


52,887



Deferred revenue


37,081


-



Accrued expenses


931,198


904,166




Total Current Liabilities


3,596,973


3,105,717



LONG-TERM LIABILITIES:



Notes payable, net of current portion


246,345


266,110




Total Long-Term Liabilities


246,345


266,110



Total Liabilities


3,843,318


3,371,827



Commitments and Contingencies



STOCKHOLDERS' DEFICIT:



Preferred stock, $0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding


-


-



Class A common stock: $0.0001 par value, 7,200,000 shares authorized; 1,643,908 and 1,367,431 issued and outstanding at June 30, 2017 and December 31, 2016, respectively


164


136



Class B common stock: $0.0001 par value, 2,500,000 shares authorized; 1,416,976 and 1,402,104 issued and outstanding at June 30, 2017 and December 31, 2016, respectively


142


140



Class Z common stock: $0.0001 par value, 300,000 shares authorized; 0 and 262,631 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively


-


26



Additional paid-in capital


5,443,385


5,321,769



Accumulated deficit


(6,126,945

)


(5,900,167

)


Total Stockholders' Deficit


(683,254

)


(578,096

)


Total Liabilities and Stockholders' Deficit


$

3,160,064


$

2,793,731





PEN INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS




For the Three Months Ended


For the Six Months Ended



June 30,


June 30,



2017


2016


2017


2016



(unaudited)


(unaudited)


(unaudited)


(unaudited)


REVENUES:



Products


$

1,754,336


$

1,916,124


$

3,750,825


$

3,609,550



Contract services


248,273


293,704


468,134


579,439




Total Revenues


2,002,609


2,209,828


4,218,959


4,188,989



COST OF REVENUES:



Products


1,080,347


1,123,716


2,116,182


2,058,642



Contract services


266,005


293,026


513,203


606,137




Total Cost of Revenues


1,346,352


1,416,742


2,629,385


2,664,779



GROSS PROFIT


656,257


793,086


1,589,574


1,524,210



OPERATING EXPENSES:



Selling and marketing expenses


172,143


71,963


236,870


119,332



Salaries, wages and related benefits


266,222


451,502


566,436


865,239



Research and development


146,431


78,850


215,153


164,613



Professional fees


186,769


139,274


401,023


245,632



General and administrative expenses


248,262


270,521


464,248


496,529




Total Operating Expenses


1,019,827


1,012,110


1,883,730


1,891,345



LOSS FROM OPERATIONS


(363,570

)


(219,024

)


(294,156

)


(367,135

)


OTHER (EXPENSE) INCOME:



Interest expense


(8,326

)


(28,136

)


(33,914

)


(56,270

)


Other income, net


50,706


121,469


101,292


177,779




Total Other Income


42,380


93,333


67,378


121,509



NET LOSS


$

(321,190

)


$

(125,691

)


$

(226,778

)


$

(245,626

)


NET LOSS PER COMMON SHARE:



Basic


$

(0.11

)


$

(0.04

)


$

(0.07

)


$

(0.08

)


Diluted


$

(0.11

)


$

(0.04

)


$

(0.07

)


$

(0.08

)


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:



Basic


3,046,341


3,002,658


3,044,393


3,000,152



Diluted


3,046,341


3,002,658


3,044,393


3,000,152






PEN INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Six Months Ended



June 30,



2017


2016



(unaudited)


(unaudited)


CASH FLOWS FROM OPERATING ACTIVITIES



Net loss


$

(226,778

)


$

(245,626

)


Adjustments to reconcile net loss to net cash provided by operating activities:



Change in inventory obsolescence reserve


38,420


24,108



Depreciation and amortization expense


68,877


94,256



Amortization of deferred lease incentives


3,564


6,415



Gain on sale of property and equipment


-


(21,866

)


Gain on sale of accounts payable


-


(33,511

)


Gain on settlement of accrued salary


-


(36,973

)


Stock-based compensation


102,620


99,620



Change in operating assets and liabilities:



Accounts receivable


(92,560

)


3,552



Accounts receivable - related party


(4,768

)


3,358



Inventory


(347,546

)


(296,385

)


Prepaid expenses and other assets


(41,672

)


84,473



Accounts payable


542,128


421,725



Accounts payable - related parties


(32,000

)


13,765



Accrued expenses


132,878


(35,055

)


Deferred revenue


37,081


(21,692

)


NET CASH PROVIDED BY OPERATING ACTIVITIES


180,244


60,164



CASH FLOWS FROM INVESTING ACTIVITIES


Proceeds from sales of property and equipment


-


21,866


Purchases of property plant and equipment


-


(4,000

)


NET CASH PROVIDED BY INVESTING ACTIVITIES


-


17,866



CASH FLOWS FROM FINANCING ACTIVITIES



Deposit on stock purchase


-


50,000



Proceeds from bank lines of credit


3,556,000


3,361,000



Repayment of bank lines of credit


(3,707,030

)


(3,421,147

)


Repayment of bank loans


(37,190

)


(37,190

)


Repayment of loan to third party


(4,940

)


(2,000

)


NET CASH USED IN FINANCING ACTIVITIES


(193,160

)


(49,337

)


NET (DECREASE) INCREASE IN CASH


(12,916

)


28,693



CASH, beginning of year


189,128


262,519



CASH, end of period


$

176,212


$

291,212



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION


Cash paid during the period for interest



Interest


$

33,914


$

56,270



Income taxes


$

-


$

5,132



SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:



Reclassification of accrued salary to notes payable - long-term


$

17,425


$

51,239



Accrued director fees settled with common stock


$

19,000


$

-


Contact Information
Elaine Ketchmere
PEN Inc.
[e-mail]
[phone]