Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2019 | |
Document and Entity Information | |
Document Type | S-1 |
Entity Registrant Name | EDISON NATION, INC. |
Amendment Flag | false |
Entity Central Index Key | 0001717556 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||
Cash and cash equivalents | $ 1,214,303 | $ 2,052,731 | $ 557,268 |
Accounts receivable, net | 1,889,706 | 1,877,351 | 1,430,236 |
Inventory | 1,106,077 | 923,707 | 240,061 |
Prepaid expenses and other current assets | 996,968 | 611,695 | 41,461 |
Income tax receivable | 31,563 | ||
Total current assets | 5,238,617 | 5,465,484 | 3,103,923 |
Property and equipment, net | 974,850 | 998,863 | 966,904 |
Right of use assets - operating leases, net | 810,017 | 0 | |
Intangible assets, net | 11,873,337 | 0 | |
Goodwill | 9,736,510 | 9,736,510 | 0 |
Total assets | 28,633,331 | 28,888,588 | 4,070,827 |
Current liabilities: | |||
Accounts payable | 6,932,584 | 5,519,159 | 1,135,039 |
Accrued expenses and other current liabilities | 1,849,003 | 1,135,551 | 80,964 |
Customer deposits | 175,956 | 0 | |
Deferred revenues | 175,956 | 175,956 | |
Current portion of operating lease liabilities | 292,800 | 0 | |
Income tax payable | 0 | 129,511 | 56,745 |
Line of credit, net of debt issuance costs of $19,466 and $31,145, respectively | 452,087 | 531,804 | 0 |
Current portion of notes payable, net of debt issuance costs of $153,793 and $0, respectively | 313,572 | 0 | |
Current portion of notes payable - related parties | 1,039,330 | 932,701 | 225,553 |
Due to related party | 22,896 | 140,682 | 0 |
Total current liabilities | 12,034,900 | 8,878,936 | 1,498,301 |
Contingent consideration | 520,000 | 520,000 | 0 |
Operating lease liabilities, net of current portion | 534,817 | 0 | |
Convertible notes payable - related parties, net of debt discount of $439,819 and $466,667 related to the conversion feature, respectively | 2,099,455 | 961,494 | 0 |
Long-term debt, net of current portion | 56,688 | 2,770,947 | |
Notes payable, net of current portion | 46,101 | 56,688 | |
Notes payable - related parties, net of current portion | 2,342,249 | 2,531,490 | 0 |
Deferred tax liability | 341 | 341 | 34,209 |
Total liabilities | 17,577,863 | 12,948,949 | 4,303,457 |
Commitments and contingencies (Note 8) | |||
Shareholders' equity | |||
Common stock, $0.001 par value, 250,000,000 shares authorized; 6,033,835 and 5,654,830 and 3,000,000 shares issued and outstanding as of September 30, 2019 and December 31, 2018 and 2017, respectively | 6,034 | 5,655 | 3,000 |
Additional paid-in-capital | 21,448,280 | 20,548,164 | 0 |
Accumulated deficit | (11,318,564) | (5,565,756) | (235,630) |
Total shareholders' equity attributable to Edison Nation, Inc. | 10,135,750 | 14,988,063 | (232,630) |
Noncontrolling interests | 919,718 | 951,576 | 0 |
Total shareholders' equity | 11,055,468 | 15,939,639 | (232,630) |
Total liabilities and shareholders' equity | 28,633,331 | 28,888,588 | $ 4,070,827 |
Long-term Debt [Member] | |||
Current liabilities: | |||
Current portion of notes payable, net of debt issuance costs of $153,793 and $0, respectively | $ 1,270,243 | $ 313,572 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Issuance Costs, Net | $ 19,466 | ||
Debt Instrument, Unamortized Discount | $ 439,819 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 | 250,000,000 |
Common Stock, Shares, Issued | 6,033,835 | 5,654,830 | 3,000,000 |
Common Stock, Shares, Outstanding | 6,033,835 | 5,654,830 | 3,000,000 |
Long-term Debt [Member] | |||
Debt Issuance Costs, Net | $ 153,793 | $ 0 | |
Debt Issuance Costs, Current, Net | 153,793 | 0 | |
Convertible Notes Payable [Member] | |||
Debt Issuance Costs, Net | 439,818 | $ 466,667 | $ 0 |
Debt Instrument, Unamortized Discount | $ 78,800 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues, net | $ 15,239,434 | $ 12,758,715 | $ 16,502,209 | $ 14,960,450 |
Cost of revenues | 10,413,868 | 9,090,215 | 11,425,619 | 11,017,625 |
Gross profit | 4,825,566 | 3,668,500 | 5,076,590 | 3,942,825 |
Operating expenses: | ||||
Selling, general and administrative | 9,738,107 | 6,276,830 | 9,718,286 | 2,379,104 |
Operating loss | (4,912,541) | (2,608,330) | (4,641,696) | 1,563,721 |
Other (expense) income: | ||||
Rental income | 77,111 | 77,111 | 102,815 | 102,815 |
Change in fair value of put option contract | 0 | (732,600) | ||
Interest expense | (875,036) | (407,267) | (501,221) | 0 |
Total other (expense) income | (797,925) | (1,062,756) | (398,406) | 106,815 |
Loss before income taxes | (5,710,466) | (3,671,086) | (5,040,102) | 1,666,536 |
Income tax expense | 74,200 | 312,186 | 303,915 | 133,105 |
Net loss | (5,784,666) | (3,983,272) | (5,344,017) | 1,533,431 |
Net loss attributable to noncontrolling interests | (31,858) | 0 | (13,891) | 0 |
Net loss attributable to Edison Nation, Inc. | $ (5,752,808) | $ (3,983,272) | $ (5,330,126) | $ 1,533,431 |
Net loss per share - basic and diluted | $ (1) | $ (1.11) | $ (1.28) | $ 0.51 |
Weighted average number of common shares outstanding - basic and diluted | 5,733,379 | 3,577,942 | 4,157,054 | 3,000,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Common Stock [Member]Cloud B, Inc. [Member] | Common Stock [Member]Edison Nation Holdings LLC [Member] | Common Stock [Member]Best Party Concepts llc [Member] | Common Stock [Member]Pirasta, LLC [Member] | Common Stock [Member] | Additional Paid-in Capital [Member]Cloud B, Inc. [Member] | Additional Paid-in Capital [Member]Edison Nation Holdings LLC [Member] | Additional Paid-in Capital [Member]Best Party Concepts llc [Member] | Additional Paid-in Capital [Member]Pirasta, LLC [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member]Cloud B, Inc. [Member] | Accumulated Deficit [Member]Edison Nation Holdings LLC [Member] | Accumulated Deficit [Member]Best Party Concepts llc [Member] | Accumulated Deficit [Member]Pirasta, LLC [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member]Cloud B, Inc. [Member] | Noncontrolling Interest [Member]Edison Nation Holdings LLC [Member] | Noncontrolling Interest [Member]Best Party Concepts llc [Member] | Noncontrolling Interest [Member]Pirasta, LLC [Member] | Noncontrolling Interest [Member] | Cloud B, Inc. [Member] | Edison Nation Holdings LLC [Member] | Best Party Concepts llc [Member] | Pirasta, LLC [Member] | Total |
Balance at Dec. 31, 2016 | $ 3,000 | $ 746,526 | $ 514,133 | $ 0 | $ 1,263,659 | ||||||||||||||||||||
Balance (in shares) at Dec. 31, 2016 | 3,000,000 | ||||||||||||||||||||||||
Dividends | $ 0 | 746,526 | 2,283,194 | 0 | 3,029,720 | ||||||||||||||||||||
Net loss | 0 | 0 | 1,533,431 | 0 | 1,533,431 | ||||||||||||||||||||
Balance at Dec. 31, 2017 | $ 3,000 | 0 | (235,630) | 0 | (232,630) | ||||||||||||||||||||
Balance (in shares) at Dec. 31, 2017 | 3,000,000 | ||||||||||||||||||||||||
Sale of common stock - investors in the IPO | $ 1,313 | 5,357,257 | 0 | 0 | 5,358,570 | ||||||||||||||||||||
Sale of common stock - investors in the IPO (in shares) | 1,312,520 | ||||||||||||||||||||||||
Issuance of common stock to note holders | $ 33 | 167,467 | 0 | 0 | 167,500 | ||||||||||||||||||||
Issuance of common stock to note holders (in shares) | 33,500 | ||||||||||||||||||||||||
Issuance of common stock to employees | $ 62 | 309,438 | 0 | 0 | 309,500 | ||||||||||||||||||||
Issuance of common stock to employees (in shares) | 61,900 | ||||||||||||||||||||||||
Issuance of common stock to vendors for services | $ 75 | 374,925 | 0 | 0 | 375,000 | ||||||||||||||||||||
Issuance of common stock to vendors for services (in shares) | 75,000 | ||||||||||||||||||||||||
Issuance of common stock to satisfy indebtedness related to acquisition of Edison Nation, Holdings, LLC | $ 557 | 3,759,760 | 0 | 0 | 3,760,317 | ||||||||||||||||||||
Issuance of common stock to satisfy indebtedness related to acquisition of Edison Nation Holdings, LLC (in shares) | 557,084 | ||||||||||||||||||||||||
Beneficial conversion option on indebtedness related to acquisition of Edison Nation Holdings, LLC | $ 0 | 500,000 | 0 | 0 | 500,000 | ||||||||||||||||||||
Stock-based compensation | 0 | 1,982,076 | 0 | 0 | 1,982,076 | ||||||||||||||||||||
Net loss | 0 | 0 | (3,983,272) | 0 | (3,983,272) | ||||||||||||||||||||
Balance at Sep. 30, 2018 | $ 5,040 | 12,450,923 | (4,218,902) | 0 | 8,237,061 | ||||||||||||||||||||
Balance (in shares) at Sep. 30, 2018 | 5,040,004 | ||||||||||||||||||||||||
Balance at Dec. 31, 2017 | $ 3,000 | 0 | (235,630) | 0 | (232,630) | ||||||||||||||||||||
Balance (in shares) at Dec. 31, 2017 | 3,000,000 | ||||||||||||||||||||||||
Sale of common stock - investors in the IPO | $ 1,313 | 5,313,863 | 0 | 0 | 5,315,176 | ||||||||||||||||||||
Sale of common stock - investors in the IPO (in shares) | 1,312,520 | ||||||||||||||||||||||||
Issuance of common stock to note holders | $ 33 | 167,467 | 0 | 0 | 167,500 | ||||||||||||||||||||
Issuance of common stock to note holders (in shares) | 33,500 | ||||||||||||||||||||||||
Issuance of common stock to employees | $ 104 | 559,395 | 0 | 0 | 559,499 | ||||||||||||||||||||
Issuance of common stock to employees (in shares) | 103,636 | ||||||||||||||||||||||||
Issuance of common stock to vendors for services | $ 159 | 800,841 | 0 | 0 | 801,000 | ||||||||||||||||||||
Issuance of common stock to vendors for services (in shares) | 158,797 | ||||||||||||||||||||||||
Issuance of common stock to satisfy indebtedness related to acquisition of Edison Nation, Holdings, LLC | $ 489 | $ 557 | $ 0 | $ 0 | $ 2,663,711 | $ 3,383,728 | $ 692,533 | $ 188,552 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 192,533 | $ 0 | $ 2,664,200 | $ 3,384,285 | $ 885,066 | $ 188,552 | |||||
Issuance of common stock to satisfy indebtedness related to acquisition of Edison Nation Holdings, LLC (in shares) | 489,293 | 557,084 | |||||||||||||||||||||||
Beneficial conversion option on indebtedness related to acquisition of Edison Nation Holdings, LLC | $ 0 | 500,000 | 0 | 0 | 500,000 | ||||||||||||||||||||
Stock-based compensation | 0 | 2,025,994 | 0 | 0 | 2,025,994 | ||||||||||||||||||||
Acquisition of Cloud B, Inc. - noncontrolling interest | 0 | 0 | 0 | 1,158,000 | 1,158,000 | ||||||||||||||||||||
Shares reserved for future issuance of common stock to sellers of Edison Nation Holdings, LLC | 0 | 6,014,250 | 0 | 0 | 6,014,250 | ||||||||||||||||||||
Net loss | 0 | 0 | (5,330,126) | (13,891) | $ 44,408 | $ 197,485 | (5,344,017) | ||||||||||||||||||
Balance at Dec. 31, 2018 | $ 5,655 | 20,548,164 | (5,565,756) | 951,576 | 15,939,639 | ||||||||||||||||||||
Balance (in shares) at Dec. 31, 2018 | 5,654,830 | ||||||||||||||||||||||||
Balance at Jun. 30, 2018 | $ 4,369 | 7,551,951 | (2,539,596) | 0 | 5,016,724 | ||||||||||||||||||||
Balance (in shares) at Jun. 30, 2018 | 4,368,930 | ||||||||||||||||||||||||
Sale of common stock - investors in the IPO | $ 18 | (18) | 0 | 0 | 0 | ||||||||||||||||||||
Sale of common stock - investors in the IPO (in shares) | 18,290 | ||||||||||||||||||||||||
Issuance of common stock to note holders | $ 20 | (20) | 0 | 0 | 0 | ||||||||||||||||||||
Issuance of common stock to note holders (in shares) | 20,000 | ||||||||||||||||||||||||
Issuance of common stock to employees | $ 1 | 3,499 | 0 | 0 | 3,500 | ||||||||||||||||||||
Issuance of common stock to employees (in shares) | 700 | ||||||||||||||||||||||||
Issuance of common stock to vendors for services | $ 75 | 374,925 | 0 | 0 | 375,000 | ||||||||||||||||||||
Issuance of common stock to vendors for services (in shares) | 75,000 | ||||||||||||||||||||||||
Issuance of common stock to satisfy indebtedness related to acquisition of Edison Nation, Holdings, LLC | $ 557 | 3,759,760 | 0 | 0 | 3,760,317 | ||||||||||||||||||||
Issuance of common stock to satisfy indebtedness related to acquisition of Edison Nation Holdings, LLC (in shares) | 557,084 | ||||||||||||||||||||||||
Beneficial conversion option on indebtedness related to acquisition of Edison Nation Holdings, LLC | $ 0 | 500,000 | 0 | 0 | 500,000 | ||||||||||||||||||||
Stock-based compensation | 0 | 260,826 | 0 | 0 | 260,826 | ||||||||||||||||||||
Net loss | 0 | 0 | (1,679,306) | 0 | (1,679,306) | ||||||||||||||||||||
Balance at Sep. 30, 2018 | $ 5,040 | 12,450,923 | (4,218,902) | 0 | 8,237,061 | ||||||||||||||||||||
Balance (in shares) at Sep. 30, 2018 | 5,040,004 | ||||||||||||||||||||||||
Balance at Dec. 31, 2018 | $ 5,655 | 20,548,164 | (5,565,756) | 951,576 | 15,939,639 | ||||||||||||||||||||
Balance (in shares) at Dec. 31, 2018 | 5,654,830 | ||||||||||||||||||||||||
Issuance of common stock to note holders | $ 251 | 309,529 | 0 | 0 | 309,780 | ||||||||||||||||||||
Issuance of common stock to note holders (in shares) | 251,004 | ||||||||||||||||||||||||
Issuance of common stock to employees | $ 3 | 8,847 | 0 | 0 | 8,850 | ||||||||||||||||||||
Issuance of common stock to employees (in shares) | 3,000 | ||||||||||||||||||||||||
Issuance of common stock to vendors for services | $ 125 | 394,000 | 0 | 0 | 394,125 | ||||||||||||||||||||
Issuance of common stock to vendors for services (in shares) | 125,000 | ||||||||||||||||||||||||
Stock-based compensation | $ 0 | 187,740 | 0 | 0 | 187,740 | ||||||||||||||||||||
Net loss | 0 | 0 | (5,752,808) | (31,858) | (5,784,666) | ||||||||||||||||||||
Balance at Sep. 30, 2019 | $ 6,034 | 21,448,280 | (11,318,564) | 919,718 | 11,055,468 | ||||||||||||||||||||
Balance (in shares) at Sep. 30, 2019 | 6,033,835 | ||||||||||||||||||||||||
Balance at Jun. 30, 2019 | $ 5,738 | 21,136,912 | (8,736,463) | 968,821 | 13,375,008 | ||||||||||||||||||||
Balance (in shares) at Jun. 30, 2019 | 5,737,830 | ||||||||||||||||||||||||
Issuance of common stock to note holders | $ 201 | 136,279 | 0 | 0 | 136,480 | ||||||||||||||||||||
Issuance of common stock to note holders (in shares) | 201,005 | ||||||||||||||||||||||||
Issuance of common stock to employees | $ 3 | 8,847 | 0 | 0 | 8,850 | ||||||||||||||||||||
Issuance of common stock to employees (in shares) | 3,000 | ||||||||||||||||||||||||
Issuance of common stock to vendors for services | $ 92 | 252,908 | 0 | 0 | 253,000 | ||||||||||||||||||||
Issuance of common stock to vendors for services (in shares) | 92,000 | ||||||||||||||||||||||||
Stock-based compensation | $ 0 | (86,666) | 0 | 0 | (86,666) | ||||||||||||||||||||
Net loss | 0 | 0 | (2,582,101) | (49,103) | (2,631,204) | ||||||||||||||||||||
Balance at Sep. 30, 2019 | $ 6,034 | $ 21,448,280 | $ (11,318,564) | $ 919,718 | $ 11,055,468 | ||||||||||||||||||||
Balance (in shares) at Sep. 30, 2019 | 6,033,835 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) (Parenthetical) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | |
Stock Issuance Costs | $ 1,247,424 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flow from Operating Activities | ||||
Net loss attributable to Edison Nation, Inc. | $ (5,752,808) | $ (3,983,272) | $ (5,330,126) | $ 1,533,431 |
Net loss attributable to noncontrolling interests | (31,858) | 0 | (13,891) | 0 |
Net loss | (5,784,666) | (3,983,272) | (5,344,017) | 1,533,431 |
Adjustments to reconcile net loss income to net cash (used in) provided by operating activities: | ||||
Depreciation and amortization | 952,019 | 120,004 | 487,878 | 188,283 |
Amortization of financing costs | 658,126 | 266,944 | 300,277 | 0 |
Stock-based compensation | 876,585 | 2,666,576 | 3,386,493 | 0 |
Amortization of right of use asset | 217,189 | 0 | ||
Change in fair value of put option contract | 0 | 732,600 | ||
Deferred taxes | (33,868) | 28,399 | ||
Changes in assets and liabilities: | ||||
Accounts receivable | (12,355) | (1,402,277) | 590 | 68,469 |
Inventory | (182,370) | 39,974 | 59,309 | (75,550) |
Prepaid expenses and other current assets | (667,836) | (1,011,586) | (353,440) | 693 |
Accounts payable | 1,413,425 | 55,194 | (1,408,184) | 291,615 |
Accrued expenses and other current liabilities | 549,072 | 780,564 | 636,881 | 23,347 |
Repayment of operating lease liabilities | (199,589) | 0 | ||
Due from related party | (117,786) | (472,352) | (507,922) | (967,301) |
Net cash used in operating activities | (2,298,186) | (2,207,631) | (2,776,003) | 1,091,386 |
Cash Flows from Investing Activities | ||||
Purchases of property and equipment | (113,612) | (121,186) | (141,440) | (39,151) |
Acquisition of Edison Nation Holdings, LLC and Subsidiaries, net of cash received | 0 | (881,318) | (772,581) | 0 |
Purchase of loan held for investment | 0 | (500,000) | (500,000) | 0 |
Net cash used in investing activities | (113,612) | (1,502,504) | (1,414,021) | (39,151) |
Cash Flows from Financing Activities | ||||
Borrowings under lines of credit | 249,370 | 0 | 531,804 | 0 |
Borrowings under long-term debt | 718,559 | 0 | ||
Repayments under long-term debt | (648,299) | 0 | ||
Borrowings under convertible notes payable | 1,111,111 | 0 | ||
Borrowings under notes payable | 1,670,000 | 718,559 | ||
Repayments under lines of credit | (340,766) | 0 | ||
Repayments under notes payable | (570,587) | (645,000) | ||
Repayments under notes payable/ long-term debt - related parties | (82,612) | (118,779) | ||
Repayments under long-term debt - related parties | (132,309) | 0 | ||
Net proceeds from sale of common stock | 0 | 5,358,570 | 5,315,176 | 0 |
Fees paid for financing costs | (463,146) | (99,444) | (99,444) | 0 |
Dividends paid | 0 | (3,029,720) | ||
Net cash provided by financing activities | 1,573,370 | 5,213,906 | 5,685,487 | (3,029,720) |
Net (decrease) increase in cash and cash equivalents | (838,428) | 1,503,771 | 1,495,463 | (1,977,485) |
Cash and cash equivalents - beginning of period | 2,052,731 | 557,268 | 557,268 | 2,534,753 |
Cash and cash equivalents - end of period | 1,214,303 | 2,061,039 | 2,052,731 | 557,268 |
Supplemental Disclosures of Cash Flow Information | ||||
Cash paid during the period for: Interest | 145,324 | 93,044 | 103,865 | 0 |
Cash paid during the period for: Income taxes | 0 | 0 | 265,015 | 64,465 |
Noncash investing and financing activity: | ||||
Shares issued to note holders | 167,500 | 0 | ||
Shares issued to note holders | 309,780 | 167,500 | ||
Shares issued for the acquisition of Edison Nation Holdings, LLC | 0 | 3,760,317 | 3,384,285 | 0 |
Shares reserved in exchange for the cancellation of certain non-voting membership interests related to acquisition of Edison Nation Holdings, LLC | 0 | 6,682,500 | 6,014,250 | 0 |
Borrowings under note payable for the purchase of property and equipment | 0 | 73,559 | 73,559 | 0 |
Issuance of 4%, 5 year senior convertible notes for the acquisition of Edison Nation Holdings, LLC | $ 0 | $ 1,428,161 | 1,428,161 | 0 |
Cloud B, Inc. [Member] | ||||
Cash Flow from Operating Activities | ||||
Net loss | 44,408 | |||
Supplemental Disclosures of Cash Flow Information | ||||
Earnout for acquisition of Cloud B, Inc. | 520,000 | 0 | ||
Deemed distribution to shareholder for acquisitions | 0 | |||
Noncash investing and financing activity: | ||||
Shares issued for the acquisition of Edison Nation Holdings, LLC | 2,664,200 | 0 | ||
Best Party Concepts llc [Member] | ||||
Supplemental Disclosures of Cash Flow Information | ||||
Deemed distribution to shareholder for acquisitions | 692,533 | 0 | ||
Pirasta, LLC [Member] | ||||
Supplemental Disclosures of Cash Flow Information | ||||
Deemed distribution to shareholder for acquisitions | $ 188,552 | $ 0 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - Senior Convertible Notes [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | 4.00% |
Debt Instrument, Term | 5 years | 5 years |
Basis of Presentation and Natur
Basis of Presentation and Nature of Operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Basis of Presentation and Nature of Operations | ||
Basis of Presentation and Nature of Operations | Note 1 — Basis of Presentation and Nature of Operations The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2019 and the results of operations, changes in shareholders’ equity, and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10‑K for the year ended December 31, 2018, and updated, as necessary, in this Quarterly Report on Form 10‑Q. As used herein, the terms the “Company,” “Edison Nation” “we,” “us,” “our” and similar refer to Edison Nation, Inc., a Nevada corporation incorporated on July 18, 2017 under the laws of the State of Nevada as Idea Lab X Products, Inc. and also formerly known as Xspand Products Lab, Inc. prior to its name change on September 12, 2018, and/or its wholly-owned and majority-owned operating subsidiaries. Formed in July 2017 under the laws of the State of Nevada, Edison Nation, Inc. seeks to be involved with every step of the consumer product life cycle- from ideation, to research and development, manufacturing, sales, packaging and fulfillment. The Company also seeks to raise awareness of the Edison Nation brand name as a diversified consumer products business through a number of media channels . As of September 30, 2019, Edison Nation, Inc. had five wholly-owned subsidiaries: S.R.M. Entertainment Limited (“SRM”), Ferguson Containers, Inc. (“Fergco”), CBAV1, LLC (“CB1”), Pirasta, LLC and Edison Nation Holdings, LLC (“EN”). Edison Nation, Inc. owns 72.15% of Cloud B, Inc. (“Cloud B”), 50% of Best Party Concepts, LLC and 50% of Ed Roses, LLC. EN is the single member of Edison Nation, LLC and Everyday Edisons, LLC. Edison Nation, LLC is the single member of Safe TV Shop, LLC. Cloud B owns 100% of Cloud B Limited (UK) and Cloud B Pty (Australia). On August 23, 2019, the Company formed Ed Roses, LLC, a 50% joint venture with 4Keeps Roses, Inc., to distribute preserved roses, flowers and associated gift products. Liquidity For the nine months ended September 30, 2019, our operations lost $4,912,541. At September 30, 2019, we had total current assets of approximately $5,200,000 and current liabilities of approximately $12,000,000 resulting in negative working capital of approximately $6,800,000. At September 30, 2019, we had total assets of approximately $28,600,000 and total liabilities of approximately $17,600,000 resulting in shareholders’ equity of approximately $11,000,000. The foregoing factors raised initial concerns about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations from the sale of its products. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The following is additional information on our operating losses and working capital: The Company’s operating loss for the nine months ended September 30, 2019 included $1,828,604 related to depreciation, amortization and stock-based compensation. In addition, approximately $100,000 and $1,200,000, respectively, was related to transaction costs, restructuring charges and other non-recurring and redundant costs which are being removed or reduced. The negative working capital includes approximately $3,800,000 related to unsecured trade payables in our Cloud B acquisition. In addition, our outstanding balances under notes payable includes $0.9 million related to Cloud B. CB1 owns the senior secured position on the promissory note to Cloud B. in the amount of $2,270,000. In February 2019, CB1, pursuant to an Article 9 foreclosure action, perfected its secured UCC interest in all the assets of Cloud B to partially satisfy the outstanding balance on the note and thereby making any payments of such Cloud B trade payables and notes unlikely in the future. In addition, SRM was an unsecured creditor in the amount of approximately $1,700,000 which is not included in the $3,800,000 but at this time remains unpaid. The total liabilities of approximately $6,400,000, of which $1,700,000, or net of $4,700,000, has been eliminated in consolidation, are not expected to be satisfied due to the foreclosure. On October 2, 2019, the Company entered into a Share Purchase Agreement (the “PIPE Purchase Agreement”) with certain accredited investors (collectively, the “Investors”) for the private placement of 1,175,000 shares of the Company’s common stock, $0.001 par value per share, at a purchase price of $2.00 per share (the “PIPE Transaction”). In a series of four closings conducted in October 2019, the Company received net proceeds of $2,039,303 which consisted of $2,350,000 of gross proceeds offset by $310,697 of fees to placement agent and their lawyers. Alexander Capital, LP (“Alexander Capital”), a FINRA registered broker dealer, acted as placement agent with respect to the PIPE Transaction. In connection with the PIPE Transaction, Alexander Capital received a commission of $141,000, a debt restructuring fee of $64,208, a debt conversion fee of 15,889, a placement fee of $33,600 and Warrants to purchase 70,500 shares of the Company’s common stock, at an exercise price of $2.50 per share. In connection with the PIPE transaction, the convertible notes entered into on May 13, 2019 were also converted at $2.00 per share into 560,185 shares of the Company's common stock. Management has considered possible mitigating factors within our management plan on our ability to continue for at least a year from the date these financial statements are filed. The following items are management plans: · Cloud B liabilities are unlikely to be paid due to CB1 holding the senior secured position and its rights under the foreclosure to the remaining assets of the entity to satisfy the outstanding obligation. · Raise further capital through the sale of additional equity; · Borrow money under debt securities; · The deferral of payments to related party debt holders for both principal of approximately $1,000,000 and related interest expense; · Cost saving initiatives related to synergies and the elimination of redundant costs of approximately $500,000, of which approximately $153,000 impacted the three months ended September 30, 2019; and · Possible sale of certain brands to other manufacturers. | Note 1 — Basis of Presentation and Nature of Operations As used herein, the terms the “Company,” “Edison Nation” “we,” “us,” “our” and similar refer to Edison Nation, Inc., a Nevada corporation incorporated on July 18, 2017 under the laws of the State of Nevada as Idea Lab X Products, Inc. and also formerly known as Xspand Products Lab, Inc. prior to its name change on September 12, 2018, and/or its wholly-owned and majority-owned operating subsidiaries, and/or where applicable, its management. Edison Nation is a vertically-integrated, end-to-end, consumer product research & development, manufacturing, sales and fulfillment company. The Company’s proprietary web-enabled platform provides a low risk, high reward platform and process to connect innovators of new product ideas with potential licensees. As of December 31, 2018, Edison Nation, Inc. had five wholly-owned subsidiaries: S.R.M. Entertainment Limited (“SRM”), Ferguson Containers, Inc. (“Fergco”), CBAV1, LLC (“CB1”), Pirasta, LLC and Edison Nation Holdings, LLC. Edison Nation, Inc. owns 72.15% of Cloud B, Inc. and 50% of Best Party Concepts, LLC. Edison Nation Holdings, LLC is the single member of Edison Nation, LLC and Everyday Edisons, LLC. Edison Nation, LLC is the single member of Safe TV Shop, LLC. Cloud B, Inc. owns 100% of Cloud B UK and Cloud B Australia. On February 14, 2018, the Company effected a one-for‑3.333333 reverse stock split of its issued and outstanding shares of common stock. All share information has been retroactively restated to reflect the aforementioned reverse stock split. Liquidity For the year ended December 31, 2018, our operations lost approximately $4,600,000 of which approximately $3,700,000 was non-cash and approximately $900,000 related to transaction costs and non-recurring items. At December 31, 2018, we had total current assets of $5,465,484 and current liabilities of $8,878,936 resulting in negative working capital of $3,413,452, of which approximately $3,800,000 related to unsecured trade payables assumed in our Cloud B acquisition. In February 2019, our consolidating subsidiary, CBAV1, LLC, foreclosed on its promissory note it held that was secured by Cloud B, Inc.’s assets making any payments of the Cloud B trade payables unlikely. At December 31, 2018, we had total assets of $28,888,588 and total liabilities of $12,948,949 resulting in shareholders’ equity of $15,939,639. The foregoing factors raised substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations from the sale of its products. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management has considered possible mitigating factors within our management plan on our ability to continue for at least a year from the date these financial statements are filed. The following items are management plans to alleviate any going concern issues: · Raise further capital through the sale of addition equity · Borrow money under debt securities. · The deferral of payments to related party debt holders for both principal of $932,701 and related interest expense ($239,885 in 2018). · Cost saving initiatives related to synergies and the elimination of redundant costs of approximately $500,000 · Possible sale of certain brands to other manufacturers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Edison Nation, Inc. and its wholly-owned and majority owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, the valuation allowance related to the Company’s deferred tax assets, the recoverability and useful lives of long-lived assets, debt conversion features, stock-based compensation, certain assumptions related to the valuation of the reserved shares and the assets acquired and liabilities assumed related to the Company’s acquisitions. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. Reclassifications Certain reclassifications have been made to prior year amounts to conform to current year presentation. Cash and Cash Equivalents The Company has cash on deposit in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. The Company had approximately $627,000 uninsured cash at September 30, 2019 of which approximately $198,000 was held in foreign bank accounts not covered by FDIC insurance limits as of September 30, 2019. Accounts Receivable As of September 30, 2019, the following customers represented more than 10% of total accounts receivable: September 30, 2019 Customer A 15 % Inventory Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. Revenue Recognition Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues continue to be recognized when control of the goods are transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no material variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards. Disaggregation of Revenue The Company’s primary revenue streams include the sale and/or licensing of consumer goods and packaging materials. The Company’s licensing business is not material and has not been separately disaggregated for segment purposes. The disaggregated Company’s revenues for the nine months ended September 30, 2019 and 2018 were as follows: For the Nine Months Ended September 30, 2019 2018 Revenues: Product sales $ 14,982,117 $ 12,676,582 Service 67,753 — Licensing 189,564 82,133 Total revenues, net $ 15,239,434 $ 12,758,715 For the nine months ended September 30, 2019 and 2018, the following customer represented more than 10% of total net revenues: For the Nine Months Ended September 30, 2019 2018 Customer : Customer A 22 % 10 % Customer B * 17 % * Customer did not represent greater than 10% of total net revenue. For the nine months ended September 30, 2019 and 2018, the following geographical regions represented more than 10% of total net revenues: For the Nine Months Ended September 30, 2019 2018 Region: North America 78 % 81 % Asia-Pacific * 15 % Europe 15 % * * Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. The loan held for investment was acquired at fair value, which resulted in a discount. As of September 30, 2019, the book value and estimated fair value of the Company’s level 3 instruments was as follows: September 30, 2019 Estimated Book Value Fair Value Contingent consideration $ (520,000) $ (520,000) The following changes in level 3 instruments for the three months ended September 30, 2019 are presented below: Contingent Consideration - Earnout Balance, July 1, 2019 $ (520,000) Change in fair value — Balance, September 30, 2019 $ (520,000) The following changes in level 3 instruments for the nine months ended September 30, 2019 are presented below: Contingent Consideration – Earnout Balance, December 31, 2018 $ (520,000) Change in fair value — Balance, September 30, 2019 $ (520,000) There were no changes to the underlying assumptions used in determining the fair value of the contingent consideration liability for the nine months ended September 30, 2019. There was no contingent consideration as of September 30, 2018. Foreign Currency Translation The Company uses the United States dollar as its functional and reporting currency since the majority of the Company’s revenues, expenses, assets and liabilities are in the United States. Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the nine months ended September 30, 2019 and 2018 and the cumulative translation gains and losses as of September 30, 2019 and December 31, 2018 were not material. Net Earnings or Loss per Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of September 30, 2018, there were no common stock equivalents outstanding. As of September 30, 2019, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. September 30, 2019 Selling Agent Warrants 89,992 Shares reserved in exchange for the cancellation of certain non-voting membership interest in Edison Nation Holdings, LLC 990,000 Options 290,000 Convertible shares under notes payable 285,632 Total 1,655,624 Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016‑02 (ASU 2016‑02) which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this accounting guidance requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. The Company has elected the “package of practical expedients” and as a result is not required to reassess its prior accounting conclusions about lease identification, lease classification and initial direct costs for lease contracts that exist as of the transition date. However, the Company has not elected the use of hindsight for determining the reasonably certain lease term. The new lease standard also provides practical expedients and policy elections for an entity’s ongoing accounting. The Company has elected the practical expedient to not separate lease and non-lease components for all of its leases. The Company has elected the short-term lease recognition exemption, which results in no recognition of right-of-use assets and lease liabilities for existing short-term leases at transition. Upon adoption on January 1, 2019, the Company recognized right of use assets for operating leases and operating lease liabilities that have not previously been recorded. The lease liability for operating leases is based on the net present value of future minimum lease payments. The right of use asset for operating leases is based on the lease liability. The Company did not have any deferred rent or material prepaid rent. The cumulative effect of initially applying the new lease accounting standard as of January 1, 2019 is as follows: Cumulative January 1, January 1, Effect 2019, as 2019 Adjustment adjusted Assets: Right of use assets – operating leases $ — $ 943,997 $ 943,997 Liabilities: Current portion of operating lease liabilities $ — $ 261,866 $ 261,866 Operating lease liabilities, net of current portion $ — $ 682,131 $ 682,131 The adoption of the standard did not result in any material changes to the recognition of operating lease expenses in the Company’s consolidated statements of operations. In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, 2018. We have adopted this accounting guidance effective January 1, 2019, with no impact on our financial statements as there were no excess tax benefits to be recognized due to our net operating losses. In August 2018, the FASB issued new accounting guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements. In August 2018, the FASB issued new accounting guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, an entity will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018‑13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Since this accounting guidance only revises disclosure requirements, it will not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued new accounting guidance for Variable Interest Entities, which requires indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective for the Company’s interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted. The Company currently does not believe that the adoption of this accounting guidance will have a material impact on its consolidated financial statements and related disclosures. Subsequent Events The Company has evaluated subsequent events through the date which the financial statements were issued. Based upon such evaluation, except for items described in Note 8 and Note 10, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company deploys resources on a consolidated level to all brands of the Company and therefore the Company only identifies one reportable operating segment with multiple product offerings. | Note 2 — Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Edison Nation, Inc. and its wholly-owned and majority owned subsidiaries. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in US dollars. All intercompany balances and transactions have been eliminated. Reclassifications Certain amounts previously presented in the consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no effect on the previously reported net loss, shareholders’ equity or cash flows. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, the valuation allowance related to the Company’s deferred tax assets, the recoverability and useful lives of long-lived assets, debt conversion features, stock-based compensation, certain assumptions related to the valuation of the reserved shares and the assets acquired and liabilities assumed related to the Company’s acquisitions. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents in the consolidated financial statements. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. The Company had approximately $1,450,000 uninsured at December 31, 2018 of which approximately $583,000 was held in foreign bank accounts not covered by FDIC insurance limits as of December 31, 2018. Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2018 and 2017, the allowance for uncollectable amounts was not material. Management estimates the allowance for bad debts based on existing economic conditions, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. As of December 31, 2018, the following customers represented more than 10% of total accounts receivable: December 31, 2018 Customer A 12 % Customer B 11 % Inventory Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. Loan Held for Investment Loan held for investment is reported on the balance sheet at the acquired cost which approximates the fair value, which resulted in a discount. The acquired loan had evidence of deterioration of credit quality and for which it was probable, at the time of our acquisition, that the Company would be unable to collect all contractually required payments. For these loans, the excess of the undiscounted contractual cash flows over the undiscounted cash flows estimated by us at the time of acquisition was not accreted into income (nonaccretable discount). The amount representing the excess of cash flows estimated by us at acquisition over the purchase price was accreted into purchase discount earned over the life of the applicable loans (accretable discount). The nonaccretable discount was not accreted into income. If cash flows could not be reasonably estimated for any loan, and collection was not probable, the cost recovery method of accounting was used. Under the cost recovery method, any amounts received were applied against the recorded amount of such loans. Subsequent to acquisition, if cash flow projections improved, and it was determined that the amount and timing of the cash flows related to the nonaccretable discount was reasonably estimable and collection was probable, the corresponding decrease in the nonaccretable discount was transferred to the accretable discount and was accreted into interest income over the remaining life of any such loan on the interest method. If cash flow projections deteriorated subsequent to acquisition, the decline was accounted for through the allowance for loan losses. Depending on the timing of an acquisition, the initial allocation of discount generally is made primarily to nonaccretable discount until the Company is able to assess any cash flows expected to be collected over the purchase price which are then transferred to accretable discount. On June 4, 2018, the Company purchased a promissory note for $500,000 from a bank at a discount of $1,700,000 from the face value of $2,270,000 of a company in financial difficulty. On October 29, 2018, the Company purchased 72.15% of the outstanding capital stock of the Company as described Note 3. The loan held for investment has been eliminated in consolidation as of December 31, 2018. Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for office equipment, 5 to 7 years for furniture and fixtures, 6 to 10 years for machinery and equipment, 10 to 15 years for building improvements, 5 years for software, 5 years for molds, 5 to 7 years for vehicles and 40 years for buildings. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statements of operations for the respective period. Minor additions and repairs are expensed in the period incurred. Major additions and repairs which extend the useful life of existing assets are capitalized and depreciated using the straight-line method over their remaining estimated useful lives. Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company assesses the recoverability of its long-lived assets using undiscounted cash flows. If an asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The Company did not record any impairment charges related to long-lived assets during the years ended December 31, 2018 and 2017. Goodwill and Intangible Assets We record intangible assets based on their fair value on the date of acquisition. Goodwill is recorded for the difference between the fair value of the purchase consideration over the fair value of the net identifiable tangible and intangible assets acquired. We perform an impairment assessment of goodwill on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill is assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business. We may assess our goodwill for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis would be performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill initially rather than using a qualitative approach. The impairment testing for goodwill is performed at the reporting unit level. The valuation methods used in the quantitative fair value assessment, discounted cash flow and market multiples method, require our management to make certain assumptions and estimates regarding certain industry trends and future profitability of our reporting units. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. The valuation of goodwill is affected by, among other things, our business plan for the future and estimated results of future operations. Future events could cause us to conclude that impairment indicators exist, and, therefore, that goodwill may be impaired. Intangible assets include the cost of patents or patent rights (hereinafter, collectively “patents”) and trademarks. Patent and trademark costs are amortized utilizing the straight-line method over their remaining economic useful lives. Costs incurred related to patents prior to issuance are included in prepaid patent expense until the time the patent is issued and amortization begins or until management determines it is no longer likely the patent will be issued and amounts are expensed. Edison Nation reviews long-lived assets and intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Revenue Recognition Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues continue to be recognized when control of the goods are transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no material variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards. Disaggregation of Revenue The Company’s primary revenue streams include the sale and/or licensing of consumer goods and packaging materials for innovative products. The Company’s licensing business is not material and has not been separately disaggregated for segment purposes. The disaggregated Company’s revenues for the years ended December 31, 2018 and 2017 was as follows: For the Years Ended December 31, 2018 2017 Revenues: Product sales $ 16,037,221 $ 14,960,450 Service revenues 197,068 Licensing revenues 267,920 — Total revenues, net $ 16,502,209 $ 14,960,450 For the years ended December 31, 2018 and 2017, the following customers represented more than 10% of total net revenues: For the years ended December 31, 2018 2017 Customer A 21 % 31 % * For the years ended December 31, 2018 and 2017, the following geographical regions represented more than 10% of total net revenues: For the Years Ended December 31, 2018 2017 North America 80 % 83 % Asia-Pacific 13 % 13 % Cost of Revenues Cost of revenues includes freight charges, purchasing and receiving costs, depreciation and inspection costs. Shipping and Handling Costs Shipping and handling costs include inbound freight costs and the cost to ship product to the customer and are included in cost of sales. Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. The loan held for investment was acquired at fair value, which resulted in a discount. As of December 31, 2018, the book value and estimated fair value of the Company’s level 3 instruments was as follows: December 31, 2018 Estimated Book Value Fair Value Loan held for investment $ — $ — Contingent consideration $ (520,000) $ (520,000) The following changes in level 3 instruments for the year ended December 31, 2018 are presented below: Loan Held Contingent For Consideration – Investment Earnout Balance, January 1, 2018 $ — $ — Purchases 500,000 — Earnout incurred related to acquisition of Cloud B, Inc. — 520,000 Acquisition of Cloud B, Inc. – eliminated in consolidation (500,000) — Balance, December 31, 2018 $ — $ (520,000) Foreign Currency Translation The Company uses the United States dollar as its functional and reporting currency since the majority of the Company’s revenues, expenses, assets and liabilities are in the United States. Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the years ended December 31, 2018 and 2017 and the cumulative translation gains and losses as of December 31, 2018 and 2017 were not material. Income Taxes The Company accounts for income taxes under the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic 740 “Income Taxes” (“ASC Topic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements as of December 31, 2018 and 2017. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statements of operations. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. This legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The TCJA permanently reduced the U.S. corporate income tax rate from 34% to 21%, effective January 1, 2018. Net Earnings or Loss per Share Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of vested common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of December 31, 2017, there were no common stock equivalents outstanding. As of December 31, 2018, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. December 31, 2018 Selling Agent Warrants 65,626 Shares reserved in exchange for the cancellation of certain non-voting membership interest in Edison Nation Holdings, LLC 990,000 Options 290,000 Convertible shares under notes payable 285,632 Shares to be issued to innovator 12,500 Total 1,643,758 Deferred Financing Costs Deferred financing costs include debt discounts and debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying value of the debt liability. Amortization of deferred financing costs are included as a component of interest expense. Deferred financing costs are amortized using the straight-line method over the term of the recognized debt liability which approximates the effective interest method. Recent Accounting Pronouncements In January 2018, the FASB issued Accounting Standards Update No. 2017‑01(“ASU 2017‑01”), Business Combinations (Topic 805): Clarifying the Definition of a Business. The standard clarifies the definition of a business with the objective of providing guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018 and the adoption did not have an impact on the Company’s results or consolidated financial statements. In February 2018, the FASB issued Accounting Standards Update No. 2018‑02 (“ASU 2018‑02”), Income Statement -Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The standard provides for a reclassification from accumulated other comprehensive earnings (“AOCE”) to retained earnings, of disproportionate income tax effects arising from the impact of the Tax Cuts and Jobs Act of 2017. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company adopted ASU 2018‑02 in the first quarter of 2018 and the adoption of this standard did not have an impact on the Company’s results or consolidated financial statements. In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (ASC 230) – Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice across all industries, in how certain transactions are classified in the statement of cash flows. ASU 2016‑15 was effective for public companies for fiscal years beginning after December 15, 2017. The Company adopted this standard in 2018 and the adoption of this standard did not have an impact on the Company’s statement of cash flows for the years ended December 31, 2018 and 2017. In October 2016, the FASB issued Accounting Standards Update No. 2016‑16 (ASU 2016‑16), Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The standard requires that the income tax impact of intra-entity sales and transfers of property, except for inventory, be recognized when the transfer occurs requiring any deferred taxes not yet recognized on intra-entity transfers to be recorded to retained earnings. The Company adopted this standard in the first quarter of 2018 and the adoption did not have an impact on the Company’s results or consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016‑02 (ASU 2016‑02) which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this accounting guidance requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. We have not yet adopted this standard and are currently evaluating the effect this standard will have on our financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017‑04 (ASU 2017‑04), “Simplifying the Test for Goodwill Impairment”, which removes Step 2 from the goodwill impairment test. ASU 2017‑04 requires that if a reporting unit’s carrying value exceeds its fair value, an impairment charge would be recognized for the excess amount, not to exceed the carrying amount of goodwill. ASU 2017‑04 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early application is permitted after January 1, 2017. The Company early adopted ASU 2017‑04 in the third quarter of 2018 with no impact on our financial statements. In May 2017, the FASB issued accounting guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have adopted this accounting guidance effective January 1, 2018, with no impact on our financial statements as there were no changes to the terms or conditions of share-based payment awards. In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, 2018. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements. In August 2018, the FASB issued new accounting guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements. In August 2018, the FASB issued new accounting guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, an entity will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018‑13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Since this accounting guidance only revises disclosure requirements, it will not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued new accounting guidance for Variable Interest Entities, which requires indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective for the Company’s interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted. The Company currently does not believe that the adoption of this accounting guidance will have a material impact on its consolidated financial statements and related disclosures. Subsequent Events The Company has evaluated subsequent events through the date which the financial statements were issued. Based upon the evaluation, except for items described in Note 13, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company deploys resources on a consolidated |
Acquisition
Acquisition | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Acquisition | ||
Acquisition | Note 3 — Acquisition On September 4, 2018, the Company completed the acquisition of all of the voting membership interest of Edison Nation Holdings, LLC (“EN”) for a total purchase price of $12,820,978 comprising of (i) $950,000 cash, (ii) the assumption of the remaining balance of the senior convertible debt through the issuance to the holders of 4%, 5‑year senior convertible notes (the “New Convertible Notes”), in the aggregate principal and interest amount of the sum of $1,428,161, less debt discount of $500,000 for the approximate fair value of the conversion feature, which are convertible into approximately 285,632 shares of the Company’s common stock, at the option of the holder of such New Convertible Notes (subject to certain adjustments as provided in the Membership Interest Purchase Agreement (the “Purchase Agreement”) among the Company and EN and EN’s members dated June 29, 2018 and the terms of the New Convertible Notes), (iii) the reservation of 990,000 shares of the Company’s common stock that may be issued in exchange for the redemption of certain non-voting membership interests of EN that will be created specifically in connection with the transaction contemplated by the Purchase Agreement (which exchange obligations may be instead satisfied in cash instead of shares of common stock, in the Company’s sole discretion), and (iv) the issuance of 557,084 shares or $3,760,317 of the Company’s common stock in full satisfaction of the indebtedness represented by promissory notes payable by EN to Venture Six, LLC and Wesley Jones. On October 29, 2018, the Company completed the acquisition of 72.15% of the outstanding capital stock of Cloud B in exchange for 489,293 shares of restricted common stock of the Company. In addition, the Company entered into an Earn Out Agreement with a majority of the shareholders of Cloud B (the “Cloud B Sellers”), whereby, beginning in 2019, the Company will pay the Cloud B Sellers an annual amount equal to 8% multiplied by the annual gross sales of Cloud B, as reduced by the total gross sales generated by Cloud B in 2018. The Earn Out Agreement expires on December 31, 2021. On December 31, 2018, the Company completed the acquisition of all of the voting membership interest of Pirasta, LLC from NL Penn Capital, LP in exchange for the satisfaction of $470,000 due from related party. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiary at historical carrying values, except that equity reflects a distribution for the excess of consideration paid over the net carrying amount of assets. On December 31, 2018, the Company completed the acquisition of 50% of the voting membership interest of Best Party Concepts, LLC from NL Penn Capital, LP in exchange for the satisfaction of $500,000 due from related party. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiary at historical carrying values, except that equity reflects a distribution for the excess of consideration paid over the net carrying amount of assets. NL Penn Capital, LP is owned by Christopher B. Ferguson, our Chairman and Chief Executive Officer. The following represents the pro forma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the nine months ended September 30, 2018: Nine Months Ended September 30, 2018 Revenues, net $ 16,740,554 Cost of revenues 10,989,040 Gross profit 5,741,514 Operating expenses: Selling, general and administrative 10,227,429 Operating loss (4,475,915) Other (expense) income: Other (expense) income (330,162) Loss before income taxes (4,806,077) Income tax expense 327,042 Net loss $ (5,133,119) Net loss attributable to noncontrolling interests (370,417) Net loss attributable to Edison Nation, Inc. $ (4,762,701) Net loss per share - basic and diluted $ (0.98) Weighted average number of common shares outstanding – basic and diluted 4,835,681 | Note 3 — Acquisition On September 30, 2017, the Company completed the acquisitions of SRM and Fergco in exchange for an aggregate of 3,000,000 shares of the Company common stock and notes payable aggregating $2,996,500. This transaction between entities under common control resulted in a change in reporting entity and required retrospective combination of the entities for all periods presented, as if the combination had been in effect since the inception of common control. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiaries at historical carrying values, except that equity reflects the equity of the Company. On September 4, 2018, the Company completed the acquisition of all of the voting membership interest of Edison Nation Holdings, LLC for a total purchase price of $12,820,978 comprising of (i) $950,000 cash (ii) the assumption of the remaining balance of the senior convertible debt through the issuance to the holders of 4%, 5‑year senior convertible notes (the “New Convertible Notes”), in the aggregate principal and interest amount of the sum of $1,428,161, less debt discount of $500,000 for the approximate fair value of the conversion feature, which are convertible into approximately 285,632 shares of the Company’s common stock, at the option of the holder of such New Convertible Notes (subject to certain adjustments as provided in the Membership Interest Purchase Agreement (the “Purchase Agreement”) among the Company and Edison Nation Holdings, LLC and Edison Nation Holdings, LLC members dated June 29, 2018 and the terms of the New Convertible Notes), (iii) the reservation of 990,000 shares of the Company’s common stock that may be issued in exchange for the redemption of certain non-voting membership interests of EN that will be created specifically in connection with the transaction contemplated by the Purchase Agreement (which exchange obligations may be instead satisfied in cash instead of shares of common stock, in the Company’s sole discretion), and (iv) the issuance of 557,084 shares or $3,760,317 of the Company’s common stock in full satisfaction of the indebtedness represented by promissory notes payable by EN to Venture Six, LLC and Wesley Jones. The activity of Edison Nation Holdings, LLC included in the Company’s consolidated statements of operations from the acquisition date to December 31, 2018 was net sales of $267,920 and net loss of $197,485. On October 29, 2018, the Company completed the acquisition of 72.15% of the outstanding capital stock of Cloud B, Inc. in exchange for 489,293 shares of restricted common stock of the Company. In addition, the Company entered into an Earn Out Agreement with the Cloud B Sellers, whereby, beginning in 2019, the Company will pay the Cloud B Sellers an annual amount equal to 8% multiplied by the annual gross sales of Cloud B, as reduced by the total gross sales generated by Cloud B in 2018. The Earn Out Agreement expires on December 31, 2021. The activity of Cloud B, Inc. included in the Company’s consolidated statements of operations from the acquisition date to December 31, 2018 was net sales of $1,512,328 and net loss of $44,408. On December 31, 2018, the Company completed the acquisition of all of the voting membership interest of Pirasta, LLC from NL Penn Capital, LP in exchange for the satisfaction of $470,000 due from related party. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiary at historical carrying values, except that equity reflects a distribution for the excess of consideration paid over the net carrying amount of assets. The activity of Pirasta, LLC included in the Company’s consolidated statements of operations from the acquisition date to December 31, 2018 was not material. On December 31, 2018, the Company completed the acquisition of 50% of the voting membership interest of Best Party Concepts, LLC from NL Penn Capital, LP in exchange for the satisfaction of $500,000 due from related party. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiary at historical carrying values, except that equity reflects a distribution for the excess of consideration paid over the net carrying amount of assets. The activity of Best Party Concepts, LLC included in the Company’s consolidated statements of operations from the acquisition date to December 31, 2018 was not material The following table summarizes the aggregate purchase price consideration paid: Edison Nation Best Party Holdings, LLC Cloud B, Inc. Pirasta, LLC Concepts, LLC Cash paid 950,000 — $ — $ — Fair value of issued shares 3,384,285 2,664,200 — — Fair value of reserved shares 6,014,250 — — — Issuance of debt 1,428,161 — — — Settlement of due from related party — — 470,000 500,000 Fair value of contingent consideration — 520,000 — — Purchase consideration 11,776,696 3,184,200 470,000 500,000 The Company believes that this combination will further strengthen its future growth opportunities while also increasing product diversification. The Company accounted for this acquisition as a business combination under the acquisition method of accounting. The following table summarizes the preliminary purchase price allocation of fair values of the assets acquired and liabilities assumed at the date of acquisition: Edison Nation Best Party Holdings, LLC Cloud B, Inc. Pirasta, LLC Concepts, LLC Cash and cash equivalents $ 68,681 $ 104,744 $ 3,629 $ 365 Accounts receivable 15,958 636,755 7,696 6,906 Inventory — 566,500 36,537 139,918 Other assets 39,691 172,747 — 4,356 Property and equipment 1,852 53,345 — 10,931 Goodwill 5,497,242 3,884,432 354,836 — Intangible assets 6,400,000 6,600,000 — — Total assets acquired 12,023,424 12,018,523 402,698 162,476 Debt — 1,400,000 — — Accounts payable 227,025 5,748,797 2,052 34,041 Accrued expenses and other liabilities 19,703 527,526 119,198 513,502 Total liabilities assumed 246,728 7,676,323 121,250 547,543 Noncontrolling interest — 1,158,000 — (192,534) Distribution to shareholder — — (188,552) (692,533) 11,776,696 3,184,200 470,000 500,000 The noncontrolling interest was valued based on the fair value of consideration paid to the Cloud B Sellers. The following represents the pro forma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the entire years ending December 31, 2018 and 2017: Years Ended December 31, 2018 2017 Revenues, net $ 20,988,594 $ 24,402,376 Cost of revenues 13,566,605 16,289,352 Gross profit 7,421,989 8,113,024 Operating expenses: Selling, general and administrative 13,144,691 8,890,638 Operating (loss) income (5,722,702) (777,614) Other (expense) income: Other (expense) income (398,406) (325,017) (Loss) income before income taxes (6,249,968) (452,597) Income tax expense 304,298 135,570 Net loss $ (6,554,266) $ (588,167) Net loss attributable to noncontrolling interests (415,466) (506,616) Net loss attributable to Edison Nation, Inc. (6,138,801) (81,551) Net loss per share - basic and diluted $ (1.09) $ (0.02) Weighted average number of common shares outstanding – basic and diluted 5,654,930 4,046,377 In connection with the acquisitions the Company will no longer present multiple segments for packaging materials and consumer goods segment as resources will be deployed on a consolidated level and all entities will operate cross functionally as one team to bring products to market. |
Inventory
Inventory | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Inventory | ||
Inventory | Note 4 — Inventory As of September 30, 2019 and December 31, 2018, inventory consisted of the following: September 30, December 31, 2019 2018 Raw materials $ 46,884 $ 48,576 Finished goods 1,059,193 875,131 Total inventory $ 1,106,077 $ 923,707 | Note 5 — Inventory As of December 31, 2018 and 2017, inventory consisted of the following: December 31, December 31, 2018 2017 Raw materials $ 48,576 $ 30,410 Finished goods 875,131 209,651 Total inventory $ 923,707 $ 240,061 |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 — Accounts Receivable As of December 31, 2018 and 2017, accounts receivable consisted of the following: December 31, December 31, 2018 2017 Accounts receivable $ 1,889,112 $ 1,441,997 Less: Allowance for doubtful accounts (11,761) (11,761) Total accounts receivable, net $ 1,877,351 $ 1,430,236 |
Intangible assets, net
Intangible assets, net | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Intangible assets, net | ||
Intangible assets, net | Note 5 — Intangible assets, net As of September 30, 2019, intangible assets consisted of the following: Gross Carrying Accumulated Net Carrying Amount Amortization Amount Finite lived intangible assets: Customer relationships 15 years 14.8 years $ 4,270,000 $ 268,389 $ 4,001,611 Developed technology 7 years 6.7 years $ 3,800,000 561,905 3,238,095 Membership network 7 years 6.7 years $ 1,740,000 269,286 1,470,714 Non-compete agreements 2 years 1.7 years $ 50,000 27,083 22,917 Total finite lived intangible assets $ 9,860,000 $ 1,126,663 $ 8,733,337 Indefinite lived intangible assets: Trademarks and tradenames Indefinite $ 3,140,000 $ — $ 3,140,000 Total indefinite lived intangible assets $ 3,140,000 $ — $ 3,140,000 Total intangible assets 13,000,000 $ 1,126,663 $ 11,873,337 As of December 31, 2018, intangible assets consisted of the following: Gross Carrying Accumulated Net Carrying Amount Amortization Amount Finite lived intangible assets: Customer relationships 15 years 14.8 years $ 4,270,000 $ 61,555 $ 4,208,445 Developed technology 7 years 6.7 years $ 3,800,000 159,524 3,640,476 Membership network 7 years 6.7 years $ 1,740,000 82,857 1,657,143 Non-compete agreements 2 years 1.7 years $ 50,000 8,333 41,667 Total finite lived intangible assets $ 9,860,000 $ 312,269 $ 9,547,731 Indefinite lived intangible assets: Trademarks and tradenames Indefinite $ 3,140,000 $ — $ 3,140,000 Total indefinite lived intangible assets $ 3,140,000 $ — $ 3,140,000 Total intangible assets 13,000,000 $ 312,269 $ 12,687,731 The estimated future amortization of intangibles subject to amortization at September 30, 2019 was as follows: For the Years Ended December 31, Amount 2019 (excluding the nine months ended September 30, 2019) $ 275,274 2020 1,092,762 2021 1,076,095 2022 1,076,095 2023 1,076,095 Thereafter 4,137,016 $ 8,733,337 Amortization expense for the three months ended September 30, 2019 and 2018 was $275,274 and $0, respectively. Amortization expense for the nine months ended September 30, 2019 and 2018 was $814,394 and $0, respectively. | Note 8 — Intangible assets, net As of December 31, 2018, intangible assets consisted of the following: For the Years Ended December 31, Weighted Gross Useful Average Carrying Accumulated Net Life Remaining Life Amount Amortization Amount Definite lived intangible assets: Customer relationships 15 years 14.8 years $ 4,270,000 $ 61,556 $ 4,208,444 Developed technology 7 years 6.7 years $ 3,800,000 159,524 3,640,476 Membership network 7 years 6.7 years $ 1,740,000 82,857 1,657,143 Non-compete agreements 2 years 1.7 years $ 50,000 8,333 41,667 Total definite lived intangible assets $ 9,860,000 $ 312,270 $ 9,547,730 Indefinite lived intangible assets: Trademarks and tradenames Indefinite $ 3,140,000 $ — $ 3,140,000 Total indefinite lived intangible assets $ 3,140,000 $ — $ 3,140,000 Total intangible assets 13,000,000 $ 312,270 $ 12,687,730 Amortization expense for the years ended December 31, 2018 and 2017 was $312,270 and $0, respectively. The estimated future amortization of intangibles subject to amortization at December 31, 2018 was as follows: For the Years Ended December 31, Amount 2019 $ 1,101,095 2020 1,092,762 2021 1,076,095 2022 1,076,095 2023 1,076,095 Thereafter 4,125,588 9,547,730 |
Property and equipment, net
Property and equipment, net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | Note 6 — Property and equipment, net As of December 31, 2018 and 2017, property and equipment consisted of the following: December 31, December 31, 2018 2017 Land $ 79,100 $ 79,100 Buildings – rental property 427,704 427,704 Building improvements 760,017 745,685 Equipment and machinery 3,929,332 3,899,040 Furniture and fixtures 322,157 280,124 Computer software 23,518 23,518 Molds 4,589,153 4,552,374 Vehicles 502,960 404,759 10,633,941 10,412,304 Less: accumulated depreciation (9,635,078) (9,445,400) Total property and equipment, net $ 998,863 $ 966,904 Depreciation expense for the years ended December 31, 2018 and 2017 was $175,609 and $188,283, respectively. |
Debt
Debt | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt | ||
Debt | Note 6 — Debt As of September 30, 2019 and December 31, 2018, debt consisted of the following: September 30, December 31, 2019 2018 Line of credit: Asset backed line of credit $ 471,553 $ 561,804 Debt issuance costs (19,466) (30,000) Total line of credit 452,087 531,804 Senior convertible notes payable: Senior convertible notes payable 2,539,273 1,428,161 Debt issuance costs (439,818) (466,667) Total long-term senior convertible notes payable 2,099,455 961,494 Less: current portion of long-term notes payable — — Noncurrent portion of long-term convertible notes payable 2,099,455 961,494 Notes payable: Notes payable 1,470,137 370,250 Debt issuance costs (153,793) — Total long-term debt 1,316,344 370,250 Less: current portion of long-term debt (1,270,243) (313,572) Noncurrent portion of long-term debt 46,101 56,678 Notes payable – related parties: Notes payable 3,381,579 3,464,191 Less: current portion of long-term debt – related parties (1,039,330) (932,701) Noncurrent portion of long-term debt – related parties $ 2,342,249 $ 2,531,490 Convertible Notes On March 6, 2019, Edison Nation entered into a securities purchase agreement (the “FirstFire SPA”) with an accredited investor (the “Investor”) pursuant to which the Investor purchased a 2% unsecured, senior convertible promissory note (the “FirstFire Note”) from the Company. The FirstFire Note was in the amount of $560,000 with an original issue discount of $60,000. The Company issued 15,000 shares of its common stock valued at $74,100 based on the share price on the date of issuance to the Investor as additional consideration for the purchase of the FirstFire Note. The Under the terms of the FirstFire SPA, the Investor will have “piggyback” registration rights in the event the Company files a Form S‑1 or Form S‑3 within six months from March 6, 2019, as well as a pro rata right of first refusal in respect of participation in any debt or equity financings undertaken by the Company during the 18 months following March 6, 2019. The Company is also subject to certain customary negative covenants under the FirstFire SPA, including but not limited to, the requirement to maintain its corporate existence and assets subject to certain exceptions, and to not to make any offers or sales of any security under circumstances that would have the effect of establishing rights or otherwise benefitting other investors in a manner more favorable in any material respect than those rights and benefits established in favor of the Investor under the terms of the FirstFire SPA and the FirstFire Note. The maturity date of the FirstFire Note is six months from March 6, 2019. All principal amounts and the interest thereon are convertible into shares of the Company’s common stock only in the event that an event of default occurs. The FirstFire note was paid in full in May 2019. On May 13, 2019, the Company entered into a series of 2% senior secured, senior convertible promissory notes of $1,111,111 with an original issue discount of $111,111. The Company issued 20,000 shares of its common stock to the note holders as additional consideration for the purchase of the notes in July 2019. The Company accrued $78,800 as a debt discount as of September 30, 2019 related to the value of the shares to be issued. The notes are convertible upon default and mature on November 13, 2019. Under the terms of the notes, the note holders will have “piggyback” registration rights. Alexander Capital placed the notes and received warrants to purchase 24,366 shares of the Company’s common stock, at an exercise price of $2.85 per share. The notes were converted into 560,185 shares of common stock in October 2019 at $2.00 per share. Receivables Financing In April 2019, we entered into a receivables financing arrangement for certain receivables of the Company. The agreement allows for borrowings up to 80% of the outstanding receivable based on the credit quality of the customer. The fee is between 1% and 2% of the total invoices financed. Notes Payable On May 16, 2019, the Company entered into a non-interest bearing promissory note of $300,000, with an original issue discount of $50,000. The Company issued 20,000 shares of its common stock to the note holder as additional consideration for the purchase of the note. The Company recorded $62,000 as a debt discount as of September 30, 2019 related to the value of the shares issued. The note matures on November 16, 2019. On June 11, 2019, the Company entered into 1.5% promissory note of $250,000. The interest and principal is due upon 30 days’ notice from the Lender, which cannot be issued before August 11, 2019. The Lender has not exercised their option for repayment yet. On August 26, 2019, the Company entered into a securities purchase agreement with Labrys Fund, LP (the “Investor”) pursuant to which the Investor purchased a 12% Convertible Promissory Note (the “Note”) from the Company. Unless there is a specific Event of Default (as such term is defined in the Note) or the Note remains unpaid by the Maturity Date, then the Investor shall not have the ability to convert the principal and interest under the Notes into shares of the Company’s common stock. The Company agreed to issue and sell to the Investor the Note, in the principal amount of $560,000, with an original issue discount in the amount of $60,000. The Note is due and payable February 26, 2020 (the “Maturity Date”). Additionally, the Company issued 181,005 shares of Common Stock to the Investor as a commitment fee, of which 153,005 shares of Common Stock must be returned to the Company in the event the Note is fully paid and satisfied prior to the Maturity Date. The scheduled maturities of the debt for the next five years as of December 31, 2018, are as follows: For the Years Ended December 31, Amount 2019 $ 2,175,092 2020 828,426 2021 871,916 2022 218,266 2023 1,229,569 Thereafter 2,539,273 7,862,542 Less: debt discount (613,077) $ 7,249,465 For the nine months ended September 30, 2019, interest expense was $875,036, of which $238,111 was related party interest expense. For the nine months ended September 30, 2018, interest expense was $407,267, of which $145,656 was related party interest expense, respectively. | Note 10 — Debt As of December 31, 2018 and 2017, debt consisted of the following: December 31, December 31, 2018 2017 Line of credit: Asset backed line of credit $ 561,804 $ — Debt issuance costs (30,000) — Total line of credit 531,804 — Long-term senior convertible debt: Senior convertible notes payable 1,428,161 — Debt issuance costs (466,667) — Total long-term senior convertible debt 961,494 — Long-term debt: Notes payable 370,250 — Less: current portion of long-term debt (313,572) — Noncurrent portion of long-term debt 56,688 — Long-term debt – related parties: Notes payable 3,464,191 2,996,500 Less: current portion of long-term debt – related parties (932,701) (225,553) Noncurrent portion of long-term debt – related parties $ 2,531,490 $ 2,770,947 Line of Credit On December 27, 2018, the Company entered into credit agreement providing for an asset backed line of credit of $1,000,000. The credit agreement contains a revolving maturity date which is subject to an annual review by the lender, The credit agreement is collateralized by substantially all of the assets of Ferguson Containers, Inc. The interest rate was 8.5% as of December 31, 2018. The agreement contains certain covenants and definition. The Company was in compliance with all covenants as of December 31, 2018. Long-term Convertible Notes Payable – Related Parties On September 4, 2018, in connection with the acquisition of EN, the Company issued five senior convertible notes payable aggregating $1,428,161. The notes have an effective interest rate of four percent (4%) per annum. The Company is required to make semi-annual interest payments on June 30th and December 31st of each year. The notes have an option to convert at a conversion price of $5.00. Prepayments are not allowed under the notes without the prior written consent of applicable holders of a note until the second anniversary of the effective date of the note, after which time the notes may be prepaid without penalty at any time upon sixty (60) days’ written notice to the holders. The holders have piggyback registration rights. If the conversion option is not elected by the holder, all outstanding principal and interest is due on September 4, 2023. The Company recorded a debt discount of $500,000 related to the beneficial conversion feature that will be amortized over five (5) years to interest expense. Notes Payable The Company borrowed funds under two separate notes, aggregating $645,000, in February 2018 and March 2018. As of December 31, 2018, both holders of the notes were paid in full. In addition, the Company issued the 20,000 and 13,500 shares to the holders of the notes payable, respectively. The fair value of the shares issued was $167,500 which was recorded as a debt discount and fully amortized through interest expense. On September 7, 2018, the Company borrowed $73,559 related to the purchase of a commercial delivery vehicle. The note bears interest at a rate of 4.5% per annum. The monthly payments under the note are $1,371 commencing on October 6, 2018 and maturing on September 6, 2023. The loan is collaterized by the commercial delivery vehicle having the approximate value of $75,000. On December 1, 2016, Cloud B, Inc. entered into a Loan Agreement with an outside associate of CEO Linda Suh. The loan was in the amount of $300,000. This loan was for a period of six (6) months and bears no interest and therefore no monthly interest payments. A Loan Amendment and Extension Agreement was entered into on June 1, 2017, extending the maturity of the loan until December 31, 2017. This loan remains outstanding. No collateral was provided by the Company for any of the above-referenced loans. Notes Payable – Related Parties On September 30, 2018, in connection with the acquisition of SRM and Fergco, the Company issued two notes payable aggregating $2,996,500. One note was issued to NL Penn Capital, L.P, in relation to the acquisition of SRM in the amount of $2,120,000 and the other note was issued to the shareholders of Fergco in the amount of $876,500. The notes bear interest at a rate of six percent (6%) per annum and have an effective interest rate of six percent (6%) per annum. The Company is required to make monthly payments comprised of principal and interest beginning in January 2018 that are amortized over ten (10) years, with a balloon payment of all outstanding principal and interest due at the respective maturity dates ($677,698 due on December 1, 2020 and $1,249,043 due on December 1, 2022). On April 24, 2014, Cloud B, Inc. entered into two shareholder Loan Agreements. One shareholder loan was from former shareholder, Board Member, and CEO of Cloud B, Inc. prior to the acquisition on October 29, 2018, Linda Suh in the amount of $100,000. This loan bears interest at a rate of 7.0% per annum for the first twelve (12) months and 8.0% per annum thereafter. The Company is required to make monthly interest only payments. Interest payments on this loan have been paid through November 2018. The other shareholder loan was from former shareholder and Board Member of Cloud B, Inc. prior to the acquisition on October 29, 2018, John Royan in the amount of $500,000. This loan bears interest at a rate of 7.0% per annum for the first six (6) months and 8.0% per annum for the next six (6) months. The Company was required to make monthly interest only payments through May 2015, with the loan becoming due and payable on May 28, 2015. This loan remains outstanding with the last interest payment made in July 2015. The scheduled maturities of the debt for the next five years as of December 31, 2018, are as follows: For the Years Ended December 31, Amount 2018 $ 1,778,077 2019 239,461 2020 254,230 2021 704,296 2022 1,420,190 Thereafter 1,428,162 5,824,416 Less: debt discount (496,667) $ 5,327,749 For the year ended December 31, 2018, interest expense was $501,221 of which $239,885 was related party interest expense. For the year ended December 31, 2017 interest income was $4,000. |
Related Party Transactions
Related Party Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transactions | ||
Related Party Transactions | Note 7 — Related Party Transactions NL Penn Capital, LP and SRM Entertainment Group LLC On December 31, 2018, the Company completed the acquisition of all of the voting membership interest of Pirasta, LLC from NL Penn Capital, LP in exchange for the satisfaction of $470,000 due from related party. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiary at historical carrying values, except that equity reflects a distribution for the excess of consideration paid over the net carrying amount of assets. On December 31, 2018, the Company completed the acquisition of 50% of the voting membership interest of Best Party Concepts, LLC from NL Penn Capital, LP in exchange for the satisfaction of $500,000 due from related party. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiary at historical carrying values, except that equity reflects a distribution for the excess of consideration paid over the net carrying amount of assets. As of September 30, 2019 and December 31, 2018, the net amounts due to related parties consists of net amounts due to SRM Entertainment Group LLC (“SRM LLC”) and NL Penn Capital, LP , which are both majority owned by Chris Ferguson, our Chairman and Chief Executive Officer. The amount due to related parties is related to the acquisitions of Pirasta, LLC and Best Party Concepts, LLC offset by operating expenses that were paid by SRM and Edison Nation on behalf of SRM LLC and NL Penn Capital, LP. As of September 30, 2019 and December 31, 2018, the net amount due to related parties was $22,896 and $140,682, respectively. Such amounts are due currently. Service Agreement On August 1, 2018, the Company entered into a one-year letter agreement with Enventys Partners, LLC, a North Carolina limited liability company (“Enventys”), whereby Enventys agreed to provide services to the Company as an independent contractor in the areas of product development and crowdfunding campaign marketing. During the term of the Enventys Agreement, the Company shall pay Enventys a fixed fee of $15,000 per month for product development assistance, including design research, mechanical engineering and quality control planning. Depending on the success of each campaign, the Company may also pay Enventys a commission of up to ten percent of the total funds raised in the applicable campaign. Louis Foreman, who is a member of the Company’s board of directors, is also the Chief Executive Officer and the largest equity holder of Enventys. We incurred fees of approximately $22,000 and $97,500 related to the services performed by Enventys for the three and months ended September 30, 2019, respectively. During 2019, the Company and Enventys agreed to the cancellation of the agreement. | Note 12 — Related Party Transactions NL Penn Capital, LP and SRM Entertainment Group LLC As of December 31, 2018 and 2017, due to related party consists of net amounts due to SRM Entertainment Group LLC (“SRM LLC”) and NL Penn Capital, LP (“NL Penn”), the majority owner of SRM Entertainment Group LLC, which are owned by Chris Ferguson, Chief Executive Officer. The amount due to related parties is related to the acquisition of Pirasta, LLC and Best Party Concepts, LLC offset by operating expenses that were paid by SRM on behalf of SRM LLC and NL Penn. As of December 31, 2018 and 2017, the net amount due to related parties was $140,682 and due from related parties was $834,897, respectively. Such amounts are due currently. Service Agreement On August 1, 2018, the Company entered into a one-year letter agreement with Enventys Partners, LLC, a North Carolina limited liability company (“Enventys”), whereby Enventys agreed to provide services to the Company as an independent contractor in the areas of product development and crowdfunding campaign marketing. During the term of the Enventys Agreement, the Company shall pay Enventys a fixed fee of $15,000 per month for product development assistance, including design research, mechanical engineering and quality control planning. Depending on the success of each campaign, the Company may also pay Enventys a commission of up to ten percent of the total funds raised in the applicable campaign. Louis Foreman, who has been nominated to be voted upon as a board member of the Company at the Company’s next annual meeting, is also the Chief Executive Officer and the largest equity holder of Enventys. We incurred fees of approximately $130,000 related to the services performed by Enventys for the year ended December 31, 2018. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets, net | |
Goodwill Disclosure [Text Block] | Note 7 — Goodwill The changes in the carrying amount of goodwill for the year ended December 31, 2018 consisted of the following: Total Balance, January 1, 2018 $ — Acquisitions 9,736,510 Balance, December 31, 2018 9,736,510 The Company had no goodwill until which time it closed on its 2018 acquisitions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies | ||
Commitments and Contingencies | Note 8 — Commitments and Contingencies Operating Leases The Company has entered into non-cancellable operating leases for office, warehouse, and distribution facilities, with original lease periods expiring through 2021. In addition to minimum rent, certain of the leases require payment of real estate taxes, insurance, common area maintenance charges, and other executory costs. Differences between rent expense and rent paid are recognized as adjustments to operating lease right-of-use assets on the consolidated balance sheets. As of September 30, 2019, the Company has operating lease liabilities of $827,617 and right of use assets for operating leases of $810,017. During the three and nine months ended September 30, 2019, operating cash outflows relating to operating lease liabilities was $78,303 and $225,249, respectively, and the expense for right of use assets for operating leases was $75,414 and $217,189 , respectively. As of September 30, 2019, the Company’s operating leases had a weighted-average remaining term of 3.3 years and weighted-average discount rate of 4.5%. Excluded from the measurement of operating lease liabilities and operating lease right-of-use assets were certain office, warehouse and distribution contracts that either qualify for the short-term lease recognition exception. On August 8, 2016, SRM entered into a lease for office space in Kowloon, Hong Kong. On August 8, 2018, SRM extended its lease for office space in Kowloon, Hong Kong so that the lease will now expire on August 7, 2020. Monthly lease payments are approximately $6,400 for a total of approximately $154,000 for the total term of the lease. On July 1, 2019, the Company entered into a lease for office space in Bethlehem, Pennsylvania. Monthly lease payments are $2,415 for a total of approximately $89,000 for the total term of the lease. Total rent expense for the nine months ended September 30, 2019 was $128,256 and $410,759, respectively. Total rent expense for the nine months ended September 30, 2018 was $65,244 and $211,780, respectively. Rent expense is included in general and administrative expense on the Company’s condensed consolidated statements of operations. The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Condensed Consolidated Balance Sheets as of September 30, 2019: September 30, 2019 2019 (excluding the nine months ended September 30, 2019) 82,230 2020 315,660 2021 267,249 2022 96,288 2023 78,648 2024 and thereafter 52,430 Total future lease payments 892,505 Less: imputed interest (64,888) Present value of future operating lease payments 827,617 Less: current portion of operating lease liabilities (292,800) Operating lease liabilities, net of current portion 534,817 Right of use assets – operating leases, net 810,017 Rental Income Fergco leases a portion of the building located in Washington, New Jersey that it owns under a month to month lease. Rental income related to the leased space for both the nine months ended September 30, 2019 and 2018 was $77,111, respectively. Rental income is included in other income on the consolidated statements of operations. Legal Contingencies The Company is involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which are not covered by insurance. For certain pending matters, accruals have not been established because such matters have not progressed sufficiently through discovery, and/or development of important factual information and legal information is insufficient to enable the Company to estimate a range of possible loss, if any. An adverse determination in one or more of these pending matters could have an adverse effect on the Company’s consolidated financial position, results of operations or cash flows. We are, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business. On July 15, 2019, the Company received correspondence from the staff of the Arkansas Securities Commissioner in connection with the state’s notice filing requirements for offerings exempt under Tier 2 of Regulation A, Section 18(b)(3) of the Security Act, such as the Company’s Form 1-A. The Company has resolved the matter with the Arkansas Securities Department for $1,100. | Note 13 — Commitments and Contingencies Operating Lease On August 8, 2016, SRM entered into a lease for office space in Kowloon, Hong Kong. On August 8, 2018, SRM extended its lease for office space in Kowloon, Hong Kong so that the lease will now expire on August 7, 2020. Monthly lease payments are approximately $6,400 for a total of approximately $154,000 for the total term of the lease. The Company leases certain office space from an entity affiliated through common ownership under operating lease agreement. The operating lease requires base monthly payments of $3,333 plus the Company’s share of the facilities operating expenses as defined in the lease agreement through May 2017. The lease agreement contains four successive five year renewal options with 5% base rent escalations at the end of each extension period. On October 1, 2018, the Company entered into a lease for office space in Winter Park, Florida which expires on September 30, 2020. Monthly lease payments are approximately $1,887 for a total of approximately $45,288 for the total term of the lease. Minimum annual rental commitments for operating leases of continuing operations having initial or remaining noncancellable lease terms in excess of one year are as follows: Total rent expense for the years ended December 31, 2018 and 2017 was $343,253 and $191,405, respectively. Rent expense is included in general and administrative expense on the consolidated statements of operations. Rental Income Fergco leases a portion of the building located in Washington, New Jersey that it owns under a month to month lease. Total rental income related to the leased space for both the years ended December 31, 2018 and 2017 was $102,815, respectively, and is included in other income on the consolidated statements of operations. Legal Contingencies The Company is involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which are not covered by insurance. For certain pending matters, accruals have not been established because such matters have not progressed sufficiently through discovery, and/or development of important factual information and legal information is insufficient to enable the Company to estimate a range of possible loss, if any. An adverse determination in one or more of these pending matters could have an adverse effect on the Company’s consolidated financial position, results of operations or cash flows. We are, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business. |
Accrued expenses and other curr
Accrued expenses and other current liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] | Note 9 — Accrued expenses and other current liabilities As of December 31, 2018 and 2017, accrued expenses and other current liabilities consisted of the following: December 31, December 31, 2018 2017 Accrued other taxes $ 259,559 $ 55,413 Accrued payroll and benefits 175,336 8,703 Accrued professional fees 133,261 16,848 Customer deposits 35,094 — Accrued interest 269,782 — Other 262,519 — Total accrued expenses and other current liabilities $ 1,135,551 $ 80,964 |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Shareholders' Equity | ||
Shareholders' Equity | Note 9 — Shareholders’ Equity Stock-Based Compensation On September 6, 2018, the Company’s board of directors approved an amendment and restatement of the Company’s omnibus incentive plan solely to reflect the Company’s name change to Edison Nation, Inc. Thus, the Edison Nation, Inc. Omnibus Incentive Plan (the “Plan”) which remains effective as of February 9, 2018, provides for the issuance of up to 1,764,705 shares of common stock to help align the interests of management and our shareholders and reward our executive officers for improved Company performance. Stock incentive awards under the Plan can be in the form of stock options, restricted stock units, performance awards and restricted stock that are made to employees, directors and service providers. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. The exercise price of stock options are equal to the fair market value of the underlying Company common stock on the date of grant. The following table represents total stock compensation expense by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employees, for the nine months ended September 30, 2019 and 2018: For the Nine Months Ended September 30, 2019 2018 Stock option awards $ $ Non-employee awards Restricted stock unit awards Phantom stock awards — $ $ The stock-based compensation is included in selling, general and administrative expense for the nine months ended September 30, 2019 and 2018. Stock option awards The following table summarizes stock option award activity for the nine months ended September 30, 2019: Weighted Remaining Average Contractual Exercise Life in Aggregate Shares Price Years Intrinsic Value Balance, January 1, 2019 290,000 $ 5.55 4.2 — Granted — — — — Forfeited — — Balance, September 30, 2019 290,000 $ 5.55 — Exercisable, September 30, 2019 263,333 $ 5.41 — As of September 30, 2019, there were 26,667 unvested options to purchase shares of the Company’s common stock or $62,139 of total unrecognized equity-based compensation expense that the Company expected to recognize over a remaining weighted-average period of 1 year. Non-employee awards From time to time, the Company grants shares of common stock to consultants and non-employee vendors for services performed. The awards are valued at the market value of the underlying common stock at the date of grant and vest based on the terms of the contract which is usually upon grant. | Note 14 — Shareholders’ Equity Common Stock The Company issued 1,312,520 shares of common stock related to the IPO, at a public offering price of $5.00 per share in August 2018. The Company received gross proceeds of $6,562,600 and net proceeds of $5,315,176 after deducting underwriter commissions and expenses of $714,802, legal fees of $157,358, escrow closing fees of $4,000 and other direct offering expenses which together aggregate $1,204,030. Stock-Based Compensation On September 6, 2018, the Company’s board of directors approved an amendment and restatement of the Company’s omnibus incentive plan solely to reflect the Company’s name change to Edison Nation, Inc. Thus, the Edison Nation, Inc. Omnibus Incentive Plan (the “Plan”) which remains effective as of February 9, 2018, provides for the issuance of up to 1,764,705 shares of common stock to help align the interests of management and our shareholders and reward our executive officers for improved Company performance. Stock incentive awards under the Plan can be in the form of stock options, restricted stock units, performance awards and restricted stock that are made to employees, directors and service providers. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. The exercise price of stock options are equal to the fair market value of the underlying Company common stock on the date of grant. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. 2018 Weighted average fair value of option granted $ 1.82 Risk-free interest rate 2.2 % Expected term in years 2.5 Volatility 50.0 % Dividend rate 0.0 % The following table summarizes stock option award activity during 2018: Weighted Remaining Average Contractual Exercise Life in Aggregate Shares Price Years Intrinsic Value Balance, January 1, 2018 — $ — — — Granted 290,000 5.55 4.2 — Balance, December 31, 2018 290,000 $ 5.55 4.2 — Exercisable, December 31, 2018 166,667 $ 5.32 4.1 — As of December 31, 2018, there was 123,333 unvested options to purchase common units of Edison Nation, Inc. or $222,279 of total unrecognized equity-based compensation expense that the Company expected to recognize over a remaining weighted-average period of 1.4 years. The Company recorded stock-based compensation expense of $2,025,994, of which 1,721,250, related to the assumption of certain consulting agreements which were satisfied by the principal shareholder of SRM transferring 344,250 shares to the consultants, for the year ended December 31, 2018. No compensation expense was recorded for the year ended December 31, 2017. Selling Agent Agreement In connection with the IPO, the Company agreed to issue to the selling agent in the IPO, warrants to purchase a number of shares of the common stock equal to 5.0% of the total shares of common stock sold in any closing of the IPO, excluding shares purchased by investors sourced via alternative funding platforms (the “Selling Agent Warrants”). The Selling Agent Warrants are exercisable commencing on the qualification date of the IPO and have a term of 5 years. The Selling Agent Warrants are not redeemable by the Company. The exercise price for the Selling Agent Warrants is 20% greater than the IPO offering price, or $6.00 per share. On August 16, 2018, the Company issued 65,626 of Selling Agent Warrants that are exercisable for 65,626 shares of the Company’s common stock. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 11 — Income Taxes Edison Nation, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from Fergco, Edison Nation Holdings, LLC, Edison Nation, LLC, Safe TV Shop, LLC, Everyday Edisons, LLC and Pirasta, LLC based upon Edison Nation, Inc.’s economic interest in those entities. Cloud B, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on its income. The Company has three foreign entities of which only SRM has operations, SRM is an entity subject to the Hong Kong, China tax regime. The Hong Kong tax returns remain subject to examination by local taxing authorities beginning with the tax year ended December 31, 2011. Cloud B, Inc. was a Subchapter S pass-through entity for income tax purposes prior to its acquisition by the Company on October 29, 2018. Accordingly, Cloud B, Inc. was not subject to income taxes prior to the acquisition and therefore the tax provision related to the United States income is only for the period from October 29, 2018 to December 31, 2018. Edison Nation Holdings, LLC and its subsidiaries are disregarded limited liability corporation entities for income tax purposes. Accordingly, EN was not subject to income taxes prior to the acquisition on September 4, 2018 and the results of operations were not material therefore the tax provision related to the United States income is only for the period from September 4, 2018 to December 31, 2018. Fergco was a Subchapter S pass-through entity for income tax purposes prior to its acquisition by the Company on September 30, 2017. Accordingly, Fergco was not subject to income taxes prior to the acquisition and therefore the tax provision related to the United States income is only for the period from October 1, 2017 to December 31, 2017. United States and foreign components of income before income taxes were as follows: For the Years Ended December 31, 2018 2017 United States (5,828,261) 49,097 Foreign 788,159 1,617,439 Income before income taxes $ (5,040,102) $ 1,666,536 The tax effects of temporary differences that give rise to deferred tax assets or liabilities are presented below: For the Years Ended December 31, 2018 2017 Deferred tax assets: Stock-based compensation $ 682,115 $ — Goodwill and intangible assets 19,410 — Net operating loss carryforwards 493,063 50,524 Less: valuation allowance (1,194,587) (50,524) Net deferred tax assets $ — $ — Deferred tax liabilities: Property and equipment $ 341 $ 34,209 Net deferred tax liabilities $ 341 $ 34,209 Net deferred tax liabilities $ 341 $ 34,209 As of December 31, 2018 and 2017, the Company had $1,820,685 and $240,591 of federal and state net operating loss carryforwards for income tax purposes. In connection with the IPO the Company does not believe the ownership change resulted in the loss of past net operating loss carryforwards. The above net operating loss carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experiences one or more ownership changes. The Company believes the goodwill acquired in the Edison Nation Holdings acquisition is deductible for tax purposes. The Company evaluates its ability to realize deferred tax assets on a quarterly basis and establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of December 31, 2018 and 2017, the Company recognized a deferred tax asset of $1,194,587 and $50,524, respectively. However, these deferred tax assets will be utilized upon the Company generating taxable income. As of December 31, 2018 and 2017, the Company established a full valuation allowance in the amount of $1,194,587 and $50,524, respectively, against the deferred tax asset. The income tax provision (benefit) consists of the following: For the Years Ended December 31, 2018 2017 Current: Federal $ 10,185 $ 27,513 Foreign 292,491 71,125 State and local 35,107 6,069 Total current $ 337,783 $ 104,707 Deferred: Federal $ (21,450) $ 23,249 Foreign (2,316) (3,153) State and local (10,102) 8,302 Total deferred $ (33,868) $ 28,398 Income tax provision (benefit) $ 303,915 $ 133,105 A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: For the Years Ended December 31, 2018 2017 Tax at federal statutory rate 21.0 % 34.0 % Effect of U.S. tax law change 0.0 % (0.9) % U.S. income attributable to pass-through entity 0.0 % (4.4) % U.S. income subject to valuation allowance (20.5) % 4.9 % State and local income taxes 0.0 % 0.9 % Foreign income not subject to U.S. federal tax 0.0 % (33.0) % Foreign tax (6.3) % 4.1 % Other (0.2) % 2.4 % Effective income tax rate (6.0) % 8.0 % The statutory federal income tax rate differs from the Company’s effective tax rate due to the valuation allowance related to deferred tax assets and net operating losses and foreign income taxes in Hong Kong. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Subsequent Events | ||
Subsequent Events | Note 10 — Subsequent Events On October 2, 2019, Edison Nation, Inc. (the “Company”) entered into a Share Purchase Agreement (the “PIPE Purchase Agreement”) with certain accredited investors (collectively, the “Investors”) for the private placement of 1,175,000 shares of the Company’s common stock, $0.001 par value per share, at a purchase price of $2.00 per share (the “PIPE Transaction”). The PIPE Purchase Agreement contains certain closing conditions relating to the sale of securities, representations and warranties by the Company and the Investors, as well as covenants of the Company and the Investors (including indemnification from the Company in the event of breaches of its representations and warranties), all of which the Company believes are customary for transactions of this type. In a series of four closings conducted in October 2019, the Company received net proceeds of $2,039,303 which consisted of $2,350,000 of gross proceeds offset by $310,697 of fees to placement agent and their lawyers. Alexander Capital, LP (“Alexander Capital”), a FINRA registered broker dealer, acted as placement agent with respect to the PIPE Transaction. In connection with the PIPE Transaction, Alexander Capital received a commission of $141,000, a debt restructuring fee of $64,208, a debt conversion fee of 15,889, a placement fee of $33,600 and Warrants to purchase 70,500 shares of the Company’s common stock, at an exercise price of $2.50 per share. In connection with the PIPE Purchase Agreement, the Company entered into Registration Rights Agreements with each of the Investors (the “Registration Rights Agreement”), pursuant to which the Company is required to prepare and file a registration statement (the “Registration Statement”) with the SEC under the Securities Act of 1933, as amended, covering the resale of the shares of common stock issued to the Investors under the PIPE Purchase Agreement, as well as the 70,500 Warrants issued in connection with the PIPE Financing. The Company will be required to have such Registration Statement declared effective by the SEC within 90 calendar days (or 120 calendar days in the event of a “full review” by the SEC) following the applicable closing date of the PIPE Transaction. If the registration statement is not filed or declared effective within the timeframe set forth in the Registration Rights Agreements, the Company is obligated to pay the Investors an amount equal to 1% of the total purchase price of the common stock per month (up to a maximum of 8% in the aggregate) until such failure is cured. The Registration Rights Agreement also contains mutual indemnifications by the Company and each Investor, which the Company believes are customary for transactions of this type. In connection with the PIPE transaction, the convertible notes entered into on May 13, 2019 were also converted at $2.00 per share into 560,185 shares of the Company’s common stock. On November 6, 2019, the Company acquired the assets of Uber Mom, LLC for $52,352, which was the approximate value of Uber Mom, LLC inventory, and 22,500 shares of our common stock. In November 2019, the Company entered into a Receivables Purchase Agreement with a financial institution (the “Receivables Purchase Agreement”), for the purchase of $225,000 of receivables with a purchase price of $200,000. The proceeds were used to fund the purchase of products for sale on our Amazon.com sellers page. In November 2019, the Company entered into a Future Receivables Purchase Agreement with a financial institution (the “Future Receivables Purchase Agreement”), for the purchase of $337,500 of receivables with a purchase price of $225,000. The proceeds were used to fund our receivables for overseas distributors as such receivables were not eligible as collateral under our current working capital facility. Christopher B. Ferguson, our Chairman and Chief Executive Officer, personally guaranteed the prompt and complete performance of the Company's obligations under the Future Receivables Purchase Agreement. On December 27, 2019, the Company paid $274,625 of the outstanding principal and interest on the Tiburon Note executed on June 14, 2019. On January 10, 2020, the Company entered into a 5% Promissory Note Agreement with Rawleigh Ralls ("Ralls") for an aggregate principal amount of $267,000 (the "Ralls Note"), pursuant to which Ralls purchased the Ralls Note from the Company for $250,000, and the Company issued to Ralls a warrant (the "Ralls Warrant") to purchase 125,000 shares of the Company's common stock. The proceeds from the Ralls Note will be used for general working capital needs of the Company. The Company will also issue 33,000 incentive shares to O'Leary. The maturity date of the Ralls Note is July 10, 2020. On January 15, 2020, the Company entered into a 5% Promissory Note Agreement with Paul J. Solit & Julie B. Solit ("Solits") for an aggregate principal amount of $107,000 (the "Solit Note"), pursuant to which the Solits purchased the Solit Note from the Company for $100,000, and the Company issued to the Solits a warrant (the "Solit Warrant") to purchase 50,000 shares of the Company's common stock. The proceeds from the Solit Note will be used for general working capital needs of the Company. The Company will also issue 13,000 incentive shares to O'Leary. The maturity date of the Solit Note is July 15, 2020. On January 17, 2020, the Company entered into a 5% Promissory Note Agreement with Richard O'Leary ("O'Leary") for an aggregate principal amount of $53,500 (the "O'Leary Note"), pursuant to which O'Leary purchased the O'Leary Note from the Company for $50,000, and the Company issued to O'Leary a warrant (the "O'Leary Warrant") to purchase 25,000 shares of the Company's common stock. The proceeds from the O'Leary Note will be used for general working capital needs of the Company. The Company will also issue 6,500 incentive shares to O'Leary. The maturity date of the O'Leary Note is July 17, 2020. On January 23, 2020, Edison Nation, Inc. (the "Company") entered into a $1,100,000 loan agreement the ("Loan Agreement") with Greentree Financial Group, Inc. (the "Investor"), pursuant to which the Investor purchased a 10% Convertible Promissory Note (the "Note") from the Company, and the Company issued to the Investor a warrant (the "Warrant") to purchase 550,000 shares of the Company's common stock, $0.001 per share ("Common Stock"). The $1,100,000 of proceeds from the Note will be used for general working capital purposes and for the repayment of debt. On January 24, 2020, the Company used $588,366,44 of the proceeds from the Note to pay off in full the 12% Convertible Promissory Note held by Labrys Fund, LP. On January 29, 2020, the Company and the Investor entered into an Amendment Agreement, amending the Loan Agreement, the Note, and the Warrant to: (i) correct the effective date set forth in the Loan Agreement, Note and Warrant to January 23, 2020, (ii) clarify the terms of the registration right provision in the Loan Agreement, and (iii) to ensure that the total number of shares of Common Stock issued pursuant to the Loan Agreement, the Note, and/or the Warrant, each as amended, does not exceed 17.99% of the Company's issued and outstanding Common Stock as of January 23, 2020. Upon execution of the Loan Agreement, the Company issued to the Investor 100,000 shares of Common Stock (the "Origination Shares") as an origination fee, plus an additional 60,000 shares of Common Stock as consideration for advisory services. Pursuant to the Loan Agreement, the Company agreed to pay certain costs of the Investor, including $15,000 for the Investor's legal fees and transfer agent fees resulting from conversion of the Note. The Loan Agreement also contains representations and warranties by the Company and the Investor, which the Company believes are customary for transactions of this type. Furthermore, the Company is subject to certain negative covenants under the Loan Agreement, which the Company also believes are also customary for transactions of this type. Pursuant to the Loan Agreement, the Company agreed to issue and sell to the Investor the Note, in the principal amount of $1,100,000. The Note, as amended, is due and payable October 23, 2020 (the "Maturity Date"), and is convertible at any time at a price of $2.00 per share, subject to certain adjustments to the conversion price set forth in the Note. The Note reiterates the registration rights set forth in the Loan Agreement and the Warrant. There is no prepayment penalty on the Note. If the Note is not prepaid by the 90th day after the effective date of the Registration Statement, the Investor is required to convert the entire amount of principal and interest outstanding on the Note at that time, at a price of $2.00 per share, unless an event of default (as such events are described in the Note) under the Note has occurred, in which case the Note would be mandatorily converted at a price equal to 50% of the lowest trading price of the Common Stock for the last 10 trading days immediately prior to, but not including, the date that the Note mandatorily converts. The Note also contains a conversion limitation provision, which prohibits the Investor from converting the Note in an amount that would result in the beneficial ownership of greater than 4.9% of the total issued and outstanding shares of Common Stock, provided that (i) such conversion limitation may be waived by the Investor with 61 days prior notice, and (ii) the Investor cannot waive the conversion limitation if conversion of the Note would result in the Investor having beneficial ownership of greater than 9.9% of the total issued and outstanding shares of Common Stock. Pursuant to the Loan Agreement, the Company also issued the Investor a warrant to purchase 550,000 shares of Common Stock at an exercise price of $2.00 per share, subject to certain adjustments to the exercise price set forth in the Warrant. The Warrant, as amended, expires on January 23, 2023. If the closing price per share of the Common Stock reported on the day immediately preceding an exercise of the Warrant is greater than $2.00 per share, the Warrant may be exercised cashlessly, based on a cashless exercise formula. The Warrant reiterates the registration rights set forth in the Loan Agreement and the Note. The Warrant also contains a repurchase provision, which at any time after the Registration Statement is effective and the Common Stock has traded at a price over $3.00 share for 20 consecutive days, gives the Company a 30-day option to repurchase any unexercised portion of the Warrant at a price of $1.00 per share. On December 4, 2019, the Company entered into a Senior Secured Note Agreement (the “32E Loan Agreement”) with 32 Entertainment LLC (“32E”), pursuant to which 32E agreed to loan the Company $250,000 (the “Loan”). The Loan is interest bearing at the rate of 10.0% per annum through the term of the Loan. The Company issued 10,000 shares of common stock to 32E in connection with the 32E Loan Agreement. In addition, the Company issued a warrant (the "32E Warrant") to purchase 50,000 shares of the Company's common stock. Under the terms of the 32E Loan Agreement, the Company entered into a registration rights agreement whereby the Company agreed to register the shares and file this registration statement on a Form S-1 with the SEC. The Company was required to have such registrations statement declared effective by the SEC within 90 calendar days. The Loan proceeds are being used to fund general working capital needs of the Company. If the Company defaults on the performance of any obligation under the Loan Agreement, 32E may declare the principal amount of the Loan owing under the 32E Loan Agreement at the time of default to be immediately due and payable. Interest is due in March, June and September. The outstanding principal and interest on the note is due on December 4, 2020. On January 2, 2020, the Company entered into that certain Loan Agreement with Tiburon Opportunity Fund (the “Lender”), dated January 2, 2020 (the “Loan Agreement”). Pursuant to the terms of the Loan Agreement, the Lender agreed to loan the Company $400,000. The Loan is interest bearing at the rate of 1.5% per month through the term of the Loan. Additionally, the Loan Agreement provides that the Company shall pay the Lender the entire unpaid principal and all accrued interest upon thirty days’ notice to the Company, but in any event, the notice shall not be sooner than June 1, 2020. The Loan proceeds are being used to fund general working capital needs of the Company. If the Company defaults on the performance of any obligation under the Loan Agreement, the Lender may declare the principal amount of the Loan owing under the Loan Agreement at the time of default to be immediately due and payable. Furthermore, the Loan Agreement grants the Lender a collateral interest in certain accounts receivable of SRM Entertainment Ltd., a subsidiary of the Company. On January 24, 2020, the Company repaid the Labrys Note in full. Upon repayment of the Labrys Note, Labrys Fund, LP returned to the Company for cancellation the 153,005 shares of Common Stock that had been originally issued to as a portion of the commitment fee paid in connection with the Labrys Note, and allowed the Company to cancel the reservation of the 875,000 shares of Common Stock that had been reserved pursuant to the Labrys SPA and Labrys Note. | Note 15 — Subsequent Events Foreclosure of Cloud B, Inc. In February 2019, CBAV1, LLC foreclosed on the Promissory Note it held that was secured by Cloud B, Inc.’s assets. After the foreclosure, there likely will be no assets to distribute to other creditors. Issuance of Common Shares In March 2019, the Company issued 10,500 shares of common stock to consultants for services performed. First Fire Note Payable On March 6, 2019, Edison Nation, Inc. (the “Company”) entered into a securities purchase agreement (the “SPA”) with an accredited investor (the “Investor”) pursuant to which the Investor purchased a 2% unsecured, senior convertible promissory note (the “Note”) from the Company. The Company issued 15,000 shares of its common stock, par value $0.001 per share (“Common Stock”) to the Investor as additional consideration for the purchase of the Note. Under the terms of the SPA, the Investor will have piggyback registration rights in the event the Company files a Form S‑1 or Form S‑3 within six months from March 6, 2019, as well as a pro rata right of first refusal in respect of participation in any debt or equity financings undertaken by the Company during the 18 months following March 6, 2019. The Company is also subject to certain customary negative covenants under the SPA, including but not limited to, the requirement to maintain its corporate existence and assets subject to certain exceptions, and to not to make any offers or sales of any security under circumstances that would have the effect of establishing rights or otherwise benefitting other investors in a manner more favorable in any material respect than those rights and benefits established in favor of the Investor under the terms of the SPA and the Note. As issued on March 6, 2019, the principal amount of the Note is $560,000, with an original issue discount in the amount of $60,000. The maturity date of the Note is six months from March 6, 2019. As stated above, all principal amounts and the interest thereon are convertible into shares Common Stock only in the event that an Event of Default occurs. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Edison Nation, Inc. and its wholly-owned and majority owned subsidiaries. All intercompany balances and transactions have been eliminated. | Principles of Consolidation The consolidated financial statements include the accounts of Edison Nation, Inc. and its wholly-owned and majority owned subsidiaries. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in US dollars. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, the valuation allowance related to the Company’s deferred tax assets, the recoverability and useful lives of long-lived assets, debt conversion features, stock-based compensation, certain assumptions related to the valuation of the reserved shares and the assets acquired and liabilities assumed related to the Company’s acquisitions. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. | Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, the valuation allowance related to the Company’s deferred tax assets, the recoverability and useful lives of long-lived assets, debt conversion features, stock-based compensation, certain assumptions related to the valuation of the reserved shares and the assets acquired and liabilities assumed related to the Company’s acquisitions. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior year amounts to conform to current year presentation. | Reclassifications Certain amounts previously presented in the consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no effect on the previously reported net loss, shareholders’ equity or cash flows. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company has cash on deposit in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. The Company had approximately $627,000 uninsured cash at September 30, 2019 of which approximately $198,000 was held in foreign bank accounts not covered by FDIC insurance limits as of September 30, 2019. | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents in the consolidated financial statements. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. The Company had approximately $1,450,000 uninsured at December 31, 2018 of which approximately $583,000 was held in foreign bank accounts not covered by FDIC insurance limits as of December 31, 2018. |
Accounts Receivable | Accounts Receivable As of September 30, 2019, the following customers represented more than 10% of total accounts receivable: September 30, 2019 Customer A 15 % | Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2018 and 2017, the allowance for uncollectable amounts was not material. Management estimates the allowance for bad debts based on existing economic conditions, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. As of December 31, 2018, the following customers represented more than 10% of total accounts receivable: December 31, 2018 Customer A 12 % Customer B 11 % |
Inventory | Inventory Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. | Inventory Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. |
Finance, Loan and Lease Receivables, Held-for-investment, Policy [Policy Text Block] | Loan Held for Investment Loan held for investment is reported on the balance sheet at the acquired cost which approximates the fair value, which resulted in a discount. The acquired loan had evidence of deterioration of credit quality and for which it was probable, at the time of our acquisition, that the Company would be unable to collect all contractually required payments. For these loans, the excess of the undiscounted contractual cash flows over the undiscounted cash flows estimated by us at the time of acquisition was not accreted into income (nonaccretable discount). The amount representing the excess of cash flows estimated by us at acquisition over the purchase price was accreted into purchase discount earned over the life of the applicable loans (accretable discount). The nonaccretable discount was not accreted into income. If cash flows could not be reasonably estimated for any loan, and collection was not probable, the cost recovery method of accounting was used. Under the cost recovery method, any amounts received were applied against the recorded amount of such loans. Subsequent to acquisition, if cash flow projections improved, and it was determined that the amount and timing of the cash flows related to the nonaccretable discount was reasonably estimable and collection was probable, the corresponding decrease in the nonaccretable discount was transferred to the accretable discount and was accreted into interest income over the remaining life of any such loan on the interest method. If cash flow projections deteriorated subsequent to acquisition, the decline was accounted for through the allowance for loan losses. Depending on the timing of an acquisition, the initial allocation of discount generally is made primarily to nonaccretable discount until the Company is able to assess any cash flows expected to be collected over the purchase price which are then transferred to accretable discount. On June 4, 2018, the Company purchased a promissory note for $500,000 from a bank at a discount of $1,700,000 from the face value of $2,270,000 of a company in financial difficulty. On October 29, 2018, the Company purchased 72.15% of the outstanding capital stock of the Company as described Note 3. The loan held for investment has been eliminated in consolidation as of December 31, 2018. | |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for office equipment, 5 to 7 years for furniture and fixtures, 6 to 10 years for machinery and equipment, 10 to 15 years for building improvements, 5 years for software, 5 years for molds, 5 to 7 years for vehicles and 40 years for buildings. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statements of operations for the respective period. Minor additions and repairs are expensed in the period incurred. Major additions and repairs which extend the useful life of existing assets are capitalized and depreciated using the straight-line method over their remaining estimated useful lives. | |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company assesses the recoverability of its long-lived assets using undiscounted cash flows. If an asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The Company did not record any impairment charges related to long-lived assets during the years ended December 31, 2018 and 2017. | |
Goodwill and Intangible Assets, Policy [Policy Text Block] | Goodwill and Intangible Assets We record intangible assets based on their fair value on the date of acquisition. Goodwill is recorded for the difference between the fair value of the purchase consideration over the fair value of the net identifiable tangible and intangible assets acquired. We perform an impairment assessment of goodwill on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill is assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business. We may assess our goodwill for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis would be performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill initially rather than using a qualitative approach. The impairment testing for goodwill is performed at the reporting unit level. The valuation methods used in the quantitative fair value assessment, discounted cash flow and market multiples method, require our management to make certain assumptions and estimates regarding certain industry trends and future profitability of our reporting units. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. The valuation of goodwill is affected by, among other things, our business plan for the future and estimated results of future operations. Future events could cause us to conclude that impairment indicators exist, and, therefore, that goodwill may be impaired. Intangible assets include the cost of patents or patent rights (hereinafter, collectively “patents”) and trademarks. Patent and trademark costs are amortized utilizing the straight-line method over their remaining economic useful lives. Costs incurred related to patents prior to issuance are included in prepaid patent expense until the time the patent is issued and amortization begins or until management determines it is no longer likely the patent will be issued and amounts are expensed. Edison Nation reviews long-lived assets and intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. | |
Revenue Recognition | Revenue Recognition Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues continue to be recognized when control of the goods are transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no material variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards. Disaggregation of Revenue The Company’s primary revenue streams include the sale and/or licensing of consumer goods and packaging materials. The Company’s licensing business is not material and has not been separately disaggregated for segment purposes. The disaggregated Company’s revenues for the nine months ended September 30, 2019 and 2018 were as follows: For the Nine Months Ended September 30, 2019 2018 Revenues: Product sales $ 14,982,117 $ 12,676,582 Service 67,753 — Licensing 189,564 82,133 Total revenues, net $ 15,239,434 $ 12,758,715 For the nine months ended September 30, 2019 and 2018, the following customer represented more than 10% of total net revenues: For the Nine Months Ended September 30, 2019 2018 Customer : Customer A 22 % 10 % Customer B * 17 % * Customer did not represent greater than 10% of total net revenue. For the nine months ended September 30, 2019 and 2018, the following geographical regions represented more than 10% of total net revenues: For the Nine Months Ended September 30, 2019 2018 Region: North America 78 % 81 % Asia-Pacific * 15 % Europe 15 % * * | Revenue Recognition Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues continue to be recognized when control of the goods are transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no material variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards. Disaggregation of Revenue The Company’s primary revenue streams include the sale and/or licensing of consumer goods and packaging materials for innovative products. The Company’s licensing business is not material and has not been separately disaggregated for segment purposes. The disaggregated Company’s revenues for the years ended December 31, 2018 and 2017 was as follows: For the Years Ended December 31, 2018 2017 Revenues: Product sales $ 16,037,221 $ 14,960,450 Service revenues 197,068 Licensing revenues 267,920 — Total revenues, net $ 16,502,209 $ 14,960,450 For the years ended December 31, 2018 and 2017, the following customers represented more than 10% of total net revenues: For the years ended December 31, 2018 2017 Customer A 21 % 31 % * For the years ended December 31, 2018 and 2017, the following geographical regions represented more than 10% of total net revenues: For the Years Ended December 31, 2018 2017 North America 80 % 83 % Asia-Pacific 13 % 13 % |
Cost of Sales, Policy [Policy Text Block] | Cost of Revenues Cost of revenues includes freight charges, purchasing and receiving costs, depreciation and inspection costs. | |
Shipping And Handling Cost Policy [Policy Text Block] | Shipping and Handling Costs Shipping and handling costs include inbound freight costs and the cost to ship product to the customer and are included in cost of sales. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. The loan held for investment was acquired at fair value, which resulted in a discount. As of September 30, 2019, the book value and estimated fair value of the Company’s level 3 instruments was as follows: September 30, 2019 Estimated Book Value Fair Value Contingent consideration $ (520,000) $ (520,000) The following changes in level 3 instruments for the three months ended September 30, 2019 are presented below: Contingent Consideration - Earnout Balance, July 1, 2019 $ (520,000) Change in fair value — Balance, September 30, 2019 $ (520,000) The following changes in level 3 instruments for the nine months ended September 30, 2019 are presented below: Contingent Consideration – Earnout Balance, December 31, 2018 $ (520,000) Change in fair value — Balance, September 30, 2019 $ (520,000) There were no changes to the underlying assumptions used in determining the fair value of the contingent consideration liability for the nine months ended September 30, 2019. There was no contingent consideration as of September 30, 2018. | Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. The loan held for investment was acquired at fair value, which resulted in a discount. As of December 31, 2018, the book value and estimated fair value of the Company’s level 3 instruments was as follows: December 31, 2018 Estimated Book Value Fair Value Loan held for investment $ — $ — Contingent consideration $ (520,000) $ (520,000) The following changes in level 3 instruments for the year ended December 31, 2018 are presented below: Loan Held Contingent For Consideration – Investment Earnout Balance, January 1, 2018 $ — $ — Purchases 500,000 — Earnout incurred related to acquisition of Cloud B, Inc. — 520,000 Acquisition of Cloud B, Inc. – eliminated in consolidation (500,000) — Balance, December 31, 2018 $ — $ (520,000) |
Foreign Currency Translation | Foreign Currency Translation The Company uses the United States dollar as its functional and reporting currency since the majority of the Company’s revenues, expenses, assets and liabilities are in the United States. Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the nine months ended September 30, 2019 and 2018 and the cumulative translation gains and losses as of September 30, 2019 and December 31, 2018 were not material. | Foreign Currency Translation The Company uses the United States dollar as its functional and reporting currency since the majority of the Company’s revenues, expenses, assets and liabilities are in the United States. Assets and liabilities in foreign currencies are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the years ended December 31, 2018 and 2017 and the cumulative translation gains and losses as of December 31, 2018 and 2017 were not material. |
Income Tax, Policy [Policy Text Block] | Income Taxes The Company accounts for income taxes under the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic 740 “Income Taxes” (“ASC Topic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements as of December 31, 2018 and 2017. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statements of operations. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. This legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The TCJA permanently reduced the U.S. corporate income tax rate from 34% to 21%, effective January 1, 2018. | |
Net Earnings or Loss per Share | Net Earnings or Loss per Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of September 30, 2018, there were no common stock equivalents outstanding. As of September 30, 2019, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. September 30, 2019 Selling Agent Warrants 89,992 Shares reserved in exchange for the cancellation of certain non-voting membership interest in Edison Nation Holdings, LLC 990,000 Options 290,000 Convertible shares under notes payable 285,632 Total 1,655,624 | Net Earnings or Loss per Share Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of vested common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of December 31, 2017, there were no common stock equivalents outstanding. As of December 31, 2018, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. December 31, 2018 Selling Agent Warrants 65,626 Shares reserved in exchange for the cancellation of certain non-voting membership interest in Edison Nation Holdings, LLC 990,000 Options 290,000 Convertible shares under notes payable 285,632 Shares to be issued to innovator 12,500 Total 1,643,758 |
Deferred Financing Costs [Policy Text Block] | Deferred Financing Costs Deferred financing costs include debt discounts and debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying value of the debt liability. Amortization of deferred financing costs are included as a component of interest expense. Deferred financing costs are amortized using the straight-line method over the term of the recognized debt liability which approximates the effective interest method. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016‑02 (ASU 2016‑02) which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this accounting guidance requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. The Company has elected the “package of practical expedients” and as a result is not required to reassess its prior accounting conclusions about lease identification, lease classification and initial direct costs for lease contracts that exist as of the transition date. However, the Company has not elected the use of hindsight for determining the reasonably certain lease term. The new lease standard also provides practical expedients and policy elections for an entity’s ongoing accounting. The Company has elected the practical expedient to not separate lease and non-lease components for all of its leases. The Company has elected the short-term lease recognition exemption, which results in no recognition of right-of-use assets and lease liabilities for existing short-term leases at transition. Upon adoption on January 1, 2019, the Company recognized right of use assets for operating leases and operating lease liabilities that have not previously been recorded. The lease liability for operating leases is based on the net present value of future minimum lease payments. The right of use asset for operating leases is based on the lease liability. The Company did not have any deferred rent or material prepaid rent. The cumulative effect of initially applying the new lease accounting standard as of January 1, 2019 is as follows: Cumulative January 1, January 1, Effect 2019, as 2019 Adjustment adjusted Assets: Right of use assets – operating leases $ — $ 943,997 $ 943,997 Liabilities: Current portion of operating lease liabilities $ — $ 261,866 $ 261,866 Operating lease liabilities, net of current portion $ — $ 682,131 $ 682,131 The adoption of the standard did not result in any material changes to the recognition of operating lease expenses in the Company’s consolidated statements of operations. In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, 2018. We have adopted this accounting guidance effective January 1, 2019, with no impact on our financial statements as there were no excess tax benefits to be recognized due to our net operating losses. In August 2018, the FASB issued new accounting guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements. In August 2018, the FASB issued new accounting guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, an entity will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018‑13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Since this accounting guidance only revises disclosure requirements, it will not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued new accounting guidance for Variable Interest Entities, which requires indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective for the Company’s interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted. The Company currently does not believe that the adoption of this accounting guidance will have a material impact on its consolidated financial statements and related disclosures. | Recent Accounting Pronouncements In January 2018, the FASB issued Accounting Standards Update No. 2017‑01(“ASU 2017‑01”), Business Combinations (Topic 805): Clarifying the Definition of a Business. The standard clarifies the definition of a business with the objective of providing guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018 and the adoption did not have an impact on the Company’s results or consolidated financial statements. In February 2018, the FASB issued Accounting Standards Update No. 2018‑02 (“ASU 2018‑02”), Income Statement -Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The standard provides for a reclassification from accumulated other comprehensive earnings (“AOCE”) to retained earnings, of disproportionate income tax effects arising from the impact of the Tax Cuts and Jobs Act of 2017. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company adopted ASU 2018‑02 in the first quarter of 2018 and the adoption of this standard did not have an impact on the Company’s results or consolidated financial statements. In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (ASC 230) – Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice across all industries, in how certain transactions are classified in the statement of cash flows. ASU 2016‑15 was effective for public companies for fiscal years beginning after December 15, 2017. The Company adopted this standard in 2018 and the adoption of this standard did not have an impact on the Company’s statement of cash flows for the years ended December 31, 2018 and 2017. In October 2016, the FASB issued Accounting Standards Update No. 2016‑16 (ASU 2016‑16), Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The standard requires that the income tax impact of intra-entity sales and transfers of property, except for inventory, be recognized when the transfer occurs requiring any deferred taxes not yet recognized on intra-entity transfers to be recorded to retained earnings. The Company adopted this standard in the first quarter of 2018 and the adoption did not have an impact on the Company’s results or consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016‑02 (ASU 2016‑02) which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this accounting guidance requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. We have not yet adopted this standard and are currently evaluating the effect this standard will have on our financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017‑04 (ASU 2017‑04), “Simplifying the Test for Goodwill Impairment”, which removes Step 2 from the goodwill impairment test. ASU 2017‑04 requires that if a reporting unit’s carrying value exceeds its fair value, an impairment charge would be recognized for the excess amount, not to exceed the carrying amount of goodwill. ASU 2017‑04 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early application is permitted after January 1, 2017. The Company early adopted ASU 2017‑04 in the third quarter of 2018 with no impact on our financial statements. In May 2017, the FASB issued accounting guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have adopted this accounting guidance effective January 1, 2018, with no impact on our financial statements as there were no changes to the terms or conditions of share-based payment awards. In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, 2018. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements. In August 2018, the FASB issued new accounting guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements. In August 2018, the FASB issued new accounting guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, an entity will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018‑13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Since this accounting guidance only revises disclosure requirements, it will not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued new accounting guidance for Variable Interest Entities, which requires indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective for the Company’s interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted. The Company currently does not believe that the adoption of this accounting guidance will have a material impact on its consolidated financial statements and related disclosures. |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the date which the financial statements were issued. Based upon such evaluation, except for items described in Note 8 and Note 10, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. | Subsequent Events The Company has evaluated subsequent events through the date which the financial statements were issued. Based upon the evaluation, except for items described in Note 13, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
Segment Reporting | Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company deploys resources on a consolidated level to all brands of the Company and therefore the Company only identifies one reportable operating segment with multiple product offerings. | Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company deploys resources on a consolidated level to all brands of the Company and therefore the Company only identifies one reportable operating segment with multiple product offerings. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||
Schedule of Accounts Receivable | As of September 30, 2019, the following customers represented more than 10% of total accounts receivable: September 30, 2019 Customer A 15 % For the nine months ended September 30, 2019 and 2018, the following customer represented more than 10% of total net revenues: For the Nine Months Ended September 30, 2019 2018 Customer : Customer A 22 % 10 % Customer B * 17 % * Customer did not represent greater than 10% of total net revenue. | |
Schedule of Disaggregation of Revenue | The Company’s primary revenue streams include the sale and/or licensing of consumer goods and packaging materials. The Company’s licensing business is not material and has not been separately disaggregated for segment purposes. The disaggregated Company’s revenues for the nine months ended September 30, 2019 and 2018 were as follows: For the Nine Months Ended September 30, 2019 2018 Revenues: Product sales $ 14,982,117 $ 12,676,582 Service 67,753 — Licensing 189,564 82,133 Total revenues, net $ 15,239,434 $ 12,758,715 | The Company’s primary revenue streams include the sale and/or licensing of consumer goods and packaging materials for innovative products. The Company’s licensing business is not material and has not been separately disaggregated for segment purposes. The disaggregated Company’s revenues for the years ended December 31, 2018 and 2017 was as follows: For the Years Ended December 31, 2018 2017 Revenues: Product sales $ 16,037,221 $ 14,960,450 Service revenues 197,068 Licensing revenues 267,920 — Total revenues, net $ 16,502,209 $ 14,960,450 |
Schedule of Disaggregation of net revenues | For the nine months ended September 30, 2019 and 2018, the following geographical regions represented more than 10% of total net revenues: For the Nine Months Ended September 30, 2019 2018 Region: North America 78 % 81 % Asia-Pacific * 15 % Europe 15 % * * | For the years ended December 31, 2018 and 2017, the following geographical regions represented more than 10% of total net revenues: For the Years Ended December 31, 2018 2017 North America 80 % 83 % Asia-Pacific 13 % 13 % |
Schedule of Book Value and Estimated Fair | As of September 30, 2019, the book value and estimated fair value of the Company’s level 3 instruments was as follows: September 30, 2019 Estimated Book Value Fair Value Contingent consideration $ (520,000) $ (520,000) | As of December 31, 2018, the book value and estimated fair value of the Company’s level 3 instruments was as follows: December 31, 2018 Estimated Book Value Fair Value Loan held for investment $ — $ — Contingent consideration $ (520,000) $ (520,000) |
Schedule of Fair Value of Financial Level 3 Instruments | The following changes in level 3 instruments for the three months ended September 30, 2019 are presented below: Contingent Consideration - Earnout Balance, July 1, 2019 $ (520,000) Change in fair value — Balance, September 30, 2019 $ (520,000) The following changes in level 3 instruments for the nine months ended September 30, 2019 are presented below: Contingent Consideration – Earnout Balance, December 31, 2018 $ (520,000) Change in fair value — Balance, September 30, 2019 $ (520,000) | The following changes in level 3 instruments for the year ended December 31, 2018 are presented below: Loan Held Contingent For Consideration – Investment Earnout Balance, January 1, 2018 $ — $ — Purchases 500,000 — Earnout incurred related to acquisition of Cloud B, Inc. — 520,000 Acquisition of Cloud B, Inc. – eliminated in consolidation (500,000) — Balance, December 31, 2018 $ — $ (520,000) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | September 30, 2019 Selling Agent Warrants 89,992 Shares reserved in exchange for the cancellation of certain non-voting membership interest in Edison Nation Holdings, LLC 990,000 Options 290,000 Convertible shares under notes payable 285,632 Total 1,655,624 | December 31, 2018 Selling Agent Warrants 65,626 Shares reserved in exchange for the cancellation of certain non-voting membership interest in Edison Nation Holdings, LLC 990,000 Options 290,000 Convertible shares under notes payable 285,632 Shares to be issued to innovator 12,500 Total 1,643,758 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The cumulative effect of initially applying the new lease accounting standard as of January 1, 2019 is as follows: Cumulative January 1, January 1, Effect 2019, as 2019 Adjustment adjusted Assets: Right of use assets – operating leases $ — $ 943,997 $ 943,997 Liabilities: Current portion of operating lease liabilities $ — $ 261,866 $ 261,866 Operating lease liabilities, net of current portion $ — $ 682,131 $ 682,131 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Acquisition | ||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table summarizes the aggregate purchase price consideration paid: Edison Nation Best Party Holdings, LLC Cloud B, Inc. Pirasta, LLC Concepts, LLC Cash paid 950,000 — $ — $ — Fair value of issued shares 3,384,285 2,664,200 — — Fair value of reserved shares 6,014,250 — — — Issuance of debt 1,428,161 — — — Settlement of due from related party — — 470,000 500,000 Fair value of contingent consideration — 520,000 — — Purchase consideration 11,776,696 3,184,200 470,000 500,000 | |
Business Combination, Separately Recognized Transactions [Table Text Block] | The following table summarizes the preliminary purchase price allocation of fair values of the assets acquired and liabilities assumed at the date of acquisition: Edison Nation Best Party Holdings, LLC Cloud B, Inc. Pirasta, LLC Concepts, LLC Cash and cash equivalents $ 68,681 $ 104,744 $ 3,629 $ 365 Accounts receivable 15,958 636,755 7,696 6,906 Inventory — 566,500 36,537 139,918 Other assets 39,691 172,747 — 4,356 Property and equipment 1,852 53,345 — 10,931 Goodwill 5,497,242 3,884,432 354,836 — Intangible assets 6,400,000 6,600,000 — — Total assets acquired 12,023,424 12,018,523 402,698 162,476 Debt — 1,400,000 — — Accounts payable 227,025 5,748,797 2,052 34,041 Accrued expenses and other liabilities 19,703 527,526 119,198 513,502 Total liabilities assumed 246,728 7,676,323 121,250 547,543 Noncontrolling interest — 1,158,000 — (192,534) Distribution to shareholder — — (188,552) (692,533) 11,776,696 3,184,200 470,000 500,000 | |
Schedule of consolidated income statement | The following represents the pro forma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the nine months ended September 30, 2018: Nine Months Ended September 30, 2018 Revenues, net $ 16,740,554 Cost of revenues 10,989,040 Gross profit 5,741,514 Operating expenses: Selling, general and administrative 10,227,429 Operating loss (4,475,915) Other (expense) income: Other (expense) income (330,162) Loss before income taxes (4,806,077) Income tax expense 327,042 Net loss $ (5,133,119) Net loss attributable to noncontrolling interests (370,417) Net loss attributable to Edison Nation, Inc. $ (4,762,701) Net loss per share - basic and diluted $ (0.98) Weighted average number of common shares outstanding – basic and diluted 4,835,681 | The following represents the pro forma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the entire years ending December 31, 2018 and 2017: Years Ended December 31, 2018 2017 Revenues, net $ 20,988,594 $ 24,402,376 Cost of revenues 13,566,605 16,289,352 Gross profit 7,421,989 8,113,024 Operating expenses: Selling, general and administrative 13,144,691 8,890,638 Operating (loss) income (5,722,702) (777,614) Other (expense) income: Other (expense) income (398,406) (325,017) (Loss) income before income taxes (6,249,968) (452,597) Income tax expense 304,298 135,570 Net loss $ (6,554,266) $ (588,167) Net loss attributable to noncontrolling interests (415,466) (506,616) Net loss attributable to Edison Nation, Inc. (6,138,801) (81,551) Net loss per share - basic and diluted $ (1.09) $ (0.02) Weighted average number of common shares outstanding – basic and diluted 5,654,930 4,046,377 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Inventory | ||
Schedule of Inventory | As of September 30, 2019 and December 31, 2018, inventory consisted of the following: September 30, December 31, 2019 2018 Raw materials $ 46,884 $ 48,576 Finished goods 1,059,193 875,131 Total inventory $ 1,106,077 $ 923,707 | As of December 31, 2018 and 2017, inventory consisted of the following: December 31, December 31, 2018 2017 Raw materials $ 48,576 $ 30,410 Finished goods 875,131 209,651 Total inventory $ 923,707 $ 240,061 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | As of December 31, 2018 and 2017, accounts receivable consisted of the following: December 31, December 31, 2018 2017 Accounts receivable $ 1,889,112 $ 1,441,997 Less: Allowance for doubtful accounts (11,761) (11,761) Total accounts receivable, net $ 1,877,351 $ 1,430,236 |
Intangible assets, net (Tables)
Intangible assets, net (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Intangible assets, net | ||
Schedule of intangible assets | As of September 30, 2019, intangible assets consisted of the following: Gross Carrying Accumulated Net Carrying Amount Amortization Amount Finite lived intangible assets: Customer relationships 15 years 14.8 years $ 4,270,000 $ 268,389 $ 4,001,611 Developed technology 7 years 6.7 years $ 3,800,000 561,905 3,238,095 Membership network 7 years 6.7 years $ 1,740,000 269,286 1,470,714 Non-compete agreements 2 years 1.7 years $ 50,000 27,083 22,917 Total finite lived intangible assets $ 9,860,000 $ 1,126,663 $ 8,733,337 Indefinite lived intangible assets: Trademarks and tradenames Indefinite $ 3,140,000 $ — $ 3,140,000 Total indefinite lived intangible assets $ 3,140,000 $ — $ 3,140,000 Total intangible assets 13,000,000 $ 1,126,663 $ 11,873,337 As of December 31, 2018, intangible assets consisted of the following: Gross Carrying Accumulated Net Carrying Amount Amortization Amount Finite lived intangible assets: Customer relationships 15 years 14.8 years $ 4,270,000 $ 61,555 $ 4,208,445 Developed technology 7 years 6.7 years $ 3,800,000 159,524 3,640,476 Membership network 7 years 6.7 years $ 1,740,000 82,857 1,657,143 Non-compete agreements 2 years 1.7 years $ 50,000 8,333 41,667 Total finite lived intangible assets $ 9,860,000 $ 312,269 $ 9,547,731 Indefinite lived intangible assets: Trademarks and tradenames Indefinite $ 3,140,000 $ — $ 3,140,000 Total indefinite lived intangible assets $ 3,140,000 $ — $ 3,140,000 Total intangible assets 13,000,000 $ 312,269 $ 12,687,731 | As of December 31, 2018, intangible assets consisted of the following: For the Years Ended December 31, Weighted Gross Useful Average Carrying Accumulated Net Life Remaining Life Amount Amortization Amount Definite lived intangible assets: Customer relationships 15 years 14.8 years $ 4,270,000 $ 61,556 $ 4,208,444 Developed technology 7 years 6.7 years $ 3,800,000 159,524 3,640,476 Membership network 7 years 6.7 years $ 1,740,000 82,857 1,657,143 Non-compete agreements 2 years 1.7 years $ 50,000 8,333 41,667 Total definite lived intangible assets $ 9,860,000 $ 312,270 $ 9,547,730 Indefinite lived intangible assets: Trademarks and tradenames Indefinite $ 3,140,000 $ — $ 3,140,000 Total indefinite lived intangible assets $ 3,140,000 $ — $ 3,140,000 Total intangible assets 13,000,000 $ 312,270 $ 12,687,730 |
Schedule of future amortization | The estimated future amortization of intangibles subject to amortization at September 30, 2019 was as follows: For the Years Ended December 31, Amount 2019 (excluding the nine months ended September 30, 2019) $ 275,274 2020 1,092,762 2021 1,076,095 2022 1,076,095 2023 1,076,095 Thereafter 4,137,016 $ 8,733,337 | The estimated future amortization of intangibles subject to amortization at December 31, 2018 was as follows: For the Years Ended December 31, Amount 2019 $ 1,101,095 2020 1,092,762 2021 1,076,095 2022 1,076,095 2023 1,076,095 Thereafter 4,125,588 9,547,730 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | As of December 31, 2018 and 2017, property and equipment consisted of the following: December 31, December 31, 2018 2017 Land $ 79,100 $ 79,100 Buildings – rental property 427,704 427,704 Building improvements 760,017 745,685 Equipment and machinery 3,929,332 3,899,040 Furniture and fixtures 322,157 280,124 Computer software 23,518 23,518 Molds 4,589,153 4,552,374 Vehicles 502,960 404,759 10,633,941 10,412,304 Less: accumulated depreciation (9,635,078) (9,445,400) Total property and equipment, net $ 998,863 $ 966,904 |
Debt (Tables)
Debt (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt | ||
Schedule of debt | As of September 30, 2019 and December 31, 2018, debt consisted of the following: September 30, December 31, 2019 2018 Line of credit: Asset backed line of credit $ 471,553 $ 561,804 Debt issuance costs (19,466) (30,000) Total line of credit 452,087 531,804 Senior convertible notes payable: Senior convertible notes payable 2,539,273 1,428,161 Debt issuance costs (439,818) (466,667) Total long-term senior convertible notes payable 2,099,455 961,494 Less: current portion of long-term notes payable — — Noncurrent portion of long-term convertible notes payable 2,099,455 961,494 Notes payable: Notes payable 1,470,137 370,250 Debt issuance costs (153,793) — Total long-term debt 1,316,344 370,250 Less: current portion of long-term debt (1,270,243) (313,572) Noncurrent portion of long-term debt 46,101 56,678 Notes payable – related parties: Notes payable 3,381,579 3,464,191 Less: current portion of long-term debt – related parties (1,039,330) (932,701) Noncurrent portion of long-term debt – related parties $ 2,342,249 $ 2,531,490 | As of December 31, 2018 and 2017, debt consisted of the following: December 31, December 31, 2018 2017 Line of credit: Asset backed line of credit $ 561,804 $ — Debt issuance costs (30,000) — Total line of credit 531,804 — Long-term senior convertible debt: Senior convertible notes payable 1,428,161 — Debt issuance costs (466,667) — Total long-term senior convertible debt 961,494 — Long-term debt: Notes payable 370,250 — Less: current portion of long-term debt (313,572) — Noncurrent portion of long-term debt 56,688 — Long-term debt – related parties: Notes payable 3,464,191 2,996,500 Less: current portion of long-term debt – related parties (932,701) (225,553) Noncurrent portion of long-term debt – related parties $ 2,531,490 $ 2,770,947 |
Schedule of maturities of the debt | The scheduled maturities of the debt for the next five years as of December 31, 2018, are as follows: For the Years Ended December 31, Amount 2019 $ 2,175,092 2020 828,426 2021 871,916 2022 218,266 2023 1,229,569 Thereafter 2,539,273 7,862,542 Less: debt discount (613,077) $ 7,249,465 | The scheduled maturities of the debt for the next five years as of December 31, 2018, are as follows: For the Years Ended December 31, Amount 2018 $ 1,778,077 2019 239,461 2020 254,230 2021 704,296 2022 1,420,190 Thereafter 1,428,162 5,824,416 Less: debt discount (496,667) $ 5,327,749 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets, net | |
Schedule of Goodwill [Table Text Block] | The changes in the carrying amount of goodwill for the year ended December 31, 2018 consisted of the following: Total Balance, January 1, 2018 $ — Acquisitions 9,736,510 Balance, December 31, 2018 9,736,510 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Condensed Consolidated Balance Sheets as of September 30, 2019: September 30, 2019 2019 (excluding the nine months ended September 30, 2019) 82,230 2020 315,660 2021 267,249 2022 96,288 2023 78,648 2024 and thereafter 52,430 Total future lease payments 892,505 Less: imputed interest (64,888) Present value of future operating lease payments 827,617 Less: current portion of operating lease liabilities (292,800) Operating lease liabilities, net of current portion 534,817 Right of use assets – operating leases, net 810,017 |
Accrued expenses and other cu_2
Accrued expenses and other current liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and other Current Liabilites [Table Text Block] | As of December 31, 2018 and 2017, accrued expenses and other current liabilities consisted of the following: December 31, December 31, 2018 2017 Accrued other taxes $ 259,559 $ 55,413 Accrued payroll and benefits 175,336 8,703 Accrued professional fees 133,261 16,848 Customer deposits 35,094 — Accrued interest 269,782 — Other 262,519 — Total accrued expenses and other current liabilities $ 1,135,551 $ 80,964 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Shareholders' Equity | ||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. 2018 Weighted average fair value of option granted $ 1.82 Risk-free interest rate 2.2 % Expected term in years 2.5 Volatility 50.0 % Dividend rate 0.0 % | |
Schedule of stock compensation expense by award type | The following table represents total stock compensation expense by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employees, for the nine months ended September 30, 2019 and 2018: For the Nine Months Ended September 30, 2019 2018 Stock option awards $ $ Non-employee awards Restricted stock unit awards Phantom stock awards — $ $ | |
Schedule of stock option award activity | The following table summarizes stock option award activity for the nine months ended September 30, 2019: Weighted Remaining Average Contractual Exercise Life in Aggregate Shares Price Years Intrinsic Value Balance, January 1, 2019 290,000 $ 5.55 4.2 — Granted — — — — Forfeited — — Balance, September 30, 2019 290,000 $ 5.55 — Exercisable, September 30, 2019 263,333 $ 5.41 — | The following table summarizes stock option award activity during 2018: Weighted Remaining Average Contractual Exercise Life in Aggregate Shares Price Years Intrinsic Value Balance, January 1, 2018 — $ — — — Granted 290,000 5.55 4.2 — Balance, December 31, 2018 290,000 $ 5.55 4.2 — Exercisable, December 31, 2018 166,667 $ 5.32 4.1 — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] | For the Years Ended December 31, 2018 2017 United States (5,828,261) 49,097 Foreign 788,159 1,617,439 Income before income taxes $ (5,040,102) $ 1,666,536 |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | For the Years Ended December 31, 2018 2017 Deferred tax assets: Stock-based compensation $ 682,115 $ — Goodwill and intangible assets 19,410 — Net operating loss carryforwards 493,063 50,524 Less: valuation allowance (1,194,587) (50,524) Net deferred tax assets $ — $ — Deferred tax liabilities: Property and equipment $ 341 $ 34,209 Net deferred tax liabilities $ 341 $ 34,209 Net deferred tax liabilities $ 341 $ 34,209 |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | The income tax provision (benefit) consists of the following: For the Years Ended December 31, 2018 2017 Current: Federal $ 10,185 $ 27,513 Foreign 292,491 71,125 State and local 35,107 6,069 Total current $ 337,783 $ 104,707 Deferred: Federal $ (21,450) $ 23,249 Foreign (2,316) (3,153) State and local (10,102) 8,302 Total deferred $ (33,868) $ 28,398 Income tax provision (benefit) $ 303,915 $ 133,105 |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: For the Years Ended December 31, 2018 2017 Tax at federal statutory rate 21.0 % 34.0 % Effect of U.S. tax law change 0.0 % (0.9) % U.S. income attributable to pass-through entity 0.0 % (4.4) % U.S. income subject to valuation allowance (20.5) % 4.9 % State and local income taxes 0.0 % 0.9 % Foreign income not subject to U.S. federal tax 0.0 % (33.0) % Foreign tax (6.3) % 4.1 % Other (0.2) % 2.4 % Effective income tax rate (6.0) % 8.0 % |
Basis of Presentation and Nat_2
Basis of Presentation and Nature of Operations (Details) - USD ($) | Oct. 02, 2019 | May 13, 2019 | Mar. 06, 2019 | May 31, 2018 | Oct. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Aug. 26, 2019 | Jun. 30, 2019 | Feb. 28, 2019 | Oct. 29, 2018 | Jun. 30, 2018 | Dec. 31, 2016 |
Working Capital | $ (6,800,000) | $ (6,800,000) | $ (3,413,452) | |||||||||||||
Assets, Current | 5,238,617 | 5,238,617 | 5,465,484 | $ 3,103,923 | ||||||||||||
Operating Income (Loss) | (4,912,541) | $ (2,608,330) | (4,641,696) | 1,563,721 | ||||||||||||
Operating IncomeLoss From Non Cash Activities | 3,700,000 | |||||||||||||||
Operating Income Loss From Non Recurring Items | 900,000 | |||||||||||||||
Liabilities, Current | 12,034,900 | 12,034,900 | 8,878,936 | 1,498,301 | ||||||||||||
Assets | 28,633,331 | 28,633,331 | 28,888,588 | 4,070,827 | ||||||||||||
Liabilities | 17,577,863 | 17,577,863 | 12,948,949 | 4,303,457 | ||||||||||||
Debt Instrument, Face Amount | $ 560,000 | 1,000,000 | 1,000,000 | 932,701 | $ 560,000 | |||||||||||
Interest Expense, Debt | $ 239,885 | |||||||||||||||
Description of Cost Cutting Initiatives | Cost saving initiatives related to synergies and the elimination of redundant costs of approximately $500,000 | |||||||||||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 11,055,468 | 11,055,468 | 8,237,061 | $ 15,939,639 | (232,630) | $ 13,375,008 | $ 5,016,724 | $ 1,263,659 | ||||||||
Redundant costs | $ 153,000 | 500,000 | ||||||||||||||
Allocated Share-based Compensation Expense | 2,025,994 | |||||||||||||||
Trade Payables Unsecured | 3,800,000 | $ 1,700,000 | ||||||||||||||
Notes Payable | 370,250 | 0 | ||||||||||||||
Total liabilities in consolidation | 6,400,000 | |||||||||||||||
Liabilities to be eliminated due to foreclosure | 1,700,000 | |||||||||||||||
Net liabilities in consolidation | 4,700,000 | |||||||||||||||
Proceeds from issuance of common stock | $ 0 | $ 5,358,570 | $ 5,315,176 | $ 0 | ||||||||||||
Stock Issued During Period, Shares, New Issues | 15,000 | |||||||||||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 13,500 | 13,500 | ||||||||||||||
CBAV1, LLC [Member] | ||||||||||||||||
Promissory Notes Payable | $ 2,270,000 | $ 2,270,000 | ||||||||||||||
Best Party Concepts [Member] | ||||||||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | 50.00% | 50.00% | |||||||||||||
Cloud B UK [Member] | ||||||||||||||||
Equity Method Investment, Ownership Percentage | 100.00% | 100.00% | 100.00% | |||||||||||||
Cloud B, Inc. [Member] | ||||||||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 72.15% | 72.15% | 72.15% | 72.15% | ||||||||||||
Allocated Share-based Compensation Expense | $ 1,828,604 | |||||||||||||||
Restructuring and Related Cost, Incurred Cost | 100,000 | |||||||||||||||
Other Non Recurring and Redundant Costs | 1,200,000 | |||||||||||||||
Trade Payables Unsecured | $ 3,800,000 | 3,800,000 | ||||||||||||||
Notes Payable | $ 900,000 | $ 900,000 | ||||||||||||||
Ed Roses [Member] | ||||||||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | 50.00% | ||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||
Debt Instrument, Face Amount | $ 1,111,111 | |||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 560,185 | |||||||||||||||
Convertible Notes Payable [Member] | Alexander Capital, LP [Member] | ||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 24,366 | |||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.85 | |||||||||||||||
Private Placement [Member] | ||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ 2 | |||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 560,185 | |||||||||||||||
Subsequent Event [Member] | Convertible Notes Payable [Member] | ||||||||||||||||
Sale of Stock, Consideration Received on Transaction | $ 2,039,303 | |||||||||||||||
Sale of Stock, Consideration Received Per Transaction | 2,350,000 | |||||||||||||||
Payments For Placement Agent And Lawyers Fees | 310,697 | |||||||||||||||
Payments For Placement Agent Commission | 141,000 | |||||||||||||||
Payments For Placement Agent Debt Restructuring Fee | 64,208 | |||||||||||||||
Payments For Placement Agent Debt Conversion Fee | 15,889 | |||||||||||||||
Payments For Placement Agent Fees | 33,600 | |||||||||||||||
Subsequent Event [Member] | Convertible Notes Payable [Member] | Alexander Capital, LP [Member] | ||||||||||||||||
Payments For Placement Agent Commission | 141,000 | |||||||||||||||
Payments For Placement Agent Debt Restructuring Fee | 64,208 | |||||||||||||||
Payments For Placement Agent Debt Conversion Fee | 15,889 | |||||||||||||||
Payments For Placement Agent Fees | $ 33,600 | |||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 560,185 | |||||||||||||||
Subsequent Event [Member] | Private Placement [Member] | ||||||||||||||||
Stock Issued During Period, Shares, New Issues | 1,175,000 | |||||||||||||||
Share Price | $ 2 | |||||||||||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | |||||||||||||||
Subsequent Event [Member] | Placement Agent Warrants [Member] | ||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 70,500 | |||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.50 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Customer represented more than 10% of total net revenues (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Apr. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | [1] | ||
Concentration Risk, Percentage | 80.00% | ||||||
Sales Revenue, Net [Member] | |||||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | ||||
Accounts Receivable [Member] | |||||||
Concentration Risk, Percentage | 10.00% | 10.00% | |||||
Customer A [Member] | Sales Revenue, Net [Member] | |||||||
Concentration Risk, Percentage | 22.00% | 10.00% | 21.00% | [1] | 31.00% | ||
Customer A [Member] | Accounts Receivable [Member] | |||||||
Concentration Risk, Percentage | 15.00% | 12.00% | |||||
Customer B [Member] | Sales Revenue, Net [Member] | |||||||
Concentration Risk, Percentage | 17.00% | ||||||
Customer B [Member] | Accounts Receivable [Member] | |||||||
Concentration Risk, Percentage | 11.00% | ||||||
[1] | Customer did not represent greater than 10% of total net revenue. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from Contract with Customer, Including Assessed Tax | $ 15,239,434 | $ 12,758,715 | $ 16,502,209 | $ 14,960,450 |
Product sales [Member] | ||||
Revenue from Contract with Customer, Including Assessed Tax | 14,982,117 | 12,676,582 | 16,037,221 | 14,960,450 |
Service [Member] | ||||
Revenue from Contract with Customer, Including Assessed Tax | 67,753 | 197,068 | ||
Licensing [Member] | ||||
Revenue from Contract with Customer, Including Assessed Tax | $ 189,564 | $ 82,133 | $ 267,920 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Geographical regions (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Apr. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |||
Concentration Risk, Percentage | 80.00% | ||||||
North America [Member] | |||||||
Concentration Risk, Percentage | 78.00% | 81.00% | 80.00% | 83.00% | |||
Asia-Pacific [Member] | |||||||
Concentration Risk, Percentage | 15.00% | [1] | 13.00% | 13.00% | |||
Europe [Member] | |||||||
Concentration Risk, Percentage | [1] | 15.00% | |||||
[1] | Region did not represent greater than 10% of total net revenue. |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Book value and estimated fair value (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Loan held for investment | $ 0 | |||
Contingent consideration | $ (520,000) | (520,000) | $ 0 | $ 0 |
Book Value | ||||
Loan held for investment | 0 | |||
Contingent consideration | (520,000) | $ (520,000) | ||
Estimated Fair Value | ||||
Contingent consideration | $ (520,000) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Changes in level 3 instruments (Details) - Fair Value, Measurements, Recurring [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Loan Held For Investment [Member] | |||
Balance, Beginning | $ 0 | $ 0 | |
Purchases | 500,000 | ||
Earnout incurred related to acquisition of Cloud B, Inc | 0 | ||
Acquisition of Cloud B, Inc. - eliminated in consolidation | (500,000) | ||
Balance, Ending | 0 | ||
Contingent consideration [Member] | |||
Balance, Beginning | $ (520,000) | (520,000) | 0 |
Purchases | 0 | ||
Earnout incurred related to acquisition of Cloud B, Inc | 520,000 | ||
Acquisition of Cloud B, Inc. - eliminated in consolidation | 0 | ||
Change in fair value | 0 | 0 | |
Balance, Ending | $ (520,000) | $ (520,000) | $ (520,000) |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Excluded common stock equivalents (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,655,624 | 1,643,758 |
Edison Nation Holdings LLC [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 990,000 | 990,000 |
Selling Agent Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 89,992 | 65,626 |
Shares to be issued to note holders [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 12,500 | |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 290,000 | 290,000 |
Convertible shares under notes payable [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 285,632 | 285,632 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Cumulative effect of initially applying the new lease accounting standard (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Assets: | |||
Right of use assets - operating leases | $ 810,017 | $ 0 | $ 0 |
Liabilities: | |||
Current portion of operating lease liabilities | 292,800 | 0 | 0 |
Operating lease liabilities, net of current portion | $ 534,817 | 0 | $ 0 |
Lease, Practical Expedients, Package [true false] | true | ||
Lease, Practical Expedient, Use of Hindsight [true false] | false | ||
Lease, Practical Expedient, Lessor Single Lease Component [true false] | true | ||
Accounting Standards Update 2016-02 [Member] | |||
Assets: | |||
Right of use assets - operating leases | 943,997 | ||
Liabilities: | |||
Current portion of operating lease liabilities | 261,866 | ||
Operating lease liabilities, net of current portion | 682,131 | ||
Restatement Adjustment [Member] | |||
Assets: | |||
Right of use assets - operating leases | 943,997 | ||
Liabilities: | |||
Current portion of operating lease liabilities | 261,866 | ||
Operating lease liabilities, net of current portion | $ 682,131 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies (Details Textual) - USD ($) | Jun. 04, 2018 | Apr. 30, 2019 | Oct. 29, 2018 | Feb. 14, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 34.00% | ||||||||
Stockholders' Equity, Reverse Stock Split | 1-for-3.333333 | |||||||||
Cash, Uninsured Amount | $ 627,000 | $ 1,450,000 | ||||||||
Concentration Risk, Percentage | 80.00% | |||||||||
Cash, FDIC Insured Amount | $ 198,000 | |||||||||
Notes, Loans and Financing Receivable, Net, Current | $ 500,000 | |||||||||
Outstanding Capital Stock Percentage | 72.15% | |||||||||
Accretion (Amortization) of Discounts and Premiums, Investments | 1,700,000 | |||||||||
Notes, Loans and Financing Receivable, Gross, Current | $ 2,270,000 | |||||||||
Cash Held With Foreign Banks | $ 583,000 | |||||||||
Geographic Concentration Risk [Member] | ||||||||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |||||||
Sales Revenue, Net [Member] | ||||||||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |||||||
Accounts Receivable [Member] | ||||||||||
Concentration Risk, Percentage | 10.00% | 10.00% | ||||||||
Software Development [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||||||
Building [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 40 years | |||||||||
Molds [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||||||
Maximum [Member] | Office Equipment [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||||||
Maximum [Member] | Furniture and Fixtures [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||||||
Maximum [Member] | Machinery and Equipment [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 10 years | |||||||||
Maximum [Member] | Building Improvements [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 15 years | |||||||||
Maximum [Member] | Vehicles [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||||||
Minimum [Member] | Office Equipment [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||||
Minimum [Member] | Furniture and Fixtures [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||||||
Minimum [Member] | Machinery and Equipment [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 6 years | |||||||||
Minimum [Member] | Building Improvements [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 10 years | |||||||||
Minimum [Member] | Vehicles [Member] | ||||||||||
Property, Plant and Equipment, Useful Life | 5 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies (Details) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019USD ($)segment | Sep. 30, 2018 | Dec. 31, 2018USD ($) | |
Cash, Uninsured Amount | $ 627,000 | $ 1,450,000 | ||||
Concentration Risk, Percentage | 80.00% | |||||
Cash, FDIC Insured Amount | $ 198,000 | |||||
Number of reportable segment | segment | 1 | |||||
Geographic Concentration Risk [Member] | ||||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |||
Sales Revenue, Net [Member] | ||||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | |||
Accounts Receivable [Member] | ||||||
Concentration Risk, Percentage | 10.00% | 10.00% |
Acquisition - Pro forma consoli
Acquisition - Pro forma consolidated income statement (Details) - Edison Nation Holdings LLC [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | |||
Revenues, net | $ 16,740,554 | $ 20,988,594 | $ 24,402,376 |
Cost of revenues | 10,989,040 | 13,566,605 | 16,289,352 |
Gross profit | 5,741,514 | 7,421,989 | 8,113,024 |
Selling, general and administrative | 10,227,429 | 13,144,691 | 8,890,638 |
Operating loss | (4,475,915) | (5,722,702) | (777,614) |
Other (expense) income: | |||
Other (expense) income | (330,162) | (398,406) | (325,017) |
Loss before income taxes | (4,806,077) | (6,249,968) | (452,597) |
Income tax expense | 327,042 | 304,298 | 135,570 |
Net loss | (5,133,119) | (6,554,266) | (588,167) |
Net loss attributable to noncontrolling interests | (370,417) | (415,466) | (506,616) |
Net loss attributable to Edison Nation, Inc. | $ (4,762,701) | $ (6,138,801) | $ (81,551) |
Net loss per share - basic and diluted | $ (0.98) | $ (1.09) | $ (0.02) |
Weighted average number of common shares outstanding - basic and diluted | 4,835,681 | 5,654,930 | 4,046,377 |
Acquisition (Details)
Acquisition (Details) - USD ($) | Sep. 04, 2018 | Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||
Fair value of contingent consideration | $ 520,000 | $ 520,000 | $ 0 | $ 0 | |
Edison Nation Holdings LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Asset acquired | 950,000 | ||||
Fair value of issued shares | 3,384,285 | ||||
Fair value of reserved shares | 6,014,250 | ||||
Issuance of debt | 1,428,161 | ||||
Purchase consideration | $ 12,820,978 | 11,776,696 | |||
Cloud B, Inc. [Member] | |||||
Business Acquisition [Line Items] | |||||
Fair value of issued shares | 2,664,200 | ||||
Fair value of contingent consideration | 520,000 | ||||
Purchase consideration | 3,184,200 | ||||
Pirasta, LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Settlement of due from related party | 470,000 | 0 | |||
Purchase consideration | 470,000 | ||||
Best Party Concepts llc [Member] | |||||
Business Acquisition [Line Items] | |||||
Settlement of due from related party | 500,000 | $ 500,000 | $ 0 | ||
Purchase consideration | $ 500,000 |
Acquisition (Details 1)
Acquisition (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 9,736,510 | $ 9,736,510 | $ 0 |
Edison Nation Holdings LLC [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 68,681 | ||
Accounts receivable | 15,958 | ||
Inventory | 0 | ||
Other assets | 39,691 | ||
Property and equipment | 1,852 | ||
Goodwill | 5,497,242 | ||
Intangible assets | 6,400,000 | ||
Total assets acquired | 12,023,424 | ||
Debt | 0 | ||
Accounts payable | 227,025 | ||
Accrued expenses and other liabilities | 19,703 | ||
Total liabilities assumed | 246,728 | ||
Noncontrolling interest | 0 | ||
Distribution to shareholder | 0 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 11,776,696 | ||
Cloud B, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 104,744 | ||
Accounts receivable | 636,755 | ||
Inventory | 566,500 | ||
Other assets | 172,747 | ||
Property and equipment | 53,345 | ||
Goodwill | 3,884,432 | ||
Intangible assets | 6,600,000 | ||
Total assets acquired | 12,018,523 | ||
Debt | 1,400,000 | ||
Accounts payable | 5,748,797 | ||
Accrued expenses and other liabilities | 527,526 | ||
Total liabilities assumed | 7,676,323 | ||
Noncontrolling interest | 1,158,000 | ||
Distribution to shareholder | 0 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 3,184,200 | ||
Pirasta, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 3,629 | ||
Accounts receivable | 7,696 | ||
Inventory | 36,537 | ||
Other assets | 0 | ||
Property and equipment | 0 | ||
Goodwill | 354,836 | ||
Intangible assets | 0 | ||
Total assets acquired | 402,698 | ||
Debt | 0 | ||
Accounts payable | 2,052 | ||
Accrued expenses and other liabilities | 119,198 | ||
Total liabilities assumed | 121,250 | ||
Noncontrolling interest | 0 | ||
Distribution to shareholder | 188,552 | 0 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 470,000 | ||
Best Party Concepts llc [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 365 | ||
Accounts receivable | 6,906 | ||
Inventory | 139,918 | ||
Other assets | 4,356 | ||
Property and equipment | 10,931 | ||
Goodwill | 0 | ||
Intangible assets | 0 | ||
Total assets acquired | 162,476 | ||
Debt | 0 | ||
Accounts payable | 34,041 | ||
Accrued expenses and other liabilities | 513,502 | ||
Total liabilities assumed | 547,543 | ||
Noncontrolling interest | (192,534) | ||
Distribution to shareholder | 692,533 | $ 0 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | $ 500,000 |
Acquisition - Additional inform
Acquisition - Additional information (Details) | Sep. 04, 2018USD ($)shares | May 31, 2018shares | Oct. 29, 2018shares | Sep. 30, 2017USD ($)shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) | Aug. 26, 2019USD ($) | Mar. 06, 2019USD ($) |
Business Acquisition [Line Items] | ||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 0 | $ 881,318 | $ 772,581 | $ 0 | ||||||||
Debt Instrument, Convertible, Number of Equity Instruments | 20,000 | 20,000 | ||||||||||
Debt Conversion, Converted Instrument, Shares Issued | shares | 13,500 | 13,500 | ||||||||||
Revenues | 15,239,434 | 12,758,715 | $ 16,502,209 | 14,960,450 | ||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (2,631,204) | $ (1,679,306) | (5,784,666) | (3,983,272) | $ (5,344,017) | 1,533,431 | ||||||
Debt Instrument, Unamortized Discount | $ 500,000 | $ 439,819 | $ 439,819 | $ 60,000 | $ 60,000 | |||||||
Percentage Of Consideration To Be Paid on Total Sales | 8.00% | |||||||||||
SRM and Fergco Acquisition [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Debt Instrument, Term | 10 years | |||||||||||
Business Combination, Consideration Transferred, Notes Payable Issued | $ 2,996,500 | $ 2,996,500 | ||||||||||
Edison Nation Holdings LLC [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Business Combination, Consideration Transferred | 12,820,978 | $ 11,776,696 | ||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 950,000 | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | |||||||||||
Debt Instrument, Term | 5 years | |||||||||||
Convertible Debt | $ 1,428,161 | |||||||||||
Debt Instrument, Convertible, Number of Equity Instruments | 285,632 | |||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares | 990,000 | |||||||||||
Debt Conversion, Converted Instrument, Shares Issued | shares | 557,084 | |||||||||||
Revenues | 267,920 | |||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 197,485 | |||||||||||
Debt Conversion, Converted Instrument, Amount | $ 3,760,317 | |||||||||||
Cloud B, Inc. [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Business Combination, Consideration Transferred | $ 3,184,200 | |||||||||||
Business Acquisition, Percentage of Voting Interests Acquired | 72.15% | 72.15% | 72.15% | 72.15% | ||||||||
Business Acquisition Number of Shares Acquired | shares | 489,293 | |||||||||||
Revenues | $ 1,512,328 | |||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 44,408 | |||||||||||
SRM and Fergco Acquisition [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares | 3,000,000 | |||||||||||
Business Combination, Consideration Transferred, Notes Payable Issued | $ 2,996,500 | |||||||||||
Pirasta, LLC [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Business Combination, Consideration Transferred | 470,000 | |||||||||||
Business Combination Settlement of related party | 470,000 | 0 | ||||||||||
Best Party Concepts llc [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Business Combination, Consideration Transferred | 500,000 | |||||||||||
Business Combination Settlement of related party | $ 500,000 | $ 500,000 | $ 500,000 | $ 0 | ||||||||
Equity Method Investment, Ownership Percentage | 50.00% | 50.00% | 50.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory | |||
Raw materials | $ 46,884 | $ 48,576 | $ 30,410 |
Finished goods | 1,059,193 | 875,131 | 209,651 |
Total inventory | $ 1,106,077 | $ 923,707 | $ 240,061 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts Receivable, Net [Abstract] | |||
Accounts receivable | $ 1,889,112 | $ 1,441,997 | |
Less: Allowance for doubtful accounts | (11,761) | (11,761) | |
Accounts Receivable, Net, Current, Total | $ 1,889,706 | $ 1,877,351 | $ 1,430,236 |
Intangible assets, net (Details
Intangible assets, net (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Gross Carrying Amount | $ 13,000,000 | $ 13,000,000 | |
Net Amount | 8,733,337 | $ 9,547,730 | |
Indefinite-lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Indefinite Lived Intangible Assets Accumulated Amortization | 1,126,663 | ||
Intangible Assets, Net (Excluding Goodwill) | $ 11,873,337 | $ 0 | |
Customer relationships [Member] | |||
Useful Life | 15 years | 15 years | |
Weighted Average Remaining Life | 14 years 9 months 18 days | 14 years 9 months 18 days | |
Gross Carrying Amount | $ 4,270,000 | $ 4,270,000 | |
Accumulated Amortization | 268,389 | ||
Net Amount | $ 4,001,611 | ||
Developed technology [Member] | |||
Useful Life | 7 years | 7 years | |
Weighted Average Remaining Life | 6 years 8 months 12 days | 6 years 8 months 12 days | |
Gross Carrying Amount | $ 3,800,000 | $ 3,800,000 | |
Accumulated Amortization | 561,905 | 159,524 | |
Net Amount | $ 3,238,095 | $ 3,640,476 | |
Membership Network [Member] | |||
Useful Life | 7 years | 7 years | |
Weighted Average Remaining Life | 6 years 8 months 12 days | 6 years 8 months 12 days | |
Gross Carrying Amount | $ 1,740,000 | $ 1,740,000 | |
Accumulated Amortization | 269,286 | 82,857 | |
Net Amount | $ 1,470,714 | $ 1,657,143 | |
Non-compete agreements [Member] | |||
Useful Life | 2 years | 2 years | |
Weighted Average Remaining Life | 1 year 8 months 12 days | 1 year 8 months 12 days | |
Gross Carrying Amount | $ 50,000 | $ 50,000 | |
Accumulated Amortization | 27,083 | 8,333 | |
Net Amount | 22,917 | 41,667 | |
Finite-Lived Intangible Assets [Member] | |||
Gross Carrying Amount | 9,860,000 | 9,860,000 | |
Accumulated Amortization | 1,126,663 | ||
Net Amount | 8,733,337 | ||
Trademarks and Trade Names [Member] | |||
Gross Carrying Amount | 3,140,000 | 3,140,000 | |
Indefinite-lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | 0 | |
Intangible Assets, Net (Excluding Goodwill) | 3,140,000 | 3,140,000 | |
Indefinite-lived Intangible Assets [Member] | |||
Gross Carrying Amount | 3,140,000 | 3,140,000 | |
Indefinite-lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | 0 | |
Intangible Assets, Net (Excluding Goodwill) | $ 3,140,000 | $ 3,140,000 |
Intangible assets, net - Estima
Intangible assets, net - Estimated future amortization of intangibles (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Intangible assets, net | ||
2019 (excluding the nine months ended September 30, 2019) | $ 275,274 | $ 1,101,095 |
2020 | 1,092,762 | 1,092,762 |
2021 | 1,076,095 | 1,076,095 |
2022 | 1,076,095 | 1,076,095 |
2023 | 1,076,095 | 1,076,095 |
Thereafter | 4,137,016 | 4,125,588 |
Finite-Lived Intangible Assets, Net | $ 8,733,337 | $ 9,547,730 |
Intangible assets, net - Additi
Intangible assets, net - Additional information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible assets, net | ||||||
Amortization of Intangible Assets | $ 275,274 | $ 0 | $ 814,394 | $ 0 | $ 312,270 | $ 0 |
Property and equipment, net (De
Property and equipment, net (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment, Gross | $ 10,633,941 | $ 10,412,304 | |
Less: accumulated depreciation | (9,635,078) | (9,445,400) | |
Property, Plant and Equipment, Net, Total | $ 974,850 | 998,863 | 966,904 |
Land [Member] | |||
Property, Plant and Equipment, Gross | 79,100 | 79,100 | |
Building [Member] | |||
Property, Plant and Equipment, Gross | 427,704 | 427,704 | |
Building Improvements [Member] | |||
Property, Plant and Equipment, Gross | 760,017 | 745,685 | |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment, Gross | 3,929,332 | 3,899,040 | |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment, Gross | 322,157 | 280,124 | |
Software Development [Member] | |||
Property, Plant and Equipment, Gross | 23,518 | 23,518 | |
Molds [Member] | |||
Property, Plant and Equipment, Gross | 4,589,153 | 4,552,374 | |
Vehicles [Member] | |||
Property, Plant and Equipment, Gross | $ 502,960 | $ 404,759 |
Property and equipment, net (_2
Property and equipment, net (Details textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 175,609 | $ 188,283 |
Debt (Details)
Debt (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 27, 2018 | Dec. 31, 2017 |
Line of credit: | ||||
Asset backed line of credit | $ 471,553 | $ 561,804 | $ 0 | |
Debt issuance costs | (19,466) | (30,000) | 0 | |
Total line of credit | 452,087 | 531,804 | $ 1,000,000 | 0 |
Senior convertible notes payable: | ||||
Debt issuance costs | (19,466) | |||
Notes payable: | ||||
Notes payable | 370,250 | 0 | ||
Debt issuance costs | (19,466) | |||
Less: current portion of long-term debt | (313,572) | 0 | ||
Noncurrent portion of long-term debt | 56,688 | |||
Notes payable - related parties: | ||||
Notes payable | 3,381,579 | 3,464,191 | 2,996,500 | |
Less: current portion of long-term debt - related parties | (1,039,330) | (932,701) | (225,553) | |
Noncurrent portion of long-term debt - related parties | 2,342,249 | 2,531,490 | 2,770,947 | |
Long-term Debt [Member] | ||||
Senior convertible notes payable: | ||||
Debt issuance costs | (153,793) | 0 | ||
Notes payable: | ||||
Notes payable | 1,470,137 | 370,250 | ||
Debt issuance costs | (153,793) | 0 | ||
Long-term debt | 1,316,344 | 370,250 | ||
Less: current portion of long-term debt | (1,270,243) | (313,572) | ||
Noncurrent portion of long-term debt | 46,101 | 56,678 | ||
Convertible Notes Payable [Member] | ||||
Senior convertible notes payable: | ||||
Senior convertible notes payable | 2,099,455 | 961,494 | 0 | |
Senior convertible notes payable | 2,539,273 | 1,428,161 | 0 | |
Debt issuance costs | (439,818) | (466,667) | 0 | |
Total long-term senior convertible notes payable | 2,099,455 | 961,494 | 0 | |
Less: current portion of long-term notes payable | 0 | |||
Noncurrent portion of long-term convertible notes payable | 2,099,455 | 961,494 | ||
Notes payable: | ||||
Debt issuance costs | $ (439,818) | $ (466,667) | $ 0 |
Debt - Scheduled maturities of
Debt - Scheduled maturities of the debt (Details) | Dec. 31, 2018USD ($) |
Debt | |
Less: debt discount | $ (613,077) |
Debt - Additional information (
Debt - Additional information (Details) - USD ($) | Aug. 26, 2019 | Jul. 15, 2019 | Jun. 11, 2019 | May 13, 2019 | Mar. 06, 2019 | Sep. 07, 2018 | Sep. 04, 2018 | May 31, 2018 | Dec. 01, 2016 | Oct. 31, 2019 | Apr. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | May 16, 2019 | Oct. 29, 2018 | Jun. 30, 2018 |
Interest Expense | $ 875,036 | $ 407,267 | $ 501,221 | ||||||||||||||||
Interest Expense, Related Party | 238,111 | 145,656 | 239,885 | ||||||||||||||||
Debt Instrument, Face Amount | $ 560,000 | $ 560,000 | 1,000,000 | $ 932,701 | |||||||||||||||
Debt Instrument, Unamortized Discount | $ 60,000 | $ 60,000 | $ 500,000 | $ 439,819 | |||||||||||||||
Common Stock, Shares, Issued | 181,005 | 15,000 | 6,033,835 | 5,654,830 | 3,000,000 | ||||||||||||||
Percentage of senior convertible note | 12.00% | 2.00% | |||||||||||||||||
Line of Credit Facility, Commitment Fee Amount | $ 153,005 | ||||||||||||||||||
Common Stock, Value, Issued | $ 74,100 | $ 6,034 | $ 5,655 | $ 3,000 | |||||||||||||||
Concentration Risk, Percentage | 80.00% | ||||||||||||||||||
Conversion of convertible notes payable, shares issued | 13,500 | 13,500 | |||||||||||||||||
Line of Credit, Current | 452,087 | $ 531,804 | 0 | ||||||||||||||||
Notes Payable | 370,250 | 0 | |||||||||||||||||
Amortization of Debt Discount (Premium) | $ 167,500 | ||||||||||||||||||
Line of Credit Facility, Interest Rate at Period End | 8.50% | ||||||||||||||||||
Interest Income (Expense), Net | 4,000 | ||||||||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.50% | ||||||||||||||||||
Debt Instrument, Collateral Amount | $ 75,000 | ||||||||||||||||||
Debt Instrument, Maturity Date | Sep. 4, 2023 | ||||||||||||||||||
Minimum [Member] | |||||||||||||||||||
Percentage of borrowing fee | 1.00% | ||||||||||||||||||
Maximum [Member] | |||||||||||||||||||
Percentage of borrowing fee | 2.00% | ||||||||||||||||||
Arkansas Securities Department [Member] | |||||||||||||||||||
Legal Fees | $ 1,100 | ||||||||||||||||||
NL Penn Capital, L.P [Member] | |||||||||||||||||||
Debt Instrument, Face Amount | $ 2,120,000 | 2,120,000 | |||||||||||||||||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 677,698 | 677,698 | |||||||||||||||||
Debt Instrument, Maturity Date | Dec. 1, 2020 | ||||||||||||||||||
Stockholders of Fergco [Member] | |||||||||||||||||||
Debt Instrument, Face Amount | $ 876,500 | 876,500 | |||||||||||||||||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 1,249,043 | $ 1,249,043 | |||||||||||||||||
Debt Instrument, Maturity Date | Dec. 1, 2022 | ||||||||||||||||||
SRM and Fergco Acquisition [Member] | |||||||||||||||||||
Interest and principal due term | 10 years | ||||||||||||||||||
Linda suh [Member] | Chief Executive Officer [Member] | |||||||||||||||||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 8.00% | 7.00% | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Long-term Debt | $ 100,000 | ||||||||||||||||||
John royan [Member] | Chief Executive Officer [Member] | |||||||||||||||||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 7.00% | 8.00% | |||||||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Long-term Debt | $ 500,000 | ||||||||||||||||||
Cloud B, Inc. [Member] | |||||||||||||||||||
Interest and principal due term | 6 months | ||||||||||||||||||
Line of Credit, Current | $ 300,000 | ||||||||||||||||||
Senior Convertible Notes Payable [Member] | |||||||||||||||||||
Convertible Notes Payable | $ 1,428,161 | ||||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ 5 | ||||||||||||||||||
Commercial Delivery Vehicle Borrowings [Member] | |||||||||||||||||||
Long-term Debt | 73,559 | ||||||||||||||||||
Debt Instrument, Periodic Payment | $ 1,371 | ||||||||||||||||||
Debt Instrument, Maturity Date | Sep. 6, 2023 | ||||||||||||||||||
February 2018 and March 2018 Notes [Member] | |||||||||||||||||||
Notes Payable | $ 645,000 | ||||||||||||||||||
Convertible shares under notes payable [Member] | |||||||||||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.00% | ||||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||||
Convertible Notes Payable | 2,099,455 | $ 961,494 | $ 0 | ||||||||||||||||
Debt Instrument, Face Amount | $ 1,111,111 | ||||||||||||||||||
Debt Instrument, Unamortized Discount | $ 111,111 | 78,800 | |||||||||||||||||
Common Stock, Shares, Issued | 20,000 | ||||||||||||||||||
Percentage of senior convertible note | 2.00% | ||||||||||||||||||
Conversion of convertible notes payable, conversion price | $ 2 | ||||||||||||||||||
Conversion of convertible notes payable, shares issued | 560,185 | ||||||||||||||||||
Convertible Notes Payable [Member] | Alexander Capital, LP [Member] | |||||||||||||||||||
Warrants to purchase shares of common stock | 24,366 | ||||||||||||||||||
Exercise price of warrants | $ 2.85 | ||||||||||||||||||
Convertible Notes Payable [Member] | Subsequent Event [Member] | Alexander Capital, LP [Member] | |||||||||||||||||||
Conversion of convertible notes payable, conversion price | $ 2 | ||||||||||||||||||
Conversion of convertible notes payable, shares issued | 560,185 | ||||||||||||||||||
Notes Payable | |||||||||||||||||||
Debt Instrument, Face Amount | $ 300,000 | ||||||||||||||||||
Debt Instrument, Unamortized Discount | $ 62,000 | $ 50,000 | |||||||||||||||||
Common Stock, Shares, Issued | 20,000 | ||||||||||||||||||
1.5% Notes Payable | |||||||||||||||||||
Debt Instrument, Face Amount | $ 250,000 | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.50% | ||||||||||||||||||
Interest and principal due term | 30 days |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Aug. 01, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Due from Related Parties, Current | $ 0 | $ 834,897 | |||
Due to Related Parties, Current | $ 22,896 | $ 22,896 | 140,682 | $ 0 | |
Related Party Transaction, Amounts of Transaction | $ 15,000 | 15,000 | |||
Best Party Concepts llc [Member] | |||||
Due from Related Parties, Current | $ 500,000 | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | ||||
SRM entertainment llc [Member] | |||||
Due to Related Parties, Current | 22,896 | 22,896 | $ 140,682 | ||
Enventys Partners LLC [Member] | |||||
Related Party Transaction, Amounts of Transaction | $ 22,000 | $ 97,500 | 130,000 | ||
NL Penn Capital, L.P [Member] | |||||
Due from Related Parties, Current | $ 470,000 |
Goodwill (Details)
Goodwill (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Intangible assets, net | |
Goodwill, Beginning Balance | $ 0 |
Acquisitions | 9,736,510 |
Goodwill, Ending Balance | $ 9,736,510 |
Commitments and Contingencies -
Commitments and Contingencies - Reconciliation of future undiscounted cash flows to the operating liabilities (Details) - USD ($) | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Aug. 08, 2016 |
Commitments and Contingencies | ||||
2019 (excluding the nine months ended September 30, 2019) | $ 82,230 | |||
2020 | 315,660 | |||
2021 | 267,249 | |||
2022 | 96,288 | |||
2023 | 78,648 | |||
2024 and thereafter | 52,430 | |||
Total future lease payments | 892,505 | $ 154,000 | ||
Less: imputed interest | (64,888) | |||
Present value of future operating lease payments | 827,617 | |||
Less: current portion of operating lease liabilities | (292,800) | $ 0 | $ 0 | |
Operating lease liabilities, net of current portion | 534,817 | 0 | 0 | |
Right of use assets - operating leases, net | $ 810,017 | $ 0 | $ 0 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Jul. 01, 2019 | Oct. 01, 2018 | May 31, 2017 | Aug. 08, 2016 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2019 |
Monthly Operating Lease Expenses | $ 6,400 | ||||||||||
Operating Leases, Rent Expense, Net | $ 128,256 | $ 65,244 | $ 410,759 | $ 211,780 | $ 343,253 | $ 191,405 | |||||
Operating Leases, Future Minimum Payments Due | $ 154,000 | 892,505 | 892,505 | ||||||||
Operating Leases, Rent Expense, Sublease Rentals | 77,111 | $ 77,111 | 102,815 | $ 102,815 | |||||||
Operating Lease, Payments | $ 3,333 | 78,303 | 225,249 | ||||||||
Operating Lease, Right-of-Use Asset | $ 810,017 | $ 810,017 | $ 0 | $ 0 | |||||||
Operating Lease, Weighted Average Discount Rate, Percent | 4.50% | 4.50% | |||||||||
Operating Lease, Weighted Average Remaining Lease Term | 3 years 3 months 18 days | 3 years 3 months 18 days | |||||||||
Operating Lease, Liability | $ 827,617 | $ 827,617 | |||||||||
Operating Lease, Cost | $ 75,414 | $ 217,189 | |||||||||
Base Rent Percent | 5.00% | ||||||||||
Lessee, Operating Lease, Renewal Term | 5 years | ||||||||||
Winter Park Florida [Member] | |||||||||||
Lease Expiration Date | Sep. 30, 2020 | ||||||||||
Monthly Operating Lease Expenses | $ 1,887 | ||||||||||
Operating Leases, Future Minimum Payments Due | $ 45,288 | ||||||||||
Bethlehem Pennsylvania [Member] | |||||||||||
Operating Leases, Future Minimum Payments Due | $ 89,000 | ||||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 2,415 |
Accrued expenses and other cu_3
Accrued expenses and other current liabilities (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | |||
Accrued other taxes | $ 259,559 | $ 55,413 | |
Accrued payroll and benefits | 175,336 | 8,703 | |
Accrued professional fees | 133,261 | 16,848 | |
Customer deposits | 35,094 | ||
Accrued interest | 269,782 | ||
Other | 262,519 | ||
Total accrued expenses and other current liabilities | $ 1,849,003 | $ 1,135,551 | $ 80,964 |
Shareholders' Equity - Stock Co
Shareholders' Equity - Stock Compensation Expense (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Allocated Share-based Compensation Expense | $ 2,025,994 |
Shareholders' Equity - Stock op
Shareholders' Equity - Stock option award activity (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Shareholders' Equity | ||
Shares, Balance, January 1, 2019 | 290,000 | 0 |
Shares, Granted | 0 | 290,000 |
Shares, Balance, September 30, 2019 | 290,000 | 290,000 |
Shares, Exercisable, September 30, 2019 | 263,333 | 166,667 |
Weighted Average Exercise Price, Balance, January 1, 2019 | $ 5.55 | $ 0 |
Weighted Average Exercise Price, Granted | 0 | 5.55 |
Weighted Average Exercise Price, Balance, September 30, 2019 | 5.55 | 5.55 |
Weighted Average Exercise Price, Exercisable, September 30, 2019 | $ 5.41 | $ 5.32 |
Remaining Contractual Life in Years, Granted | 0 years | 4 years 2 months 12 days |
Remaining Contractual Life in Years, Balance | 3 years 6 months | 4 years 2 months 12 days |
Remaining Contractual Life in Years, Exercisable, September 30, 2019 | 3 years 6 months | 4 years 1 month 6 days |
Aggregate Intrinsic Value, Balance, January 1, 2019 | $ 0 | $ 0 |
Aggregate Intrinsic Value, Granted | $ 0 | $ 0 |
Aggregate Intrinsic Value, Balance, September 30, 2019 | $ 0 | $ 0 |
Aggregate Intrinsic Value, Exercisable, September 30, 2019 | $ 0 | $ 0 |
Shareholders' Equity - Assumpti
Shareholders' Equity - Assumptions (Details) | 12 Months Ended |
Dec. 31, 2018$ / shares | |
Shareholders' Equity | |
Weighted average fair value of option granted | $ 1.82 |
Risk-free interest rate | 2.20% |
Expected term in years | 2 years 6 months |
Volatility | 50.00% |
Dividend rate | 0.00% |
Shareholders' Equity - Addition
Shareholders' Equity - Additional information (Details) - USD ($) | Mar. 06, 2019 | Aug. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 06, 2018 | Aug. 16, 2018 | Feb. 09, 2018 |
Share-based Compensation | $ 876,585 | $ 2,666,576 | $ 3,386,493 | $ 0 | ||||||
Stock Issued During Period, Shares, New Issues | 15,000 | |||||||||
Stock Issued During Period, Value, New Issues | $ 0 | 5,358,570 | 5,315,176 | |||||||
Proceeds from Issuance of Common Stock | $ 0 | $ 5,358,570 | $ 5,315,176 | 0 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,764,705 | 1,764,705 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 26,667 | 123,333 | ||||||||
Allocated Share-based Compensation Expense | $ 2,025,994 | |||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 62,139 | $ 222,279 | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year | 1 year 4 months 24 days | ||||||||
Consulting Agreements [Member] | ||||||||||
Stock Issued During Period, Shares, Issued for Services | 344,250 | |||||||||
Allocated Share-based Compensation Expense | $ 1,721,250 | |||||||||
Stock option awards | ||||||||||
Share-based Compensation | $ 0 | |||||||||
Regulation A Offering [Member] | ||||||||||
Stock Issued During Period, Shares, New Issues | 1,312,520 | |||||||||
Shares Issued, Price Per Share | $ 5 | |||||||||
Stock Issued During Period, Value, New Issues | $ 6,562,600 | |||||||||
Proceeds from Issuance of Common Stock | 5,315,176 | |||||||||
Legal Fees | 157,358 | |||||||||
Deferred Offering Costs | 1,204,030 | |||||||||
Underwriter Commissions and Expenses | 714,802 | |||||||||
Escrow Closing Fees | $ 4,000 | |||||||||
Regulation A Offering [Member] | Selling Agent Warrants [Member] | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 | |||||||||
Class of Warrant or Right, Outstanding | 65,626 | |||||||||
Class of Warrant or Right Expiration Period | 5 years | |||||||||
Class of Warrant or Right Exercise Price Percentage Threshold | 20.00% | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 65,626 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ (5,710,466) | $ (3,671,086) | $ (5,040,102) | $ 1,666,536 |
UNITED STATES | ||||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | 5,828,261 | 49,097 | ||
Foreign | ||||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ 788,159 | $ 1,617,439 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Stock-based compensation | $ 682,115 | |
Goodwill and intangible assets | 19,410 | |
Net operating loss carryforwards | 493,063 | $ 50,524 |
Less: valuation allowance | (1,194,587) | (50,524) |
Deferred tax liabilities: | ||
Property and equipment | 341 | 34,209 |
Net deferred tax liabilities | 341 | 34,209 |
Net deferred tax liabilities | $ 341 | $ 34,209 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||||
Federal | $ 10,185 | $ 27,513 | ||
Foreign | 292,491 | 71,125 | ||
State and local | 35,107 | 6,069 | ||
Total current | 337,783 | 104,707 | ||
Deferred: | ||||
Federal | (21,450) | 23,249 | ||
Foreign | (2,316) | (3,153) | ||
State and local | (10,102) | 8,302 | ||
Total deferred | (33,868) | 28,398 | ||
Income tax provision (benefit) | $ 74,200 | $ 312,186 | $ 303,915 | $ 133,105 |
Income Taxes (Details 3)
Income Taxes (Details 3) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Tax at federal statutory rate | 21.00% | 34.00% |
Effect of U.S. tax law change | 0.00% | (0.90%) |
U.S. income attributable to pass-through entity | 0.00% | (4.40%) |
U.S. income subject to valuation allowance | (20.50%) | 4.90% |
State and local income taxes | 0.00% | 0.90% |
Foreign income not subject to U.S. federal tax | 0.00% | (33.00%) |
Foreign tax | (6.30%) | 4.10% |
Other | (0.20%) | 2.40% |
Effective income tax rate | (6.00%) | 8.00% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets, Gross | $ 1,194,587 | $ 50,524 |
Deferred Tax Assets, Valuation Allowance | 1,194,587 | 50,524 |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards | $ 1,820,685 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards | $ 240,591 |
Subsequent Events (Details)
Subsequent Events (Details) | Jan. 24, 2020USD ($)shares | Jan. 23, 2020USD ($)itemD$ / sharesshares | Jan. 17, 2020USD ($)shares | Jan. 15, 2020USD ($)shares | Jan. 10, 2020USD ($)shares | Dec. 27, 2019USD ($) | Dec. 04, 2019USD ($)shares | Nov. 06, 2019USD ($)shares | Oct. 02, 2019$ / sharesshares | Aug. 26, 2019USD ($) | May 13, 2019USD ($)$ / sharesshares | Mar. 06, 2019USD ($)$ / sharesshares | Mar. 06, 2019USD ($)$ / shares | May 31, 2018shares | Nov. 30, 2019USD ($) | Oct. 31, 2019USD ($)$ / sharesshares | Mar. 31, 2019USD ($) | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / sharesshares | Jan. 02, 2020USD ($) | Sep. 04, 2018USD ($) | Dec. 31, 2017USD ($)$ / shares |
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Number of shares issued | shares | 15,000 | ||||||||||||||||||||||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||||
Notes Payable | $ 370,250 | $ 0 | |||||||||||||||||||||||
Conversion of convertible notes payable, shares issued | shares | 13,500 | 13,500 | |||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | shares | 15,000 | ||||||||||||||||||||||||
Stock Issued During Period, Value, Issued for Services | $ 10,500 | $ 253,000 | $ 375,000 | $ 394,125 | $ 375,000 | $ 801,000 | |||||||||||||||||||
Percentage of senior convertible note | 12.00% | 2.00% | |||||||||||||||||||||||
Payment of outstanding principal and interest | $ 58,836,644 | $ 274,625 | 570,587 | $ 645,000 | |||||||||||||||||||||
Loan Amount | $ 560,000 | $ 560,000 | $ 560,000 | 1,000,000 | 1,000,000 | $ 932,701 | |||||||||||||||||||
Shares issued in connection with loan agreement | shares | 13,500 | 13,500 | |||||||||||||||||||||||
Debt Instrument, Unamortized Discount | $ 60,000 | $ 60,000 | $ 60,000 | 439,819 | 439,819 | $ 500,000 | |||||||||||||||||||
Private Placement [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Conversion of convertible notes payable, shares issued | shares | 560,185 | ||||||||||||||||||||||||
Shares issued in connection with loan agreement | shares | 560,185 | ||||||||||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Conversion of convertible notes payable, conversion price | $ / shares | $ 2 | ||||||||||||||||||||||||
Conversion of convertible notes payable, shares issued | shares | 560,185 | ||||||||||||||||||||||||
Percentage of senior convertible note | 2.00% | ||||||||||||||||||||||||
Loan Amount | $ 1,111,111 | ||||||||||||||||||||||||
Shares issued in connection with loan agreement | shares | 560,185 | ||||||||||||||||||||||||
Debt Instrument, Unamortized Discount | $ 111,111 | $ 78,800 | $ 78,800 | ||||||||||||||||||||||
Convertible Notes Payable [Member] | Alexander Capital, LP [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 24,366 | ||||||||||||||||||||||||
Exercise price of warrants | $ / shares | $ 2.85 | ||||||||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Percentage the entity is obligated to pay on total purchase price per month | 1.00% | ||||||||||||||||||||||||
Maximum percentage the entity is obligated to pay on total purchase price in aggregate | 8.00% | ||||||||||||||||||||||||
Maximum percentage of Company's issued and outstanding Common Stock | 17.99% | ||||||||||||||||||||||||
Subsequent Event [Member] | Labrys Note | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Cancellation shares of common stock portion of commitment fee paid | shares | 153,005 | ||||||||||||||||||||||||
Subsequent Event [Member] | Labrys SPA and Labrys Note | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Cancel the reservation of common stock | shares | 875,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | 32E Loan Agreement | 32 Entertainment LLC | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 50,000 | ||||||||||||||||||||||||
Conversion of convertible notes payable, shares issued | shares | 10,000 | ||||||||||||||||||||||||
Loan Amount | $ 250,000 | ||||||||||||||||||||||||
Interest rate (as a percent) | 10.00% | ||||||||||||||||||||||||
Shares issued in connection with loan agreement | shares | 10,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | Loan Agreement | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 550,000 | ||||||||||||||||||||||||
Exercise price of warrants | $ / shares | $ 2 | ||||||||||||||||||||||||
Conversion of convertible notes payable, conversion price | $ / shares | $ 2 | ||||||||||||||||||||||||
Number of shares of common stock issued as origination fee | shares | 100,000 | ||||||||||||||||||||||||
Number of shares of common stock issued as advisory services | shares | 60,000 | ||||||||||||||||||||||||
Investor's legal fees and transfer agent fees payable | $ 15,000 | ||||||||||||||||||||||||
Loan Amount | $ 1,100,000 | ||||||||||||||||||||||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 50.00% | ||||||||||||||||||||||||
Debt Instrument, Convertible, Threshold Trading Days | item | 10 | ||||||||||||||||||||||||
Debt Instrument, Convertible, Stock Price Trigger | $ / shares | $ 3 | ||||||||||||||||||||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | item | 20 | ||||||||||||||||||||||||
Number of day option to repurchase any unexercised portion of the Warrant at a price of $1.00 per share | D | 30 | ||||||||||||||||||||||||
Subsequent Event [Member] | Loan Agreement | Minimum [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Percentage of beneficial ownership contains a conversion limitation provision | 4.90% | ||||||||||||||||||||||||
Percentage of beneficial ownership not waive contains a conversion limitation provision | 9.90% | ||||||||||||||||||||||||
Subsequent Event [Member] | Loan Agreement | Tiburon Opportunity Fund | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Loan Amount | $ 400,000 | ||||||||||||||||||||||||
Interest rate per month (as a percent) | 1.50% | ||||||||||||||||||||||||
Subsequent Event [Member] | Loan Agreement | Greentree Financial Group, Inc. | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Common stock, par value | $ / shares | $ 0.001 | ||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 550,000 | ||||||||||||||||||||||||
Percentage of senior convertible note | 12.00% | 10.00% | |||||||||||||||||||||||
Subsequent Event [Member] | Edison Nation, Inc | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Shares acquired | shares | 22,500 | ||||||||||||||||||||||||
Subsequent Event [Member] | Uber Mom, LLC | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Asset acquired | $ 52,352 | ||||||||||||||||||||||||
Subsequent Event [Member] | Rawleigh Ralls | Loan Agreement | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 125,000 | ||||||||||||||||||||||||
Shares issued to vendors | shares | 33,000 | ||||||||||||||||||||||||
Payment of outstanding principal and interest | $ 250,000 | ||||||||||||||||||||||||
Loan Amount | $ 267,000 | ||||||||||||||||||||||||
Interest rate (as a percent) | 5.00% | ||||||||||||||||||||||||
Subsequent Event [Member] | Paul J. Solit And Julie B. Solit | Loan Agreement | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 50,000 | ||||||||||||||||||||||||
Shares issued to vendors | shares | 13,000 | ||||||||||||||||||||||||
Payment of outstanding principal and interest | $ 100,000 | ||||||||||||||||||||||||
Loan Amount | $ 107,000 | ||||||||||||||||||||||||
Interest rate (as a percent) | 5.00% | ||||||||||||||||||||||||
Subsequent Event [Member] | Richard O'Leary | Loan Agreement | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 25,000 | ||||||||||||||||||||||||
Shares issued to vendors | shares | 6,500 | ||||||||||||||||||||||||
Payment of outstanding principal and interest | $ 50,000 | ||||||||||||||||||||||||
Loan Amount | $ 53,500 | ||||||||||||||||||||||||
Interest rate (as a percent) | 5.00% | ||||||||||||||||||||||||
Subsequent Event [Member] | Private Placement [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Number of shares issued | shares | 1,175,000 | ||||||||||||||||||||||||
Common stock, par value | $ / shares | $ 0.001 | ||||||||||||||||||||||||
Purchase price per share | $ / shares | $ 2 | ||||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | shares | 1,175,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | Placement Agent Warrants [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Warrants to purchase shares of common stock | shares | 70,500 | ||||||||||||||||||||||||
Exercise price of warrants | $ / shares | $ 2.50 | ||||||||||||||||||||||||
Subsequent Event [Member] | Receivables Purchase Agreement | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Receivables | $ 225,000 | ||||||||||||||||||||||||
Purchase price of receivables | 200,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | Future Receivables Purchase Agreement | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Receivables | 337,500 | ||||||||||||||||||||||||
Purchase price of receivables | $ 225,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | Convertible Notes Payable [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Net proceeds from the PIPE transaction | $ 2,039,303 | ||||||||||||||||||||||||
Gross proceeds from the PIPE transaction | 2,350,000 | ||||||||||||||||||||||||
Placement agent and their lawyer's fees | 310,697 | ||||||||||||||||||||||||
Placement agent debt restructuring fee | 64,208 | ||||||||||||||||||||||||
Placement agent commission | 141,000 | ||||||||||||||||||||||||
Placement agent debt conversion fee | 15,889 | ||||||||||||||||||||||||
Placement agent fees | 33,600 | ||||||||||||||||||||||||
Subsequent Event [Member] | Convertible Notes Payable [Member] | Alexander Capital, LP [Member] | |||||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||||
Placement agent debt restructuring fee | 64,208 | ||||||||||||||||||||||||
Placement agent commission | 141,000 | ||||||||||||||||||||||||
Placement agent debt conversion fee | 15,889 | ||||||||||||||||||||||||
Placement agent fees | $ 33,600 | ||||||||||||||||||||||||
Conversion of convertible notes payable, conversion price | $ / shares | $ 2 | ||||||||||||||||||||||||
Conversion of convertible notes payable, shares issued | shares | 560,185 | ||||||||||||||||||||||||
Shares issued in connection with loan agreement | shares | 560,185 |