Galaxy Next Generation Reports Fiscal Year Third Quarter 2019 Results

TOCCOA, GA / ACCESSWIRE / May 16, 2019 / 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 ended March 31, 2019.

Key Highlights for FY Q3 2019:

  • Launched new SLIM LCD interactive learning panel at Future in Educational Technology Conference
  • Reduced consolidated debt by $5 million
  • Executed agreements with 3 new resellers, expanding geographically and vertically
  • Awarded commitment from Brooks County, Georgia school district
  • Awarded contract from Marshall County, Alabama
  • Awarded contract from Newtown County, Georgia school district

During the third quarter, Galaxy sold its Entertainment segment that owns and operates Georgetown 14 Cinemas, a fourteen-theater movie complex located in Indianapolis, Indiana, to an entity with a common board member, effective February 6, 2019.

Subsequent to the End of FY Q3 2019

Galaxy secured additional funding totaling $1.325 million, which will allow the Company to continue product expansion, marketing efforts and increase inventory for future sales. The Company is in verbal discussions with a developer for potential new products to launch in the summer of 2019. Galaxy has recently increased their sales channel with the addition of three new resellers and has added a new regional sales rep to their team. Management believes these subsequent events show their continued efforts on Company growth and profitability.

Management Commentary

“We are very excited for what lies ahead for Galaxy in 2019 and beyond. We have successfully sold off our legacy Entertainment business and are now purely focused on our interactive learning technology solutions,” commented, Gary LeCroy, Galaxy’s Chief Executive Officer. “The K-12 classroom continues to evolve with interactive learning technologies and our products and services are ripe for this technology transition. We are growing rapidly, as there is a clear demand for our products and recognition among school districts and industry partners. The replacement of older technology Interactive Whiteboards is in full swing across the world.”

Mr. LeCroy concluded, “Our sales pipeline of opportunities we have identified and are competing for is as robust as ever. We have committed to complement our organic growth through strategic and accretive acquisitions, and we are delivering on that promise. We believe this is just the beginning of a major technology turnover cycle in the K-12 education market and we look forward to being a major participant in it.”

Financial Results for the Three Months Ended December 31, 2018:

Revenue for the three months ended March 31, 2019 was $348,723, an increase of $43,776 or 14%, compared to $304,947 for the three months ended March 31, 2018.

Gross profit for the three months ended March 31, 2019 was $63,575 compared to $68,704 for the three months ended March 31, 2018. The resulting gross margin was 18.2% for the three months ended March 31, 2019. Cost of revenue consists primarily of manufacturing, freight, and installation costs.

General and administrative expenses for the three months ended March 31, 2019 was $2,043,181, an increase of $1,477,044 or 261%, compared to $566,137 for the three months ended March 31, 2018. General and administrative expenses consist primarily of salaries and stock compensation expense, office rent, insurance premiums, and professional fees. The increase in general and administrative expenses is directly related to Company growth and the desire to take advantage of market opportunity.

Net loss for the three months ended March 31, 2019 was $1,983,028, an increase of $1,463,565, or 282%, compared to $519,463 for the three months ended March 31, 2018. The resulting EPS loss for the three months ended March 31, 2019 was $(0.20) per diluted share, compared to $(0.06) per diluted share for the three months ended March 31, 2018.

At March 31, 2019, and including its subsequent funding, Galaxy had $1.4 million of cash, $3.9 million debt, and 10.2 million shares issued and 9.9 million shares outstanding.

Financial Results for the Nine Months Ended March 31, 2019:

Revenue for the nine months ended March 31, 2019 was $1,717,353, a decrease of $431,602 or 20%, compared to $2,148,955 for the nine months ended March 31, 2018.

Gross profit for the nine months ended March 31, 2019 was $551,642, compared to $381,354 for the nine months ended March 31, 2018. The resulting gross margin was 32.1% for the nine months ended March 31, 2019.

General and administrative expenses for the nine months ended March 31, 2019 was $4,408,951, an increase of $2,846,942 or 182%, compared to $1,562,009 for the nine months ended March 31, 2018.

Net loss for the nine months ended March 31, 2019 was $3,869,278, an increase of $2,652,441, or 218%, compared to $1,216,837 for the nine months ended March 31, 2018. The resulting EPS loss for the nine months ended March 31, 2019 was $(0.42) per diluted share, compared to $(0.14) per diluted share for the nine months ended March 31, 2018.

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

GALAXY NEXT GENERATION, INC.
Consolidated Balance Sheets

March 31, 2019
June 30, 2018
Assets
(Unaudited)
(Audited)
Current Assets
Cash
$ 57,899 $ 184,255
Accounts receivable
54,004 341,726
Inventories
171,083 586,764
Prepaid and other current assets
1,184 2,764
Total Current Assets
284,170 1,115,509
Property and Equipment, net (Note 2)
31,383 4,254,451
Other Assets
Goodwill (Note 11)
834,220 892,312
Other assets (Note 11)
1,522,714
Total Other Assets
834,220 2,415,026
Total Assets
$ 1,149,773 $ 7,784,986
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities
Line of credit (Note 3)
$ 1,230,550 $ 547,603
Convertible notes payable, net of discount (Note 4)
1,131,322
Current portion of long term notes payable (Note 4)
281,045 362,181
Accounts payable
555,459 771,080
Accrued expenses
50,552 146,978
Advances from stockholders (Note 5)
260,173
Deferred revenue
219,820
Short term notes payable (Note 4)
165,000
Short term notes payable – related party (Note 5)
485,534
Total Current Liabilities
3,248,928 2,958,369
Noncurrent Liabilities
Notes payable, less current portion (Note 4)
1,694 4,524,347
Total Liabilities
3,250,622 7,482,716
Stockholders’ Equity (Deficit) (Notes 1, 7, and 11)
Common stock
999 965
Additional paid-in capital
4,574,998 3,108,873
Accumulated deficit
(6,676,846 ) (2,807,568 )
Total Stockholders’ Equity (Deficit)
(2,100,849 ) 302,270
Total Liabilities and Stockholders’ Equity (Deficit)
$ 1,149,773 $ 7,784,986

GALAXY NEXT GENERATION, INC.
Consolidated Statements of Operations
(Unaudited)

For the Three-Months
For the Nine-Months
Ended March 31,
Ended March 31,
2019
2018
2019
2018
Revenues
Technology interactive panels and related products
$ 261,712 $ 293,136 $ 1,106,540 $ 2,137,144
Entertainment theater ticket sales and concessions
78,661 589,705
Technology office supplies
8,350 11,811 21,108 11,811
Total Revenues
348,723 304,947 1,717,353 2,148,955
Cost of Sales
Technology interactive panels and related products
230,833 236,243 948,073 1,767,601
Entertainment theater ticket sales and concessions
54,315 217,638
Total Cost of Sales
285,148 236,243 1,165,711 1,767,601
Gross Profit
63,575 68,704 551,642 381,354
General and Administrative Expenses
General and administrative
2,043,181 566,137 4,408,951 1,562,009
Loss from Operations
(1,979,606 ) (497,433 ) (3,857,309 ) (1,180,655 )
Other Income (Expense)
Other income
97,471 177 151,289 1,056
Interest expense
(100,893 ) (22,207 ) (163,258 ) (37,238 )
Total Other Income (Expense)
(3,422 ) (22,030 ) (11,969 ) (36,182 )
Net Loss before Income Taxes
(1,983,028 ) (519,463 ) (3,869,278 ) (1,216,837 )
Income taxes (Note 8)
Net Loss
$ (1,983,028 ) $ (519,463 ) $ (3,869,278 ) $ (1,216,837 )
Net Basic and Fully Diluted Loss Per Share
$ (0.20 ) $ (0.06 ) $ (0.42 ) $ (0.14 )
Weighted average common shares outstanding
Basic and fully diluted
10,105,121 8,572,233 9,154,161 8,572,233

GALAXY NEXT GENERATION, INC.
Consolidated Statements of Cash Flows
(Unaudited)

Nine-Months Ended March 31,
2019
2018
Cash Flows from Operating Activities
Net loss
$ (3,869,278 ) $ (1,216,837 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
216,642 14,547
Amortization of convertible note discount included in interest expense
45,022
Gain on sale of Entertainment
(60,688 )
Issuance of stock for services
921,859
Changes in assets and liabilities:
Accounts receivable
283,222 336,591
Inventories
410,071 32,674
Prepaid expenses and other assets
(34,710 ) 13,029
Accounts payable
(135,105 ) (79,405 )
Accrued expenses
34,344 21,367
Deferred revenue
(219,820 )
Net used in operating activities
(2,408,441 ) (878,034 )
Cash Flows from Investing Activities
Purchase of property and equipment
(2,686 )
Net used in investing activities
(2,686 )
Cash Flows from Financing Activities
Dividends
(1,587 )
Principal payments on mortgage and capital lease obligations
(37,989 ) (8,604 )
Principal payments on short term notes payable
(20,000 ) (225,000 )
Proceeds (payments) on advance from stockholder, net
(111,173 ) 261,131
Proceeds from convertible note payable
1,086,300
Proceeds from line of credit
682,947 528,603
Proceeds from issuance of common stock (Note 7)
637,000 104,226
Proceeds from notes payable – related parties
45,000
Net provided in financing activities
2,282,085 658,769
Net Decrease in Cash and Cash Equivalents
(126,356 ) (221,951 )
Cash, Beginning of Period
184,255 232,427
Cash, End of Period
$ 57,899 $ 10,476
Supplemental and Non Cash Disclosures
Non-cash debt discount on convertible notes payable
$ 120,700 $
Non-cash sale of Entertainment
$ 92,700 $
Cash paid during the period for interest
$ 132,560 $ 37,238

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:

[email protected]
317-361-2393

SOURCE: Galaxy Next Generation, Inc.

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