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PEN Inc. Announces First Quarter Financial Results

DEERFIELD BEACH, FL--(Marketwired - May 13, 2015) - PEN Inc. (PENC) (PEN) yesterday reported the financial results for the quarter that ended March 31, 2015.

Scott Rickert, PEN's President, Chairman and CEO, said, "PEN is performing in line with my strategic expectations. Our two core businesses, eyeglass cleaning and related businesses, and nanotechnology contract research, under dynamic leadership at the respective businesses are "right sizing" costs and have plans to significantly enhance their businesses. I could not be more pleased with their progress.

"The development of the HALO™ surface fortifier and protector is occurring at a pace we can support at this stage of our growth as a company. As we secure more capital, the roll-out of the HALO product will ramp up. We are currently exploring a capital raise with International FCStone as our placement agent. It is anticipated that such a capital raise will be closed and funded before the end of the second quarter. Once funds are received, the rollout of the HALO product will accelerate.

"As noted in our May 12, 2015 press release, HALO surface fortifier and protector is a world-class product that will transform PEN from a small but innovative nanotechnology products company into a sizable global business."

Results for quarters ended March 31, 2015 and 2014

For the three months ended March 31, 2015, sales from PEN's Product segment decreased by $334,097 or 12.1% as compared to the three months ended March 31, 2014, which was primarily attributable to several factors. In 2013, we experienced delays in the production of anti-fog cloths which resulted in higher than normal sales in the first half of 2014. Due to the overstocking of the anti-fog cloths at a major customer in the first half of 2014, we experienced reduced sales in the 2015 period.

For the three months ended March 31, 2015, revenues from our research and development segment amounted to $630,427. We did not recognize revenues for this segment until after August 27, 2014 (the date of Combination).

For the three months ended March 31, 2015, gross profit amounted to $1,152,638 as compared to $1,321,270 for the three months ended March 31, 2014, a decrease of $168,632 or 12.8%. For the three months ended March 31, 2015 and 2014, gross margins were 37.6% and 47.7%, respectively. For the three months ended March 31, 2015, the decrease in gross margins from the Product segment as compared to the comparable 2014 period was primarily attributable to higher sales of our higher margin anti-fog and protective coating products in the 2014 period as compared to 2015 period.

For the three months ended March 31, 2015, net loss amounted to $185,392 as compared to net income of $231,455 for the three months ended March 31, 2014, a change of $416,847 or 180.1%.

Financial Condition

As of March 31, 2015, PEN held cash and cash equivalents of $173,733 as compared to $464,735 at December 31, 2014. Additionally, as of March 31, 2015, PEN had working capital of $252,282 compared to $86,636 at December 31, 2014, an increase of $165,646.

   
   
PEN INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
             
             
    March 31,     December 31,  
    2015     2014  
    (Unaudited)        
ASSETS                
CURRENT ASSETS:                
  Cash   $ 173,733     $ 464,735  
  Accounts receivable, net     1,295,092       1,032,995  
  Accounts receivable - related party     11,045       38,246  
  Inventory     1,372,683       1,557,100  
  Prepaid expenses and other current assets     246,976       200,079  
                 
  Total Current Assets     3,099,529       3,293,155  
                 
OTHER ASSETS:                
  Property, plant and equipment, net     830,417       850,847  
  Intangible assets, net     226,516       239,338  
  Other assets     40,090       41,841  
                   
  Total Other Assets     1,097,023       1,132,026  
                 
TOTAL ASSETS   $ 4,196,552     $ 4,425,181  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES:                
  Bank revolving line of credit   $ 627,282     $ 773,344  
  Current portion of note payable     27,543       -  
  Convertible notes payable, net     -       13,333  
  Accounts payable     1,343,246       1,426,465  
  Accrued expenses     819,123       964,587  
  Deferred revenue     30,053       28,790  
                   
  Total Current Liabilities     2,847,247       3,206,519  
                 
LONG-TERM LIABILITIES:                
  Note payable, net of current portion     137,715       -  
                   
  Total Long-term Liabilities     137,715       -  
                   
  Total Liabilities     2,984,962       3,206,519  
                 
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; 237,042,916 and 234,744,655 issued and outstanding at March 31, 2015 and December 31, 2014, respectively     23,704       23,474  
  Class B common stock: $.0001 par value, 400,000,000 shares authorized; 251,017,063 and 251,017,063 issued and outstanding at March 31, 2015 and December 31, 2014, respectively     25,102       25,102  
  Class Z common stock: $.0001 par value, 100,000,000 shares authorized; 47,273,470 and 47,273,470 issued and outstanding at March 31, 2015 and December 31, 2014, respectively     4,727       4,727  
  Additional paid-in capital     4,818,368       4,640,278  
  Accumulated deficit     (3,660,311 )     (3,474,919 )
                 
Total Stockholders' Equity     1,211,590       1,218,662  
                 
Total Liabilities and Stockholders' Equity   $ 4,196,552     $ 4,425,181  
                 
See 10Q for accompanying notes to consolidated financial statements.  
   
   
   
   
PEN INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
             
             
    For the Three Months Ended  
    March 31,  
    2015     2014  
    (Unaudited)     (Unaudited)  
REVENUES:                
  Products (including related party sales of $44,827 and $82,685 for the three months ended March 31, 2015 and 2014, respectively)   $ 2,437,314     $ 2,771,411  
  Research and development services     630,427       -  
                 
  Total Revenues     3,067,741       2,771,411  
                 
COST OF REVENUES:                
  Products     1,406,719       1,450,141  
  Research and development services     508,384       -  
                 
  Total Cost of Revenues     1,915,103       1,450,141  
                 
GROSS PROFIT     1,152,638       1,321,270  
                 
OPERATING EXPENSES:                
  Selling and marketing expenses     82,209       73,517  
  Salaries, wages and contract labor     587,830       433,352  
  Research and development     195,202       150,735  
  Professional fees     180,552       171,472  
  General and administrative expenses     266,395       166,505  
                 
  Total Operating Expenses     1,312,188       995,581  
                 
(LOSS) INCOME FROM OPERATIONS     (159,550 )     325,689  
                 
OTHER INCOME (EXPENSES):                
  Interest income     -       -  
  Interest expenses     (27,729 )     (7,333 )
  Other income, net     6,831       13  
                 
    Total Other Income/(Expense)     (20,898 )     (7,320 )
                 
(Loss) Income before income taxes     (180,448 )     318,369  
                 
Income tax benefit (expense)     (4,944 )     (47,608 )
                 
NET (LOSS) INCOME     (185,392 )     270,761  
                 
Net income attributable to former non-controlling interest     -       (39,306 )
                 
NET (LOSS) INCOME ATTRIBUTABLE TO PEN INC.   $ (185,392 )   $ 231,455  
                 
NET (LOSS) INCOME PER COMMON SHARE:                
  Basic   $ (0.00 )   $ 0.00  
  Diluted   $ (0.00 )   $ 0.00  
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                
  Basic     534,216,610       325,641,762  
  Diluted     534,216,610       325,641,762  
                 
See 10Q for accompanying notes to consolidated financial statements.  
   
   

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

Investor webcast and business update: Thursday, May 21, 1 pm EDT

PEN will host an investor webcast Thursday, May 21, 1 pm EDT to discuss first quarter results, provide a business update and take questions from investors. Participants can register for the event at: http://w.on24.com/r.htm?e=996591&s=1&k=3F7EB4B88D7AF6C218FB112CF508E3EA.

Questions for the event may be submitted in advance to Lynn Lilly at llilly@pen-technology.com.

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.