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PEN Inc. Announces 2014 Financial Results

DEERFIELD BEACH, FL--(Marketwired - April 13, 2015) - PEN Inc. (PENC) (PEN) filed on Friday, April 10, 2015, its Form 10K for the year ending December 31, 2014.

Commenting on PEN's financial and operating results for the year, Scott Rickert, Chairman, President and CEO, said:

"2014 was a great year as we successfully combined two outstanding nanotechnology companies -- Nanofilm and Applied Nanotech -- to form a dynamic growth company -- PEN. We reported revenue of approximately $10 million, and remember that only included Applied Nanotech for approximately four months. More importantly, on an adjusted basis for non-cash charges, we posted positive results. We enter 2015 with expectation of increasing sales of our historic products and exciting growth opportunities for our new products. In addition, we have built a management team with seasoned executives that have all worked with larger companies, setting the stage for sustainable growth."

This is the first such filing for PEN, the successor to Applied Nanotech Holdings, Inc (APNT). PEN results from the combination of NanoHoldings Inc. (private company) and Applied Nanotech Holdings; in that combination NanoHoldings is considered the acquiring company from an accounting perspective. Even though PEN is the successor to Applied Nanotech Holdings, the financial history is of NanoHoldings with the inclusion of Applied Nanotech Holdings from the date of combination, August 27, 2014.

Full Year Results
For the year ending December 31, 2014, revenue was $9,950,477, an increase of $875,129 from the similar period in 2013 of $9,075,348 for a 9.6% increase. The increase of $875,129 consists of $102,000 from the Product segment and $772,909 from the Research and Development segment for the period from August 27, 2014 to December 31, 2014.

Gross profit was $4.3 million in 2014 as compared to $3.4 million in 2013. Gross margin in 2014 was 43.2%, compared to 37.8% in 2013, an increase of more than 5 percentage points. 

Operating loss increased $2.1 million from $179,928 in 2013 to $2.3 million in 2014. Net loss was $2.3 million, compared to $0.2 million in 2013. Net loss per basic and diluted share was $(0.01) compared to $(0.00) in 2013. A significant part of the loss in 2014 is from a non-cash impairment loss adjusting the value of the intangible assets acquired in the Combination. PEN is required to evaluate the carrying value of its assets on at least an annual basis under specific accounting rules. The charge does not reflect any revision of our assessment of the value of the intellectual property acquired in the combination as far as future product development, but results from an analysis of the present value of the cash flow of current products. Non-GAAP adjusted net loss, computed by adding back to net loss the non-cash impairment loss, results in a loss of $383,692, compared to $218,320 in 2013. Non-GAAP adjusted loss per basic and diluted share was $(0.00) compared to $(0.00) in 2013. The calculations for non-GAAP adjusted net loss and loss per share are shown in a table following the financial statements.

Financial Condition
As of December 31, 2014, PEN held cash and cash equivalents of $464,735, compared to $100,367 at December 31, 2013. In 2014, the Company generated $547,647 in cash flow from operations, compared to cash used in operations of $214,079 in 2013.

   
PEN INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
             
             
    December 31,     December 31,  
    2014     2013  
             
ASSETS            
CURRENT ASSETS:                
    Cash   $ 464,735     $ 100,367  
    Accounts receivable, net     1,032,995       1,524,303  
    Accounts receivable - related party     38,246       17,224  
    Inventory     1,557,100       1,484,456  
    Prepaid expenses and other current assets     200,079       107,718  
                 
    Total Current Assets     3,293,155       3,234,068  
                 
OTHER ASSETS:                
    Property, plant and equipment, net     850,847       672,704  
    Intangible assets, net     239,338       -  
    Other assets     41,841       73,504  
                 
    Total Other Assets     1,132,026       746,208  
                 
TOTAL ASSETS   $ 4,425,181     $ 3,980,276  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES:                
    Bank revolving line of credit   $ 773,344     $ 199,919  
    Current portion of bank term loan     -       60,000  
    Convertible notes payable, net     13,333       -  
    Accounts payable     1,426,465       721,860  
    Accrued expenses     964,587       344,271  
    Deferred revenue     28,790       -  
                 
    Total Current Liabilities     3,206,519       1,326,050  
                 
LONG-TERM LIABILITIES:                
    Bank term loan, net of current portion     -       515,000  
    Other long-term liabilities     -       127,914  
                 
    Total Long-term Liabilities     -       642,914  
                 
    Total Liabilities     3,206,519       1,968,964  
                 
Commitments and Contingencies (See Note 13)                
                 
STOCKHOLDERS' EQUITY:                
Preferred stock, $.0001 par value, 20,000,000 shares authorized; No shares issued and outstanding     -       -  
Class A common stock: $.0001 par value, 1,300,000,000 shares authorized; 234,744,655 and 27,670,187 issued and outstanding at December 31, 2014 and 2013, respectively     23,474       2,767  
Class B common stock: $.0001 par value, 400,000,000 shares authorized; 251,017,063 and 250,698,105 issued and outstanding at December 31, 2014 and 2013, respectively     25,102       25,070  
Class Z common stock: $.0001 par value, 100,000,000 shares authorized; 47,273,470 and 47,273,470 issued and outstanding at December 31, 2014 and 2013, respectively     4,727       4,727  
Additional paid-in capital     4,640,278       3,083,413  
Accumulated deficit     (3,474,919 )     (1,104,665 )
                 
Total Stockholders' Equity     1,218,662       2,011,312  
                 
Total Liabilities and Stockholders' Equity   $ 4,425,181     $ 3,980,276  
                 
   
See 10K for accompanying notes to consolidated financial statements.  
   
   
PEN INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
             
             
    For the Years Ended  
    December 31,  
    2014     2013  
                 
REVENUES:                
    Products (including related party sales of $198,858 and $209,170 for the year ended December 31, 2014 and 2013, respectively)   $ 9,177,568     $ 9,075,348  
    Research and development services     772,909       -  
                 
    Total Revenues     9,950,477       9,075,348  
                 
COST OF REVENUES:                
    Products     5,014,296       5,644,017  
    Research and development services     635,820       -  
                 
    Total Cost of Revenues     5,650,116       5,644,017  
                 
GROSS PROFIT     4,300,361       3,431,331  
                 
OPERATING EXPENSES:                
    Selling and marketing expenses     235,234       284,236  
    Salaries, wages and contract labor     2,003,996       1,247,484  
    Research and development     607,049       878,364  
    Professional fees     814,518       453,319  
    General and administrative expenses     996,238       747,856  
    Impairment loss     1,933,144       -  
                 
    Total Operating Expenses     6,590,179       3,611,259  
                 
LOSS FROM OPERATIONS     (2,289,818 )     (179,928 )
                 
OTHER INCOME (EXPENSES):                
  Interest income     -       40  
  Interest expenses     (28,967 )     (80,326 )
  Other income, net     86,132       41,894  
                 
    Total Other Income/(Expense)     57,165       (38,392 )
                 
Loss before income taxes     (2,232,653 )     (218,320 )
                 
Income tax benefit (expense)     (84,183 )     -  
                 
NET LOSS     (2,316,836 )     (218,320 )
                 
Net (income) loss attributable to former non-controlling interest     (53,418 )     31,694  
                 
NET LOSS ATTRIBUTABLE TO PEN, INC.   $ (2,370,254 )   $ (186,626 )
                 
NET LOSS PER COMMON SHARE:                
    Basic   $ (0.01 )   $ (0.00 )
    Diluted   $ (0.01 )   $ (0.00 )
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                
    Basic     396,641,386       325,641,762  
    Diluted     396,641,386       325,641,762  
                 
                 
See 10K for accompanying notes to consolidated financial statements.  

   

The entire Form 10K and related financial statements are available at www.sec.gov, or the company's website, www.pen-technology.com.

Use of Non-GAAP Financial Measures
The Company has included in this press release certain non-GAAP financial measures. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of the Company and when planning and forecasting future periods. Readers are cautioned not to view non-GAAP financial measures on a stand-alone basis or as a substitute for GAAP measures, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP measures with non-GAAP measures also included herein.

   
Reconciliation of Non-GAAP Adjusted Net Loss and EPS  
       
    For the Years Ending
December 31
 
    2014     2013  
                 
Net (loss)   $ (2,316,836 )   $ (218,320 )
Add: impairment loss of intangible assets   $ 1,933,144     $ -  
Non-GAAP adjusted net loss   $ (383,692 )   $ (218,320 )
                 
Weighted average shares - diluted     396,641,386       325,641,762  
                 
Non-GAAP adjusted diluted EPS   $ (0.00 )   $ (0.00 )
                 

About PEN Inc. (PENC)
PEN Inc. (PENC) is a global leader in developing, commercializing and marketing enhanced-performance products enabled by nanotechnology. The company focuses on innovative and advanced product solutions in safety, health and sustainability. For more information about PEN, visit www.pen-technology.com.

Safe Harbor Statement 
This press release contains forward-looking statements that involve risks and uncertainties concerning our business, products, and financial results. Actual results may differ materially from the results predicted. More information about potential risk factors that could affect our business, products, and financial results are included in our annual report on Form 10-K for the fiscal year ended December 31, 2014, and in reports subsequently filed by us with the Securities and Exchange Commission ("SEC"). All documents are available through the SEC's Electronic Data Gathering Analysis and Retrieval System (EDGAR) at www.sec.gov or from our website listed above. We hereby disclaim any obligation to publicly update the information provided above, including forward-looking statements, to reflect subsequent events or circumstances.