Increased Budgetary Spending at U.S. K-12 Schools Continues to Accelerate Deferred Revenue and Backlog
Conference Call Scheduled for Today at 9:00am ET
TOCCOA, GA / ACCESSWIRE / May 14, 2021 / Galaxy Next Generation, Inc. (OTCQB:GAXY), a provider of interactive learning technology solutions, today announced the Company's operating and financial results for the fiscal third quarter and nine months ended March 31, 2021.
Key Financial Highlights for Three Months Ended March 31, 2021
- Cash increased 280% to $742K
- Revenue increased 123% to $777K
- Deferred revenue of $800K
- Product Gross Margin improved to 54%
- Inventory increased to $2.2 million
- Accounts Receivable increased to $1.3 million
- Receivables are collected on as product ships/installs and we have been successful in collecting ~half of the open AR subsequent to quarter end thus far
- Total Assets increased to $6.6 million
- Total Liabilities decreased by $0.6 million
- With another $1 million decrease subsequent to quarter end with the elimination of legal settlement
- Backlog ~$1.9 million with product due in this month for order fulfillment prior to June 30.
Key Business Highlights for Three Months Ended March 31, 2021
- Announced partnership with ROYBI, Inc to bring AI technology into the learning environments of our schools
- Launched G2 Visual Alerts, a safety and security alert system for Schools and other verticals
- Partnered with CB&A, a marketing firm to assist in messaging and building the G2 brands
- Awarded Richland County School District Two Catalog Bid
- Awarded Charlotte County Public Schools Catalog Bid
- Received additional order under a supply agreement with OEM customer, will be shipping order in current quarter
- Australian Partner awarded major contract with New South Wales
- Awarded St Johns County Schools in Florida Catalog Bid
- Continued to expand our presence in Thompson County Schools, CO with additional orders, and even 3 additional orders in current quarter
- Achieved record day for purchase orders with $1 million in single day
- Awarded 5-year contract with Allen Independent School District in Texas
- Hired a new Regional Sales Manager for the West Coast region
- Hired a new Chief Operating Officer with years of experience in the Ed Tech segment
- Announced our elimination of all Convertible Debt instruments
- Established a non-toxic equity stock agreement with institutional investor
Summary Snapshot of 3 months Y/Y and Q/Q
|
|
Q3 2021
|
Q3 2020
|
Q2 2020 (Previous Q)
|
|
Cash on Hand
|
$742,382
|
$194,702
|
$372,591
|
|
Accounts Receivable
|
$1,302,764
|
$599,146
|
$1,231,807
|
|
Inventory
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$2,207,885
|
$929,210
|
$1,473,749
|
|
Total Assets
|
$6,662,043
|
$3,943,798
|
$5,624,872
|
|
Revenue
|
$777,457
|
$349,247
|
$798,793
|
|
Gross Profit
|
$420,726
|
$218,633
|
$327,730
|
|
Operating Loss
|
($1,279,034)
|
($3,492,047)
|
($930,188)
|
Nine Month Numbers or Year to Date
- Total Revenue ~2.8 million an increase of 1 million from 2020
- Gross Profit ~1.09 million an increase of ~$0.4 million from 2020
Management Commentary
"We continue to successfully build upon a solid year, with 123% revenue growth quarter over quarter from Q3 2020 to 2021, led by interactive panels, Our Bell, Paging, and Intercom product line, G2 communication software(s) and our related OEM partnerships," commented, Gary LeCroy, Galaxy's Chief Executive Officer. The three months ending March 31 2020 was our lowest revenue quarter last year, so to see such a growth in the same three month period in 2021 is very encouraging. We continued to execute on our strategy for growth and and have made some strategic hires this quarter leading to increased sales and more influence in the ed tech community. Galaxy is continually expanding its reseller community and its brand awareness while maintaining strong supply chains and increasing our turn-around time to better service the orders we are receiving. We continued to experience strong demand for our products and services. We remain confident in our strategy and we are executing against our innovation roadmap. We believe our understanding of high-performance interactive technology products position us to effectively capitalize on the industry transition to remote classrooms."
Galaxy's Chief Financial Officer, Magen McGahee, stated, "We continue to experience growth in our sales, as well as, our entire financial reports. As Gary mentioned, Q3 was our lowest reported revenue quarter last year so having the increase in sales of 123% is a great indicator of whats to come. This year has continued to have unique challenges related to school closures and logistical issues within supply chains and shipping delays. However, we remain confident in our strategy and that strategy is starting to reflect hard on our financial statements. We believe that the increase in school budgets will have the biggest impact on revenues in the Q4 and Q1 reporting periods for Galaxy. Our education customers have began to see their new budgets and have began placing larger orders and creating new projects to fulfill their needs over the upcoming summer months."
McGahee, concluded, "Our assets continue to increase and remain strong, while our liabilites are decreasing as we strive to make it a continued goal to reach a net positive asset balance sheet. Our remaining reported debt is associated with related parties (i.e, executives, officers, insiders, or family members of executives/officers) or traditional banking forms such as our business line of credit or our accounts receivable financing. Subsequent to March 31 quarter end date, we have eliminated another ~$1 million in legal settlement liabilities (making the balance $0) and another ~$500K in aged Accounts Payable. We have applied for and exceed the requirements to be granted forgiveness on our PPP loan from 2020 and therefore hope to report that as less ~$330K in liabilities soon as well. Our equity line of credit has allowed for us to raise money to assist with these improvements, at the company's discretion and when most appropriate for the maximum return on value."
The details for the conference call can be found below.
Shareholder Update Conference Call
Date: Friday, May 14, 2021
Time: 9:00 AM ET
Dial-in: 1-888-506-0062 (Domestic)
1-973-528-0011 (International)
Entry Code: 412414
If you would like to submit a question, please send an email with your question to IR@GalaxyNext.us prior to the call. Galaxy will do their best to answer all questions.
Webcast: https://www.webcaster4.com/Webcast/Page/2559/41335
For those unable to participate during the live broadcast, a replay of the call will also be available through May 28, 2021 by dialing 1-877-481-4010 (domestic) and 1-919-882-2331 (international) and referencing the replay pin number: 41335.
Financial Results for the Three Months Ended March 31, 2021:
Revenue for the three months ended March 31, 2021 was $0.8 million, an increase of $0.4 million or 123%, as compared to $0.3 million for the three months ended March 31, 2020. Additionally, deferred revenue amounted to $0.8 million as of March 31, 2021.
Gross profit for the three months ended March 31, 2021 was $0.4 million, an increase of $0.2 million or 92%, as compared to $0.2 million for the three months ended March 31, 2020. The resulting gross margin was 54% for the three months ended March 31, 2021, compared to 63% for the three months ended March 31, 2020.
General and administrative expenses for the three months ended March 31, 2021 were $1.7 million, a decrease of $2.0 million or 54%, compared to $3.7 million for the three months ended March 31, 2020.
Operating loss for the three months ended March 31, 2021 was $1.3 million, a decrease of $2.2 million, or 63%, compared to $3.5 million for the three months ended March 31, 2020.
Other expenses for the three months ended March 31, 2021 were $1.6 million, a decrease of $0.2 million, compared to $1.8 million for the three months ended March 31, 2020. For the three months ended March 31, 2021, this was mainly comprised of $1.8 million interest expense related to Equity Purchase Agreement, a non-cash expense and recorded due to GAAP accounting.
Net loss for the three months ended March 31, 2021 was $2.9 million, a decrease of $2.4 million, or 45%, compared to $5.3 million for the three months ended March 31, 2020. The resulting loss per share for the three months ended March 31, 2021 was ($0.001) per diluted share, compared to ($0.15) per diluted share for the three months ended March 31, 2020.
Non-cash contributing factors for the net loss incurred for the three months ended March 31, 2020 is as follows:
a) $2,350 and $48,034 represent consulting fees and employee compensation paid through the issuance of stock for the three months ended March 31, 2021 and 2020, respectively;
b) Interest expenses related to equity purchase agreement of $1,805,687 and $0 for the three months ended March 31, 2021 and March 31, 2020
c) Impairment charges taken of $0 and $2,000,287 for the three months ended March 31, 2021 and March 31, 2020
Financial Results for the Nine Months Ended March 31, 2021:
Revenue for the nine months ended March 31, 2021 was $2.8 million, an increase of $0.9 million or 49%, as compared to $1.9 million for the nine months ended March 31, 2020.
Gross profit for the nine months ended March 31, 2021 was $1.1 million, an increase of $0.4 million or 49%, as compared to $0.7 million for the nine months ended March 31, 2020. The resulting gross margin was 40% for the nine months ended March 31, 2021, compared to 40% for the nine months ended March 31, 2020.
General and administrative expenses for the nine months ended March 31, 2021 were $7.1 million, a decrease of $1.2 million or 14%, compared to $8.3 million for the nine months ended March 31, 2020.
Operating loss for the nine months ended March 31, 2021 was $6.0 million, a decrease of $1.6 million, or 20%, compared to $7.6 million for the nine months ended March 31, 2020. Operating loss for the nine months ended March 31, 2020 included $2.8 million of non-cash stock-based compensation.
Other expenses for the nine months ended March 31, 2021 were $17.8 million, an increase of $15.3 million, compared to $2.5 million for the nine months ended March 31, 2020. For the nine months ended March 31, 2021, this was comprised of $3.2 million negative change in fair value of derivative liability, $0.8 million interest accretion, $6.8 million interest expense related to Equity Purchase Agreement and $7.2 million interest expense. These were all non-cash expenses and recorded due to GAAP accounting.
Net loss for the nine months ended March 31, 2021 was $23.8 million, an increase of $13.8 million, or 135%, compared to $10.1 million for the nine months ended March 31, 2020. The resulting loss per share for the nine months ended March 31, 2021 was ($0.008) per diluted share, compared to ($0.47) per diluted share for the nine months ended March 31, 2020.
Non-cash contributing factors for the net loss incurred for the nine months ended March 30, 2021 is as follows:
a) $2.8 million and $2.1 million represent consulting fees and employee compensation paid through the issuance of stock for the nine months ended March 31, 2021 and 2020, respectively;
b) amortization of intangible assets for the nine months ended March 31, 2021 totaling $0.2 million;
c) change in fair value of the derivative liability related to convertible notes payable of $3.2 million and positive $2.7 million for the nine months ended March 31, 2021 and 2020;
d) Interest of $14.7 million and $5.2 million related to convertible notes payable and equity purchase agreement for the nine months ended March 31, 2021 and 2020.
About Galaxy Next Generation, Inc.
Galaxy Next Generation (OTCQB: GAXY) is a provider of interactive learning technology solutions that allows the presenter and participant to engage in a fully collaborative instructional environment. Galaxy's products include Galaxy's own private-label interactive touch screen panel as well as numerous other national and international branded peripheral and communication devices. Galaxy's distribution channel consists of 22+ resellers across the U.S. who primarily sell the Company's products within the commercial and educational market. Galaxy does not control where resellers focus their resell efforts, although generally, the K-12 education market is the largest customer base for Galaxy products - comprising nearly 90% of Galaxy's sales.
For additional information, please visit our website at: www.galaxynext.us
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect the company's current plans and expectations, as well as future results of operations and financial condition. A more extensive listing of risks and factors that may affect the company's business prospects and cause actual results to differ materially from those described in the forward-looking statements can be found in the reports and other documents filed by the company with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Investors Contact:
IR@GalaxyNext.us
p888-859-1274
SOURCE: Galaxy Next Generation, Inc.
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