VINCO VENTURES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

Overview

Our Company was incorporated on July, 18 2017 in the State of Nevada under the
name of Idea Lab X Products, Inc, On September 12, 2017, we filed an Amendment
to our Articles of Incorporation changing the name to Xspand Products Lab, Inc.,
and then on September 7, 2018 we filed an Amendment to our Articles of
Incorporation changing the name to Edison Nation, Inc. On November 5, 2020, the
Company (the "Parent") and its wholly owned subsidiary, Vinco Ventures, Inc.
(the "Merger Sub"), entered into an Agreement and Plan of Merger (the
"Agreement"). Under the terms of the Agreement, the Merger Sub merged with and
into the Parent and the Parent became the surviving corporation of the Merger
(the "Surviving Corporation"). The name of the Surviving Corporation became
Vinco Ventures, Inc. The transaction closed on November 10, 2020.



Vinco Ventures 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
Vinco Ventures brand name as a diversified consumer products business through a
number of media channels.



The first stage of development for any consumer product is the impetus to turn
an idea into a salable commodity. Considered to be the "go-to" resource for
independent innovators with great consumer product invention ideas, Vinco
Ventures maintains a consumer-facing online presence whereby innovators can
submit ideas for consideration by us. If an idea is successfully chosen, Vinco
Ventures will apply its proprietary, web-enabled new product development ("NPD")
and commercialization platform that can take a product from idea through
e-commerce final sale in a matter of months versus a year or more for capital
intensive and inefficient new product development protocols traditionally used
by legacy manufacturers serving "big box" retailers. Vinco Ventures presently
engages with over 180,000 registered online innovators and entrepreneurs
interested in accessing the Company's NPD platform to bring innovative, new
products to market focusing on high-interest, high-velocity consumer categories.
The Company generates revenue from its web presence by charging a fee for each
idea submission, and also through subscription-based plans for innovators that
wish to submit high volumes of ideas.



Since its inception, Vinco Ventures has received over 200,000 idea submissions,
with products selling in excess of $250 million at retail through the management
of over 300 client product campaigns with distribution across diverse channels
including e-commerce, mass merchandisers, specialty product chains,
entertainment venues, national drug chains, and tele-shopping. These clients
include many of the largest manufacturers and retailers in the world including
Amazon, Bed Bath and Beyond, HSN, Rite Aid, P&G, and Black & Decker. The Company
generates revenue from licensing agreements with such manufacturers and
retailers, which such agreements are entered into when innovators submit their
ideas through Edison Nation's web portal. Occasionally, the Company also
generates revenue from innovators that wish to use the Company's product
development resources, but license or distribute products themselves.



Vinco Ventures has a number of internally developed brands "EN Brands" which act
as a launchpad for new innovative items that have matriculated through the
innovation portal. These EN Brands include Cloud B, Pirasta, Uber Mom, Best
Party Concepts, Lily and Grey, Sol and Salud, Trillion Trees, Eco Quest, Smarter
Specs, Barkley Lane, and Ngenious Fun. Additionally, the Company offers a
partnership model for entrepreneurs and businesses that are seeking to elevate
their existing brands. Recent partnerships for Vinco Ventures include 4Keeps
Roses and Mother K. Within the partnership model, the Company seeks to identify
new lines of distribution and provide innovation through development of new item
that enhance the brands overall image and consumer adoption,



In addition to developing products for its EN Brands, the Company develops and
manufactures products for well-known brands in the entertainment and theme park
industry. For over 20 years, the Company has developed, manufactured and
supplied the entertainment and amusement park industry with exclusive products
that are often only available to consumers inside venues such as Disney Parks
and Resorts, Disney Stores, Universal Resorts, Sea World, Sesame Place, Busch
Gardens, Merlin Entertainment, and Madison Square Garden. For the customers
listed above, the Company has developed products for core brands such as Harry
Potter, Frozen, Marvel, and Star Wars.



Once most consumer products are ideated, developed, manufactured, and possibly
even licensed, they must be packaged and distributed. Currently, we maintain a
logistics center in Clearwater, FL. The Company generates revenue from the sale
of custom packaging for many of the products that have run through our NPD or
in-house product development process. The Company also sells packaging products
to a number of other entities that are not related to the Company's product
development process, including pharmaceutical and e-commerce companies. When
packaging of products is complete, we typically ship products using our own
trucks rather than relying on a common carrier. For packaging products, the
Company does not have long-term agreements with customers, and instead
manufactures and sells its packaging products subject to purchase orders from
its customers.



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Once a product is ready for distribution, consumer awareness must be raised in
order to the sell the product. Accordingly, the Company has begun to pursue a
three-prong media strategy. First, the Company is seeking to re-release episodes
of the 'Everyday Edisons' television program, while simultaneously seeking a
distribution partner for forthcoming episodes. The Company intends to generate
revenue from the Everyday Edisons brand by entering into a contract with a
broadcast network or online streaming service. Second, the Company is developing
a proprietary e-learning platform. The Company intends to generate revenue from
the e-learning platform through the sale of subscription-based plans. Third, the
Company is seeking to expand its web presence by acquiring or creating other
innovator-facing internet media properties. The Company intends to generate
revenue from such internet media through the display of paid advertisements

on
its properties.



COVID-19



COVID-19 has caused and continues to cause significant loss of life and
disruption to the global economy, including the curtailment of activities by
businesses and consumers in much of the world as governments and others seek to
limit the spread of the disease, and through business and transportation
shutdowns and restrictions on people's movement and congregation.



As a result of the pandemic, we have experienced, and continue to experience,
weakened demand for our traditional products. Many of our customers have been
unable to sell our products in their stores and theme parks due to
government-mandated closures and have deferred or significantly reduced orders
for our products. We expect these trends to continue until such closures are
significantly curtailed or lifted. In addition, the pandemic has reduced foot
traffic in the stores where our products are sold that remain open, and the
global economic impact of the pandemic has temporarily reduced consumer demand
for our products as they focus on purchasing essential goods.



In the United States and Asia, many of our key accounts remain closed or are
operating at significantly reduced volumes. As a result, we have made the
strategic decision to expand our operations through our Edison Nation Medical
("Ed Med") division. Through Ed Med, the Company wholesales Personal Protective
Equipment ("PPE") products and proprietary branded hand sanitizer through an
online portal for hospitals, government agencies and distributors.

Given these factors, the Company anticipates that the greatest impact from the COVID-19 pandemic in fiscal 2020 occurred in the first quarter of 2020 and resulted in a net sales decline as compared to the first quarter of 2019.

In addition, certain of our suppliers and the manufacturers of certain of our
products were adversely impacted by COVID-19. As a result, we faced delays or
difficulty sourcing products, which negatively affected our business and
financial results. Even if we are able to find alternate sources for such
products, they may cost more and cause delays in our supply chain, which could
adversely impact our profitability and financial condition.



We have taken actions to protect our employees in response to the pandemic,
including closing our corporate offices and requiring our office employees to
work from home. At our distribution centers, certain practices are in effect to
safeguard workers, including a staggered work schedule, and we are continuing to
monitor direction from local and national governments carefully. Additionally,
our two retail locations have been closed until further notice.

As a result of the impact of COVID-19 on our financial results, and the anticipated future impact of the pandemic, we have implemented cost control measures and cash management actions, including:

? Furloughing a significant portion of our employees; and

? Implementing 20% salary reductions across our executive team and other members of upper level management; and

? Executing reductions in operating expenses, planned inventory levels and non-product development capital expenditures; and

? Proactively managing working capital, including reducing incoming inventory to align with anticipated sales.

Business Model

New product ideas have little value without the ability and skill required to
commercialize them. The considerable investment and executional "know how"
needed to initiate a process - from idea to product distribution - has always
been a challenge for the individual innovator.

Vinco Ventures' business model is designed to take advantage of online marketplace and crowdfunding momentum for our future growth, in order to mitigate new product development risk while allowing for optimized product monetization based on a product's likelihood to succeed.

To that end, Vinco Ventures empowers and enables innovators and entrepreneurs to
develop and launch products, gain consumer adoption and achieve commercial scale
efficiently at little to no cost.

The Vinco Venture New Product Development & Commercialization Platform

Indeed, the cornerstone of Vinco Ventures' competitive advantage is its
proprietary and web-enabled new product development ("NPD") and
commercialization platform. The platform can take a product from idea through
ecommerce final sale in a matter of months versus a year or more for capital
intensive and inefficient new product development protocols traditionally used
by legacy manufacturers serving "big box" retailers.



The Company's web-enabled NPD platform is designed to optimize product licensing
and commercialization through best-in-class digital technologies, sourcing /
manufacturing expertise and one of the largest sets of go-to-market solutions.
This unique set of resources and capabilities have proven to be a reliable
catalyst for sales success.



In order to expand the Company's universe of registered innovators and
entrepreneurs submitting ideas on the Edison Nation NPD web platform, the
Company has entered a global agreement for distribution of two existing
13-episode seasons of the Company's Everyday Edison TV series with a leading
digital media service company. The series will be available in its original
English version as well as voiceover adaptations in German, French, and Spanish.
Distribution is planned for Europe and the Middle East through digital content
providers such as Amazon Prime Video.

Product Submission Aggregation

Interested innovators enter the Vinco Ventures web site to register for a free
account by providing one's name and email address. The member then creates a
username and password to use on the site. Once registered, the member is
provided with their own unique, password protected dashboard by which they can
begin submitting ideas and join online member forums to learn about industry
trends, ask and seek answers to common questions, engage in member chats, and
stay informed of the latest happenings at Vinco Ventures. They can also track
the review progress of ideas they submit through their dashboard.



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Vinco Ventures accepts ideas through a secure online submission process. Once a
member explores the active searches in different product categories being run on
the platform for potential licensees seeking new product ideas to be
commercialized, the member can submit their new product ideas for processing.
Vinco Ventures regularly works with different companies and retailers in various
product categories to help them find new product ideas.

Registered members pay $25 to submit an idea. This submission fee covers a portion of the cost to review each idea submitted to the platform. There are no additional fees after the submission fee.

Although the platform might not have an active search that matches the innovator's idea, the Edison Nation Licensing Team hosts an ongoing search for new consumer product ideas in all categories.

"Insider Membership" is Vinco Ventures' premium level of membership. Insiders
receive feedback on all their ideas submitted and gain access to online features
that are not available to registered members. In addition, Insiders pay $20 for
each idea submitted (20% discount vs. a registered member), can opt-in ideas for
free, as well as receive other benefits. An annual membership costs $99, or
$9.25 / month automatically debited from a credit card each month. Also included
online is feedback to the innovator on the status of each stage of the process
and notification when ideas are not selected to move forward during any stage in
the review process.

Insiders also have access to the Insider Licensing Program (the "ILP"). The
primary benefit of the ILP is having the Vinco Ventures Licensing team working
directly on an innovator's behalf to help secure a licensing agreement with one
of the company's manufacturing partners. If an idea is selected for
commercialization by a retail partner, Edison Nation will invest in any
necessary patent applications, filings and maintenance. The innovator's name is
included on any patent or patent application that Vinco Ventures files on the
member's behalf after the idea has been selected.



In addition to the above member programs, the Vinco Ventures ASOTV ("As Seen on
TV") Team hosts a search for new products suitable for marketing via DRTV and
subsequent distribution in national retail chains including mass merchandisers,
specialty retail, drug chains and department stores.



Product Submission Review



Led by the Company's NPD Licensing Team (which has over 150 years of combined
experience in a variety of industries and product categories), all ideas
submitted by innovators through the Company's website are reviewed and assessed
through an 8-stage process. Vinco Ventures' product idea review process is
confidential with non-disclosure agreements executed with every participating
registered or "Insider" member.



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The NPD platform's database of over 85,000 product ideas helps determine which
inventions have a substantial market opportunity quickly through proprietary
algorithms that have been developed incorporating continuous learning from
marketplace experience and changes in category requirements.



Selected ideas are assessed by the NPD Licensing Team based on nine key factors:
competing products, uniqueness, retail pricing, liability & safety,
marketability, manufacturing cost, patentability, consumer relevant features and
benefits, and commercial-ability.



The time required to review ideas depends upon different variables, such as: the
number of searches concurrently running on the Vinco Ventures platform, idea
volume and complexity of the search, how many presentation dates to licensees
are pending, and the date an idea is submitted.



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Presentation dates to potential licensees are usually set a few weeks following
the close of the search. After the presentation has been given to a licensing /
retail partner, the partner has 45 days to 6 months to select ideas on which
they will move forward.

The Insider Licensing Program (ILP program) incorporates a four-stage process:

? Stage #1 - Preliminary Review: The NPD licensing team performs a preliminary

review to ensure an invention meets the program criteria. Factors that might

stall an idea from moving forward include: an invention is cost-prohibitive,

has engineering challenges, and/or major players in the marketplace have

already launched products like it. If none of these apply, an idea will be

approved and move on to the preparation phase.

? Stage #2 - Preparation: The NPD licensing team performs a best partner review.

Vinco Ventures' retail and manufacturing contacts are assessed, and the team

    begins to plan which licensors would be the best fit for an idea. A gap
    analysis and visits the store shelves are executed to gain greater
    understanding of marketplace potential.

? Stage #3 - Pitching: At this phase, an idea can become a "Finalist." The NPD

team begins to proactively pitch an idea to potential licensees using a

proprietary presentation system. When a company expresses interest, the team

proceeds into term sheets and negotiations while staying in constant contact

with the prospect until the best possible deal is struck for the innovator.

? Stage #4 - Outcome: In the end, the market decides what products will be

successful. There are no guarantees. If for some reason Edison Nation is not

successful in finding a licensing partner, a complete debrief is given to the

    Insider.




Due to the public nature of licensing, Vinco Ventures only accepts ideas from
Insiders that are patented or patent-pending. A valid provisional patent
application is required. The cost of submitting an idea to the Insider Licensing
Program is $100, and a member must be an "Insider" to be considered.



The Vinco Ventures ASOTV new product development process follows a six-stage
protocol appropriate for the broadcast-based sales channel. For more information
regarding the ASOTV process, the Edison Nation NPD platform, its features and
member benefits, visit https://app.edisonnation.com/faq.

Acquisition of Intellectual Property

Once an innovator's idea is judged to be a potentially viable, commercial product and selected for potential commercialization, the Company acquires intellectual property rights from the innovator.

Once an innovator's intellectual property is secured, the innovator's product
idea can then either be licensed to a manufacturer or retailer or developed and
marketed directly by Vinco Ventures. In either case, Vinco Ventures serves as
the point-of-contact with the innovator for term sheets, royalty negotiation and
concluding licensing agreements. Edison Nation also maintains contact with the
innovator to keep them engaged during product development.



In general, innovators are paid a percentage of the Company's revenue from the
commercialization of the innovator's intellectual property. This percentage
varies with the Company's investment in the development of the intellectual
property, including whether the Company decides to license the innovator's idea
for commercialization or instead, to directly develop and market the innovator's
idea.



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One Company Initiative



During the first quarter of 2019, Vinco Ventures began the process to
consolidate all operating companies' businesses into distinct business units of
Edison Nation, which allows the Company to focus on growing sales and leveraging
operations. The units consist of:



? Innovate. The Vinco Ventures Platform. Responsible for the innovation platform
that helps innovators go from idea to reality. This is accomplished by
optimizing new product election processes through deeper analytics to predict
success on platforms like crowdfunding and web market places like Amazon, while
simultaneously driving brand awareness of the platform by producing content for
innovators and innovators on media platforms including our own Everyday Edison's
television show.



? Build and launch. Consolidating our teams of product designers and developers
who take the product from the concept to the consumers' hand. These are
distributed by geography, industry skillset and expertise in the development
process to ensure efficient product build and launch. The bulk of operations are
part of this business unit, and the company will continue to develop this unit
to meet the needs of our product launch schedule.



? Sell. Our Omni-channel sales effort is divided into three groups; (1)
business-to-business revenue opportunities including traditional brick and
mortar retailers (2) online market places and direct-to-consumer revenue
opportunities, and (3) our NiTRO Team (Near Term Revenue Opportunities). NiTRO,
identifies brands and products lines that would benefit from being part of Vinco
Ventures. The team seeks to a find a mutually beneficial transaction to
accomplish that goal.

Product Design and Development

With product design, product prototyping and creation of marketing assets all resourced with expert Vinco Ventures in-house capabilities, we have made protracted, high-cost, high-risk research and development models obsolete.

Vinco Ventures custom designs most products in-house for specific customers and
their needs. We utilize our existing tooling to produce samples and prototypes
for customer reviews, refinement and approval, as well as our in-house packaging
design and fabrication resources.



The Company's design and product development professionals are dedicated to the
commercialization and marketability of new product concepts advanced through the
company's NPD platform and for licensors / partners like Disney World and
Universal Studios.



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No matter the product, Vinco Ventures' objective is to optimize its
marketability, function, value and appearance for the benefit of the consumer
end user. From concept and prototyping, through design-for-manufacture, special
attention is paid to a product's utility, ease of use, lowest cost bill of
materials, and how it "communicates" its features and benefits through design.



The combined experience and expertise of the Company's team spans many
high-demand categories including household items, small appliances, kitchenware,
and toys. The Company's in-house capabilities are complimented by third-party
engineering and prototyping contractors, like Enventys Partners, and
category-specific expert resources within select manufacturers.



Paths to Market



After an innovator's idea has been selected and then developed, Vinco Ventures'
NPD and commercialization platform - powered by team of experienced licensing
experts and backed by our scalable manufacturing and fulfillment supply chain
infrastructure - provides innovators with a clear and unencumbered set of paths
to market.

Matching the Innovation with the Licensing Community

Vinco Ventures partners with many of the biggest and most well-known consumer
products companies and retailers. They use the Company's platform as a "think
engine" to develop targeted products, significantly reduce research and
development expense, and expedite time to market.



Each potential licensee of an innovator's idea publishes an exclusive page on
the Vinco Ventures web site with innovation goals and a timeline for their
search. Appropriate new product ideas are submitted in 100% confidence with all
intellectual property safely guarded.

Once the search concludes, Vinco Ventures presents each with the best patent protected, or patentable ideas that can be selected for development.

Licensing partners and customers include Amazon, Bed, Bath & Beyond, Church &
Dwight, Black & Decker, HSN, Worthington Industries, Pampered Chef, Boston
America Corp., Walmart, Target, PetSmart, "As Seen on TV," Sunbeam, Home Depot,
and Apothecary Products.

Online Marketplace and Crowdfunding

Vinco Ventures has established a commercialization path to include the
development and management of crowdfunding campaigns. This is evolving to be a
engine for future growth. The benefits of crowdfunding include increased product
testing efficiency, decreased financial risk, and the ability to get closer to
the end consumer, simultaneously.

The ability for consumers to re-order product not only gauges marketplace demand, but it can also be leveraged as a quantitative "proof point" for potential sales to licensees. Most importantly, the money pledged for orders can be used to finance manufacturing and ecommerce launch marketing costs as negative working capital.

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Manufacturing, Materials and Logistics

Once a product's path to market is successfully identified, Vinco Ventures produces and commercializes the product either through (1) licensing partnerships, or (2) through a direct-to-market path via ecommerce or traditional retail distribution.

To provide greater flexibility in the manufacturing and delivery of products,
and as part of a continuing effort to reduce manufacturing costs, Vinco Ventures
has concentrated production of most of the Company's products in third-party
manufacturers located in China and Hong Kong. The Company maintains a fully
staffed Hong Kong office for sourcing, overseeing manufacturing and quality
assurance.



Vinco Ventures' contracted manufacturing base continues to expand, from two
major facilities to 4 to-date. These include two manufacturers required to
produce Cloud B children's sleep products. Based on anticipated manufacturing
requirements, this footprint may expand significantly by the end of 2019. The
Company also continues to explore more efficient and expert manufacturing
partners to gain greater economies of scale, potential consolidation, and cost
savings on an on-going basis.

Products are also purchased from unrelated enterprises with specific expertise in the design, development, and manufacture those specialty products.

We base our production schedules on customer orders and forecasts, considering
historical trends, results of market research, and current market information.
Actual shipments of ordered products and order cancellation rates are affected
by consumer acceptance of product lines, strength of competing products,
marketing strategies of retailers, changes in buying patterns of both retailers
and consumers, and overall economic conditions. Unexpected changes in these
factors could result in a lack of product availability or excess inventory

in a
product line.

Most of our raw materials are available from numerous suppliers but may be subject to fluctuations in price.

Sales, Marketing and Advertising

Our Omni-channel sales effort is divided into three groups: (1)
business-to-business revenue opportunities including traditional brick and
mortar retailers, (2) online market places and direct-to-consumer revenue
opportunities, and (3) our NiTRO Team (Near Term Revenue Opportunities). NiTRO,
identifies brands and products lines that would benefit from being part of
Edison Nation. The team seeks to a find a mutually beneficial transaction to
accomplish that goal.

Vinco Ventures' business to business team sells products through a diverse
network of manufacturers, distributors and retailers. New customer prospects are
gained through outbound sales calls, trade show participation, web searches,
referrals from existing customers.

The online team for the Company has expertise in selling products on platforms such as the Amazon marketplace as well as portals like Walmart.com and "crowd-funded" websites such as Kickstarter and Indiegogo.

The NiTRO team identifies small, unique brands that could benefit from becoming
part of a larger consumer products organization with more resources. The team
seeks to negotiate a mutually beneficial agreement whereby the respective
branded products become part of Vinco Ventures' portfolio of consumer products.



In order to expand the Company's universe of registered innovators and
entrepreneurs submitting ideas on the Vinco Ventures NPD web platform, the
Company has entered a global agreement for distribution of two existing
13-episode seasons of the Company's Everyday Edison TV series with a leading
digital media service company. The series will be available in its original
English version as well as voiceover adaptations in German, French, and Spanish.
Distribution is planned for Europe and the Middle East through digital content
providers such as Amazon Prime Video.



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Sources of Revenue

The Company aggressively pursues the following three sources of sales volume:

? Our branded products sold through traditional retail channels of distribution

and other channels of business to business distribution.

? Our branded products sold through direct to consumer platforms such as the

Amazon marketplace as well as portals like Walmart.com and "crowd-funded"

websites such as Kickstarter and Indiegogo.

? Custom products and packaging solutions that the Company develops and

manufactures for partners such as Disney, Marvel, Madison Square Garden and

Universal Studios.

? Member idea submission and ILP program fees: $25 per submission (registered

members); $20 per submission (Insider members); $100 per submission (ILP

members)

? Licensing agents: We match an innovator's intellectual property with vertical

product category leaders in a licensing structure whereby the innovator can

earn up to 50% of the contracted licensing fee. Product categories include

kitchenware, small appliances, toys, pet care, baby products, health & beauty

aids, entertainment venue merchandise, and housewares.

? Product principals: We work with innovators directly, providing such

innovators direct access to all of Vinco Ventures' resources. Depending on

case-by-case factors, innovators may receive a range of up to 35% - 50% of

    profits.




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Market Overview



The process for developing and launching consumer products has changed
significantly in recent years. Previously, Fortune 500 and specialty consumer
product companies funded multimillion-dollar NPD divisions to develop and launch
products. These products were sold primarily on "big box" retail shelves
supported by large marketing investments.



The emergence of ecommerce giants, including Amazon and Walmart.com, has
disrupted traditional NPD and commercialization paths and has accelerated a
consumer shift away from "brick and mortar" retailers. The result has been the
bankruptcy or downsizing of many iconic retailers, including Toys R Us, JC
Penney, Macy's, Sears, Kmart, Office Depot, Family Dollar, and K-B Toys, with a
commensurate loss of shelf space and accessible locations.



Moreover, crowdfunding sites, like Kickstarter and Indiegogo, have also
disrupted NPD process cycles and are now "mainstream." In fact, as of October
2018, Kickstarter's cumulative pledged funding exceeded $3.9 billion according
to Kickstarter published data. Statista.com estimates that crowdfunded sales of
products will exceed $18.9 billion by 2021.



These crowdfunding sites have enabled individual innovators and entrepreneurs to
design, prototype and market unique products to millions of potential customers
with significantly lower acquisition costs when compared to the capital and time
required by legacy NPD processes.

Leveraging Evolving Market Opportunities for Growth

The Company believes that its anticipated growth will be driven by five macro factors including:

  ? The significant growth of ecommerce (14% CAGR, estimated to reach $4.9
    trillion by 2021 (eMarketer 2018);

? The increasing velocity of "brick and mortar" retail closures, now surpassing

Great Recession levels (Cushman & Wakefield / Moody's Analytics 2018);

? Product innovation and immediate delivery gratification driving consumer

desire for next-generation products with distinctive sets of features and

    benefits without a reliance on brand awareness and familiarity;

  ? The rapid adoption of crowdsourcing to expedite successful new product
    launches; and

? Utilizing the opportunities to market products over the internet, rather than

through traditional, commercial channels, to reach a much broader, higher

    qualified target market for brands and products.




In addition, we believe that by leveraging our expertise in helping companies
launch thousands of new products and our ability to create unique, customized
packaging, we intend to acquire small brands that have achieved approximately $1
million in retail sales over the trailing twelve-month period with a track
record of generating free cash flow. In addition, we will seek to elevate the
value of these acquired brands by improving each part of their launch process,
based on our own marketing methodologies.



We believe our acquisition strategy will allow us to acquire small brands using
a combination of shares of our common stock, cash and other consideration, such
as earn-outs. We intend to use our acquisition strategy in order to acquire ten
or more small brands per year for the next three years. In situations where we
deem that a brand is not a "fit" for acquisition or partnership, we may provide
the brand with certain manufacturing or consulting services that will assist the
brand to achieve its goals.

One example is Cloud B (www.cloudb.com), a leading manufacturer of products and
accessories that help parents and children sleep better. The Company distributes
its products nationally and in over 100 countries worldwide.



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Founded in 2002 and acquired by Vinco Ventures in October 2018, Cloud B's highly
regarded, award-winning products are developed in consultation with an Advisory
Board of pediatricians and specialists. The Company recently won the Toy of the
Year award from The Toy Association. Cloud B's best-known products are Twilight
Turtle™ and Sleep Sheep™.

Cloud B's products can be purchased on-line (through its own ecommerce site and
other online e-tailers), in specialty boutiques, gift stores, and worldwide at
major retailers including Barnes & Noble, Bloomingdales, Dillard's, Nordstrom,
Von Maur, Harrods of London, and FNAC in France.



Immediate synergies from the Company's acquisition of Cloud B include expanding
Vinco Ventures' West coast footprint by leveraging Cloud B's sizeable
distribution, sales and fulfillment operations. In addition, Cloud B is
leveraging the Vinco Ventures proprietary NPD platform, Hong Kong-based
manufacturer sourcing and management capabilities, and marketing and packaging
resources.

The Company's primary focus since the Cloud B acquisition has been to optimize existing product performance, while helping to develop new product lines leveraging the Vinco Ventures NPD platform.

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Factors Which May Influence Future Results of Operations

The following is a description of factors that may influence our future results
of operations, and which we believe are important to an understanding of our
business and results of operations.

Edison Nation Holdings, LLC Transaction

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 $11,776,696 comprised of (i) $700,000 in cash to Edison Nation
($550,000 of which was subsequently used to purchase the membership interests of
Access Innovation, LLC, which membership interests were then distributed to the
Members), and $250,000 in cash used to pay off a portion of the indebtedness
owed by EN to holders of certain senior convertible debt), (ii) the assumption
of the remaining balance of EN's senior convertible debt through the issuance of
new 4%, 5-year senior convertible notes (the "New Convertible Notes"), in the
aggregate principal and interest amount of $1,428,161 (which amount was
previously disclosed in the Company's Current Report on Form 8-K filed with the
SEC on September 6, 2018 as $1,436,159 due to final adjustments for principal
and accrued interest), which are convertible into 285,632 shares of the
Company's common stock, at the option of the holder 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, and (iv) the issuance of 557,084 shares of the
Company's common stock in satisfaction of the indebtedness represented by
promissory notes payable by EN with a total principal balance of $4,127,602. On
August 19, 2020, the Company issued the 990,000 shares of common stock to the
members of EN, resulting in the Company owning 100% of EN.



Cloud B, Inc. Transaction



On October 29, 2018, the Company entered into a Stock Purchase Agreement with
the Cloud B Sellers. Pursuant to the terms of such Stock Purchase Agreement, the
Company purchased 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 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 incremental gross sales of Cloud B over its 2018
gross sales level. The Earn Out Agreement expires on December 31, 2021. CBAV1,
LLC ("CB1"), a wholly-owned subsidiary of Edison Nation, Inc., owns the senior
secured position on the promissory note to Cloud B, Inc. in the amount of
$2,270,000. In February 2019, CB1, LLC, pursuant to an Article 9 foreclosure
action, perfected its secured UCC interest in all the assets of Cloud B, Inc. 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.



On February 17, 2020, the Company divested its Cloud B, Inc. subsidiary and
entered into an Agreement for the Purchase and Sale of Cloud B, Inc.(the
"Purchase Agreement"), with Pearl 33 Holdings, LLC (the "Buyer"), pursuant to
which the Buyer purchased from the Company (and the Company sold and assigned)
80,065 shares of common stock of Cloud B (the "Cloud B Shares") for $1.00,
constituting a 72.15% ownership interest in Cloud B, based on 110,964 shares of
Cloud B's common stock outstanding as of February 17, 2020. In accordance with
the agreement, all of the liabilities of Cloud B were assumed by Pearl 33.



On February 17, 2020, the Company entered into an indemnification agreement with
Pearl 33 Holdings, LLC in connection with the divestiture of Cloud B, Inc.,
whereby pursuant to such agreement the Company is limited to the issuance of
150,000 shares of the Company's common stock to the Buyer for indemnification of
claims against Cloud B Inc. Please see Note 3 - Acquisitions and Divestitures
for further information.



Impairment



For the year end December 31, 2019, the Company recorded an impairment charge of
$4,443,000 related to our annual impairment assessment. The impairment was a
result of decreased profitability as compared to anticipated profitability in
our businesses acquired in 2018. The Company utilized the simplified test for
goodwill impairment. The amount recognized for impairment is equal to the
difference between the carrying value and the asset's fair value. The valuation
methods used in the quantitative fair value assessment was a discounted cash
flow method and required management to make certain assumptions and estimates
regarding certain industry trends and future profitability of our reporting
units.

Non-Employee Director Compensation

On September 26, 2018, the Compensation Committee of the board of directors
approved the terms of compensation to be paid to non-employee directors for
fiscal year 2018. Compensation for non-employee directors includes an annual
retainer of $15,000, an annual committee meeting fee of $5,000, if such director
chairs a committee of the board of directors, and an award of options to
purchase 20,000 shares of the Company's common stock (the "Options"). The
restricted stock underlying such Options were to vest one year after the grant
date. However, the Options were never granted.



Accordingly, on November 15, 2019, in lieu of granting the Options, the Company
granted the board of directors restricted stock units of 20,000 shares which
vested immediately. In addition, on November 15, 2019, the Company granted each
non-employee director restricted stock units of 30,000 shares, which vested

on
January 1, 2020.



  42







Acquisition of Uber Mom, LLC

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.

Ed Roses, LLC Joint Venture



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.

Acquisition of HMNRTH, LLC Assets

On March 11, 2020, the Company and its wholly owned subsidiary, Scalematix, LLC
(together the "Buyer"), entered into an Asset Purchase Agreement (the
"Agreement") with HMNRTH, LLC (the "Seller") and TCBM Holdings, LLC (the
"Owner") (together Seller and Owner the "Selling Parties") for the purchase of
certain assets in the health wellness industry and related consumer products
industry. Under the terms of the Agreement, Buyer was to remit $70,850 via wire
transfer at Closing and shall issue to a representative of the Selling Parties
Two Hundred Thirty-Eight Thousand Seven Hundred and Fifty (238,750) shares of
restricted common stock. The shares were issued on March 16, 2020 and valued at
$477,500 and cash compensation was made on July 1, 2020.



In addition, the Selling Parties shall have the right to additional earn out
compensation based upon the following metrics: (i) at such time as the purchased
assets achieve cumulative revenue of $2,500,000, the Selling Parties shall earn
One Hundred Twenty-Five Thousand (125,000) shares of common stock; and (ii) at
such time as the purchased assets achieve cumulative revenue of $5,000,000, the
Selling Parties shall earn One Hundred Twenty-Five Thousand (125,000) shares of
common stock. The transaction closed on March 11, 2020.

Global Clean Solutions Agreement and Plan of Share Exchange

On May 20, 2020 (the "Effective Date"), Edison Nation, Inc. (the "Company")
entered into an Agreement and Plan of Share Exchange (the "Share Exchange
Agreement") with PPE Brickell Supplies, LLC, a Florida limited liability company
("PPE"), and Graphene Holdings, LLC, a Wyoming limited liability company
("Graphene", and together with PPE, the "Sellers"), whereby the Company
purchased 25 membership units of Global Clean Supplies, LLC, a Nevada limited
liability company ("Global") from each of PPE and Graphene, for a total of fifty
(50) units, representing fifty percent (50%) of the issued and outstanding units
of Global (the "Purchase Units"). The Company issued 250,000 shares of its
restricted common stock, $0.001 par value per share (the "Common Stock") to PPE,
and 50,000 shares of Common Stock to Graphene, in consideration for the Purchase
Units.

Pursuant to the terms of the Share Exchange Agreement, the Sellers may earn
additional shares of Common Stock upon Global realizing the following revenue
targets: (i) In the event that Global's total orders equal or exceed $1,000,000,
Graphene shall receive 200,000 shares of Common Stock; (ii) In the event that
Global's total orders equal or exceed $10,000,000, PPE shall receive 100,000
shares of restricted Common Stock; and (iii) In the event that Global's total
orders equal or exceed $25,000,000, Graphene shall receive 125,000 shares of
restricted Common Stock. Additionally, the Company shall be entitled to appoint
two managers to the Board of Managers of Global.

Amended Limited Liability Company Agreement

On the Effective Date, the Company entered into an Amended Limited Liability
Company Agreement of Global (the "Amended LLC Agreement"). The Amended LLC
Agreement amends the original Limited Liability Company Agreement of Global,
dated May 13, 2020. The Amended LLC Agreement defines the operating rules of
Global and the ownership percentage of each member: Edison Nation, Inc. 50%, PPE
25% and Graphene 25%.

Secured Line of Credit Agreement

On the Effective Date, the Company (as "Guarantor") entered into a Secured Line
of Credit Agreement (the "Credit Agreement") with Global and PPE. Under the
terms of the Credit Agreement, PPE is to make available to Global a revolving
credit loan in a principal aggregate amount at any one time not to exceed
$2,500,000. Upon each drawdown of funds against the credit line, Global shall
issue a Promissory Note (the "Note") to PPE. The Note shall accrue interest at
3% per annum and have a maturity date of six (6) months. In the event of a
default, any and all amounts due to PPE by Global, including principal and
accrued but unpaid interest, shall increase by forty (40%) percent and the
interest shall increase to five (5%) percent (the "Default Interest").



Security Agreement

On the Effective Date, the Company (as "Guarantor") entered into a Security
Agreement (the "Security Agreement") with Global (as "Borrower") and PPE (as
"Secured Party"), whereby the Company placed 1,800,000 shares of Common Stock
(the "Reserve Shares") in reserve with its transfer agent in the event of
default under the Credit Agreement. In the event of a default that is not cured
by the defined cure period, the PPE may liquidate the Reserve Shares until the
Global's principal, interest and associated expenses are recovered. The number
of Reserve Shares may be increased through the issuance of True-Up shares in the
event the original number of Reserve Shares is insufficient.



  43

Acquisition of TBD Safety, LLC

On September 29, 2020, the Company (as "Purchaser") entered into a Purchase and
Sale Agreement (the "Agreement") with Graphene Holdings, LLC, Mercury FundingCo,
LLC, Ventus Capital, LLC and Jetco Holdings, LLC (together the "Sellers") to
acquire all outstanding Membership Units (the "Units") of TBD Safety, LLC
("TBD"). Collectively, the Sellers own all outstanding Units of TBD. Under the
terms of the Agreement, the Company is to issue a total of Two Million Two
Hundred Ten Thousand Three Hundred Eighty-Two (2,210,382) shares of the
Company's common stock and a total of Seven Hundred Sixty Four Thousand Six
Hundred Eighteen (764,618) shares of a newly designated Preferred Stock (the
"Preferred"). In addition, the Company and Sellers shall enter into a
Registration Rights Agreement (the "Registration Rights Agreement") in favor of
the Sellers obligating the Company to register such Common Stock and shares of
Common Stock to be issued upon conversion of the Preferred within 120 days after
the Closing. The Sellers shall have an Earn Out Consideration - At such time as
the Assets purchased in the Agreement achieve cumulative revenue of $10,000,000,
the Sellers shall earn a total of One Hundred Twenty-Five Thousand (125,000)
shares of Common Stock. The Closing of the transaction occurred on October

16,
2020.

Edison Nation Medical Operations

Edison Nation Holdings, LLC formed Edison Nation Medical ("EN Medical") in May
of 2012. It was a partnership between Edison Nation and Carolinas Healthcare
Systems (now called Atrium). Atrium is the 2nd largest healthcare system in the
US. Carolina Health (Atrium) wanted a way to aggregate and commercialize the
healthcare related innovations that were coming from their physicians, nurses,
and patients, and Edison Nation offered a platform to provide that function.



EN Medical built out a separate platform, leveraging the Edison Nation model to
look for ideas that improved patient care and lowered costs. Over the past three
years, EN Medical collected some great ideas, but the market shifted and EN
found that the licensing model was very difficult as big medical device
companies wanted to acquire companies with sales versus just buying IP and
prototypes. In 2019, certain less complex devices such as Ezy Dose were licensed
to third parties by the Company. Additionally, EN Medical has continued to
explore opportunities in the health and wellness space for products that do not
require FDA approval. Examples of product lines in the health wellness space
that are currently being evaluated include an organic skin care line, essential
oils, supplements for breast feeding, and an all-natural nutritional supplement.



Based upon the emergence of COVID 19 and the increased demand for certain
medical supplies, hand sanitizers and personal protective equipment, Edison
Nation made the strategic decision to have EN Medical develop an online portal
granting hospitals, government agencies and distributors access to its catalog
of medical supplies and hand sanitizers. EN Medical's website is located
at www.edisonnationmedical.com. For purposes of this business description, the
activities of EN Medical are inclusive of Global Clean Solutions ("Global")

as
well.

EN Medical is focused primarily on its proprietary brand of hand sanitizer,
Purple Mountain Clean, that is being produced and sold by the operating
subsidiary, Global. The Purple Mountain Clean Brand is 100% USA Made and is
offered in both gel and liquid formulas. The Purple Mountain Clean sanitizer is
produced with 70% Ethyl Alcohol and is FDA certified. EN Medical offers a
variety of sizes and pumps for Purple Mountain Clean and recently initiated the
production of sanitizer stands that can be customized with a customer's logo or
other promotional artwork. The launching of our EN Medical's brand of sanitizer
did delay certain shipments for the second quarter in 2020 as EN Medical needed
to develop EN Medical's specific formulas and packaging for Purple Mountain
Clean.



As a secondary focus, EN Medical offers medical supplies and personal protective
equipment to government agencies, counties, municipalities and business
customers, Since March 2020, EN Medical has established a network of more than
thirty suppliers located both domestically and abroad. EN Medical primarily
utilizes approximately six core suppliers and has flexibility with its terms
based on the specific terms and conditions of the respective purchase orders for
the respective end customers. The product lines that have received the highest
amount of interest from customers include but are not limited to face coverings,
gloves, medical grade gowns, and wipes.



The competitive landscape for sanitizer and personal protective equipment is
frequently changing. Recently the FDA announced the recall of numerous hand
sanitizer brands. Additionally, many suppliers of personal protective equipment
have failed to complete deliveries and failed to meet order specifications for
the specific products. EN Medical has benefited from successfully fulfilling
orders for government agencies and large business customers that have provided
referrals on behalf of EN Medical which has assisted the Company in winning
other business opportunities. Due to the high demand for items related to the
pandemic, pricing of products can change relatively quickly and customer
expectations for delivery times are often aggressive. EN Medical works
diligently with its core suppliers to meet these challenges and satisfy all
customer requirements in a timely fashion.



EN Medical verifies all FDA certificates of the Company's suppliers and all
compliance documents for our manufacturers and importers. For certain product
lines, EN Medical may consider applying for its own FDA certifications, and the
Company closely monitors the updates with respect to the regulation of personal
protective equipment and hand sanitizers.



COVID-19 has created both opportunity and a considerable amount of uncertainty
across many markets including the sourcing and sale of Personal Protective
Equipment. While we were initially excited regarding the confirmed orders that
we received, we have realized that the supply side of the industry is unable to
keep up with the current global demand. In response, we have adjusted our
corporate guidance in the PPE space from fiscal year 2020 to include the initial
two quarters of 2021 to allow sufficient time for delivery. While we still
remain confident in our confirmed demand and ability to supply the products
required, we have taken a different approach moving forward due to the
uncertainty of timing of production and transportation which has caused the
additional time added to our initial guidance.



  44







Receivables Financing



On November 17, 2020, the Company, through its subsidiary, Edison Nation, LLC
(the "Vendor"), entered into an Inventory Management Agreement (the "Agreement")
with the Forever 8 Fund, LLC ("F8"), an entity which our Chief Executive Officer
holds a 45% ownership interest. Under the terms of the Agreement, F8 desires to
maintain inventory of and sell to Vendor certain Products pursuant to the terms
and conditions set forth in the Agreement. As consideration for the inventory
management services provided under this Agreement, Vendor agrees to pay F8 a fee
for each unit of each Product sold on a Platform determined in accordance with
the fee schedule set forth in the applicable Product Schedule (the "Fee
Schedule") based on the Age of Inventory Sold set forth on the Fee Schedule (the
"F8 Fees"). This Agreement shall commence on the Effective Date and shall
continue in full force and effect until January 31, 2022 (the "Initial Term"),
unless terminated earlier as provided in this Agreement.



On October 29, 2020, the Company, along with its subsidiaries, Edison Nation,
LLC and Ferguson Containers, Inc., entered into a Futures Receivables Sale
Agreement (the "Agreement") with Itria Ventures, LLC whereby the Company agreed
to the sale of $155,000 of receivables for $125,000. The proceeds were used to
fund our receivables for overseas distributors. Christopher B. Ferguson, our
Chairman and Chief Executive Officer, personally guaranteed the prompt and
complete performance of the Company's obligations under the Agreement.



On August 12, 2020, the Company entered into an Amendment to a Purchase of
Inventory and Repurchase Agreement (the "Amendment") dated November 12, 2019.
Under the terms of the Amendment, (i) the repurchase date is extended to
December 10, 2020; and (ii) the Company agreed to pay the Purchaser-Assignee a
commitment fee of $13,053, and (iii) the Company agreed to pay the
Purchaser-Assignee 2% per month for extension periods commencing July 1, 2020
through December 10, 2020.



On February 21, 2020, the Company entered into a receivables financing
arrangement for certain receivables of the Company not to exceed $1,250,000 at
any one time. The agreement allows for borrowings up to 85% of the outstanding
receivable based on the credit quality of the customer. The fee is between 1%
and 2% of the total invoices financed.



On March 31, 2019, the Company entered into a receivables financing arrangement
for specific customer receivables. The agreement allowed for borrowing up to 80%
of the outstanding receivable based on the credit quality of the customer. The
Company's Chairman and Chief Executive Officer personally guaranteed all amounts
due under the agreement. The fee is between 1% and 2% of the total invoice
financed. The proceeds were used for funding the purchase of products sold on
HSN, but the Company is not currently utilizing this receivables financing
arrangement, and therefore no amounts are outstanding under the agreement as of
February 12, 2020.



On November 12, 2019, the Company entered into a Receivables Purchase Agreement
with a financial institution (the "Receivables Purchase Agreement"), whereby the
Company agreed to purchase $225,000 of receivables for $200,000. The Company's
Chairman and Chief Executive Officer as well as NL Penn Capital, LP personally
guaranteed all amounts due under the agreement. NL Penn Capital, LP is owned by
Christopher B. Ferguson, our Chairman and Chief Executive Officer. The proceeds
were used for general working capital.



On November 18, 2019, the Company entered into a Future Receivables Purchase
Agreement with a financial institution (the "Future Receivables Purchase
Agreement"), whereby the Company agreed to purchase of $337,500 of receivables
for $250,000. The proceeds were used to fund our orders with our factories 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.



  45







Tiburon Loan Agreement



On January 2, 2020, the Company entered into that certain Loan Agreement (the
"Second Loan Agreement") with Tiburon Opportunity Fund (the "Lender"), dated
January 2, 2020 (the "Second Loan"). Pursuant to the terms of the Second Loan
Agreement, the Lender agreed to loan the Company $400,000. The Second Loan bears
interest at the rate of 1.5% per month through the term of the Second Loan.
Additionally, the Second 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 Second 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 Second Loan Agreement, the Lender may declare the principal
amount of the Second Loan owing under the Second Loan Agreement at the time of
default to be immediately due and payable. Furthermore, the Second Loan
Agreement grants the Lender a collateral interest in certain accounts receivable
of SRM. On April 24, 2020, the Company and Lender entered into a Debt Conversion
Agreement whereby the Lender was given the right and elected to exercise that
right to convert principal and interest of $424,000 of funds loaned to the
Company into shares of the Company's common stock. The fair value of the
Company's common stock was $2.08 on the date of conversion and the conversion
price was $2.00 per share for a total of 212,000 shares of restricted common
stock issued by the Company.



32E Financing



On December 4, 2019, the Company agreed to issue and sell to 32 Entertainment
LLC ("32E") a 10% Senior Secured Note (the "32E Note"), in the principal amount
of $250,000. The maturity date of the 32E Note is December 4, 2020. In addition,
the Company issued to 32E 10,000 shares of common stock as an inducement to 32E
to purchase the 32E Note. The $250,000 of proceeds from the 32E Note was used
for general working capital needs of the Company and the repayment of debt
related to Horberg Enterprises.



Pursuant to the terms of the 32E Note, on December 4, 2019, the Company also
issued 32E a Common Stock Purchase Warrant (the "32E Warrant") to purchase
50,000 shares of common stock at an exercise price of $1.50 per share. The 32E
Warrant expires on December 4, 2024. The 32E Warrant contains price protection
provisions, as well as a provision allowing 32E to purchase the number of shares
that 32E could have acquired if it held the number of shares of common stock
acquirable upon complete exercise of the 32E Warrant, in the event that the
Company grants, issues or sells common stock, common stock equivalents, rights
to purchase common stock, warrants, securities or other property pro rate to
holders of any class of the Company's securities. If there is no effective
registration statement registering the resale of the shares of common stock
underlying the 32E Warrant, then the 32E Warrant may be exercised cashlessly,
based on a cashless exercise formula. The 32E Warrant also contains a conversion
limitation provision, which prohibits 32E from exercising the 32E Warrant 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
exercise limitation may be waived by 32E with 61 days prior notice, and (ii) 32E
cannot waive the exercise limitation if conversion of the 32E Warrant would
result in 32E having beneficial ownership of greater than 9.9% of the total
issued and outstanding shares of common stock.



In connection with the sale of the 32E Note, also on December 4, 2019, the
Company entered into a registration rights agreement whereby the Company agreed
to register the 10,000 shares of common stock issued to 32E as an inducement on
a registration statement on Form S-1 with the SEC. The Company was required to
have such registration statement declared effective by the SEC within 90
calendar days (or 180 calendar days in the event of a "full review" by the SEC)
following the earlier of 30 days from December 4, 2019 or the filing date of the
registration statement on Form S-1, which such registration statement has not
been filed or timely declared effective. If the registration statement is not
filed or declared effective within the timeframe set forth in the registration
rights agreement, the Company was supposed to be obligated to pay to 32E a
monthly amount equal to 1% of the total subscription amount paid by 32E until
such failure is cured. The Company has not made any such payment 32E. 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.



  46

On May 19, 2020, the Company entered into an Amendment (the "Amendment") to the
32E Note. Under the terms of the Amendment, the Company issued to 32E an Amended
Subordinate Secured Note (the "Replacement Note") in the principal amount of
$200,000 that accrues interest at 16% annually and matures on May 21, 2021. On
May 28, 2020, the Company paid $50,000 toward the principal plus interest in the
amount of $6,250 for a total of $56,250. 32E shall also receive 40,000
restricted stock units and surrender the warrant issued to it in the December 4,
2019 financing transaction. The Company accounted for the Amendment as a
modification.



Other Financing Notes



On January 10, 2020, the Company entered into a 5% Promissory Note Agreement
with Equity Trust Company on behalf of Rawleigh Ralls ("Ralls")("Ralls
Financing") 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 an original issue discount of $17,000, and the Company issued to Ralls a
warrant (the "Ralls Warrant") to purchase 125,000 shares of the Company's common
stock valued at $86,725 estimated using the Black-Scholes option-valuation
model. 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
Ralls valued at $79,860 based on the closing stock price on January 10, 2020.
The fair value of the warrants and incentive shares have been recorded as debt
discount. The maturity date of the Ralls Note is July 10, 2020. On July 14,
2020, the Company entered into an Amendment to Note Agreement and Common Stock
Purchase Warrant (the "Amendment") with Equity Trust Company, a Custodian FBO:
Rawleigh H. Ralls IRA. Under the terms of the Amendment, the parties amended the
terms of the January 10, 2020 Note Agreement (the "Agreement") and Common Stock
Purchase Warrant (the "Warrant") such that; (i) the maturity date of the
Agreement was extended to January 10, 2021, (ii) the Original Issuer Discount
("OID") shall be increased to $34,000, (iii) the Lender shall be issued 33,000
Additional Incentive Shares and (iv) the Company shall prepare and file with the
United States Securities and Exchange Commission a registration statement on
Form S-1 within 30 days of the Effective Date of the Amendment, that registers a
total of 191,000 shares of Common Stock, which such amount of shares is the sum
of 125,000 Warrant Shares, the 33,000 Incentive Shares, and 33,000 Additional
Incentive Shares. On July 14, 2020, the Company issued the 33,000 Additional
Incentive Shares valued at $124,740. On October 12, 2020, the Company issued
125,000 shares of common stock to Ralls, valued at $250,000, related to the
exercise of the Ralls Warrant.



On January 15, 2020, the Company entered into a 5% Promissory Note Agreement
with Paul J. Solit & Julie B. Solit ("Solits")("Solit Financing") 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 an original
issue discount of $7,000, and the Company issued to the Solits a warrant (the
"Solit Warrant") to purchase 50,000 shares of the Company's common stock valued
at $31,755 estimated using the Black-Scholes option-valuation model. 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 the Solits
valued at $30,420 based on the closing stock price on January 15, 2020. The fair
value of the warrants and incentive shares have been recorded as debt discount.
The maturity date of the Solit Note is July 15, 2020. On July 14, 2020, the
Company entered into an Amendment to Note Agreement and Common Stock Purchase
Warrant (the "Amendment") with Paul J. Solit and Julie B. Solit. Under the terms
of the Amendment, the parties amended the terms of the January 15, 2020 Note
Agreement (the "Agreement") and Common Stock Purchase Warrant (the "Warrant")
such that; (i) the maturity date of the Agreement was extended to December 15,
2020, (ii) the Original Issuer Discount ("OID") shall be increased to $14,000
and (iii) the Lender shall be issued 13,000 Additional Incentive Shares. On July
14, 2020, the Company issued the 13,000 Additional Incentive Shares valued

at
$49,140.



On January 17, 2020, the Company entered into a 5% Promissory Note Agreement
with Richard O'Leary ("O'Leary")("O'Leary Financing") 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 an original issue discount of
$3,500, and the Company issued to O'Leary a warrant (the "O'Leary Warrant") to
purchase 25,000 shares of the Company's common stock valued at $16,797 estimated
using the Black-Scholes option-valuation model. 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 valued at $15,535 based on the
closing stock price on January 17, 2020. The fair value of the warrants and
incentive shares have been recorded as debt discount. The maturity date of the
O'Leary Note is July 17, 2020. On July 14, 2020, the Company entered into an
Amendment to Note Agreement and Common Stock Purchase Warrant (the "Amendment")
with Richard O'Leary. Under the terms of the Amendment, the parties amended the
terms of the January 17, 2020 Note Agreement (the "Agreement") and Common Stock
Purchase Warrant (the "Warrant") such that; (i) the maturity date of the
Agreement was extended to January 17, 2021, (ii) the Original Issuer Discount
("OID") shall be increased to $7,000, (iii) the Lender shall be issued 6,500
Additional Incentive Shares and (iv) the expiration date of the Warrant shall be
extended to June 30, 2021. On July 14, 2020, the Company issued the 6,500
Additional Incentive Shares valued at $24,570.



  47

On April 7, 2020, the Company entered into a Securities Purchase Agreement (the
"Agreement") with BHP Capital NY Inc. (the "Investor") wherein the Company
issued the Investor a Convertible Promissory Note (the "Note") in the amount of
$168,000 ($18,000 OID). The $150,000 of proceeds from the Note will be used for
general working capital purposes The Note has a term of six (6) months, is due
on October 7, 2020 and has a one-time interest charge of 2%. In addition, the
Company is to issue the Investor 10,700 shares of Common Stock (the "Origination
Shares") as an origination fee. The transaction closed on April 9, 2020. The
Investor shall have the right at any time to convert all or any part of the
outstanding and unpaid principal, interest, fees, or any other obligation owed
pursuant to this Note into fully paid and non-assessable shares of Common Stock
at a conversion price equal to $2.05 per share.



On April 7, 2020, the Company (the "Borrower") entered into a Securities
Purchase Agreement (the "Agreement") with Jefferson Street Capital, LLC (the
"Investor") wherein the Company issued the Investor a Convertible Promissory
Note (the "Note") in the amount of $168,000 ($18,000 OID). The $150,000 of
proceeds from the Note will be used for general working capital purposes The
Note has a term of six (6) months, is due on October 7, 2020 and has a one-time
interest charge of 2%. In addition, the Company is to issue the Investor 10,700
shares of Common Stock (the "Origination Shares") as an origination fee. The
transaction closed on April 9, 2020. The Investor shall have the right at any
time to convert all or any part of the outstanding and unpaid principal,
interest, fees, or any other obligation owed pursuant to this Note into fully
paid and non-assessable shares of Common Stock at a conversion price equal to
$2.05 per share. On October 7, 2020, the Borrower and Investor entered into a
Forbearance Agreement (the "Agreement") against the Note issued by the Borrower
to the Holder dated April 7, 2020. Under the terms of the Agreement, the
Borrower has requested and the Holder has agreed to temporarily forebear, until
the earlier of (i) December 9, 2020 or (ii) at such time as a default shall
occur under and pursuant to the Purchase Agreement, the Note or the Agreement,
from exercising its right to convert amounts due under the Note into Common
Stock of the Borrower, in exchange for a one time cash payment forbearance fee
equal to $12,500.00 paid upon execution of the Agreement.



On July 29, 2020, the Company issued Jefferson Street Capital, LLC (the
"Investor") a Convertible Promissory Note (the "Note") in the amount of $224,000
($24,000 OID) under the terms of the April 7, 2020 Securities Purchase Agreement
entered into by the parties. The $200,000 of proceeds from the Note will be used
for general working capital purposes The Note has a term of six (6) months, is
due on January 29, 2021 and has a one-time interest charge of 2%. In addition,
the Company issued the Investor 14,266 shares of Common Stock (the "Origination
Shares") as an origination fee. The transaction closed on July 31, 2020. With
regard to conversion of the Note, the Investor shall not have the right to
convert the Note into shares prior to 180 calendar days from the Issue Date.
Provided that the Note remains unpaid, the Investor may elect to convert all or
any part of the outstanding and unpaid principal, interest, fees, or any other
obligation owed pursuant to this Note into fully paid and non-assessable shares
of Common Stock at a conversion price equal to $2.05 per share after 180
calendar Days from the Issue Date.



Paycheck Protection Program

On April 15, 2020, Edison Nation, Inc. (the "Company") entered into a loan
agreement ("PPP Loan") with First Choice Bank under the Paycheck Protection
Program (the "PPP"), which is part of the recently enacted Coronavirus Aid,
Relief, and Economic Security Act ("CARES Act") administered by the United
States Small Business Administration ("SBA"). The Company received proceeds of
$789,852 from the PPP Loan. In accordance with the requirements of the PPP, the
Company intends to use proceeds from the PPP Loan primarily for payroll costs,
rent and utilities. The PPP Loan has a 1.00% interest rate per annum and matures
on April 15, 2022 and is subject to the terms and conditions applicable to loans
administered by the SBA under the PPP. Under the terms of the PPP, certain
amounts of the PPP Loan may be forgiven if they are used for qualifying expenses
as described in the CARES Act.



Greentree Financing

On January 23, 2020, the Company entered into a financing transaction (the
"Greentree Financing") by executing a loan agreement (the "Greentree Loan
Agreement") with Greentree Financial Group, Inc. ("Greentree"), pursuant to
which Greentree purchased a $1,100,000 10% Convertible Promissory Note (the
"Greentree Note") from the Company, and the Company issued to Greentree a
warrant (the "Greentree Warrant") to purchase 550,000 shares of the Company's
common stock. The $1,100,000 in proceeds from the Greentree Note will be used
for general working capital needs of the Company and for the repayment of debt.
On January 24, 2020, the Company used $588,366 of the proceeds from the
Greentree Note to pay off in full the Labrys Note.



  48







On January 29, 2020, the Company and the Greentree entered into an Amendment
Agreement, amending the Greentree Loan Agreement, the Greentree Note, and the
Greentree Warrant to: (i) correct the effective date set forth in the Greentree
Loan Agreement, Greentree Note, and Greentree Warrant to January 23, 2020, (ii)
clarify the terms of the registration right provision in the Greentree Loan
Agreement, and (iii) to ensure that the total number of shares of common stock
issued pursuant to the Greentree Loan Agreement, the Greentree Note, and/or the
Greentree Warrant, each as amended, does not exceed 17.99% of the Company's
issued and outstanding common stock as of January 23, 2020. The Amendment
Agreement also contains a liquated damages provision which requires the Company
to pay Greentree an amount in cash equal to $2.50 per share for any amount of
shares that Greentree would have received pursuant to the Greentree Loan
Agreement, the Greentree Note, and/or the Greentree Warrant, but does not so
receive such shares as a result of the 17.99% cap described above.



Greentree Loan Agreement

Upon execution of the Greentree Loan Agreement, the Company issued to Greentree 100,000 shares of common stock (the "Greentree Origination Shares") as an origination fee, plus an additional 60,000 shares of common stock as consideration for advisory services.

Pursuant to the Greentree Loan Agreement, the Company agreed to pay certain
costs of Greentree, including $15,000 for Greentree's legal fees and transfer
agent fees resulting from conversion of the Note. The Greentree Loan Agreement
also contains representations and warranties by the Company and Greentree, which
the Company believes are customary for transactions of this type. Furthermore,
the Company is subject to certain negative covenants under the Greentree Loan
Agreement, which the Company also believes are also customary for transactions
of this type.



The Greentree Loan Agreement, as amended, also contains a registration rights
provision, pursuant to which the Company is required to prepare and file a
registration statement with the SEC under the Securities Act of 1933, as
amended, registering a total of 1,200,000 shares of common stock issued to
Greentree pursuant to the Greentree Loan Agreement, Greentree Note and Greentree
Warrant. The Company will be required to have such registration statement filed
within 30 days of the effective date of the Greentree Loan Agreement (which, as
amended, is January 23, 2020) and declared effective by the SEC within 105
calendar days following the effective date of the Greentree Loan Agreement. If
the Company fails to file or have declared effective the registration statement
within the timeframe set forth in the Greentree Loan Agreement, or certain other
events occur as set forth in the Greentree Loan Agreement, the Company is
obligated to pay Greentree an amount of liquidated damages equal to $35,000 per
month until such failure is cured. As of the date of this filing, the Company
has failed to have its Registration Statement deemed Effective. In addition to
the registration rights granted to Greentree, the Greentree Loan Agreement
contains a "true up" provision, which requires the Company to issue Greentree
additional shares of common stock during the period beginning on the effective
date of the registration statement until the 90th day after the effective date
of the registration statement, if the average of the 15 lowest daily closing
prices of the Company's common stock is less than $2.00.



Greentree Note



Pursuant to the Greentree Loan Agreement, the Company agreed to issue and sell
to Greentree the Greentree Note, in the principal amount of $1,100,000. The
Greentree Note, as amended, is due and payable October 23, 2020, 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 Greentree Note. The
Greentree Note reiterates the registration rights set forth in the Greentree
Loan Agreement and the Greentree Warrant. There is no prepayment penalty on the
Greentree Note. If the Greentree Note is not prepaid by the 90th day after the
effective date of the Registration Statement, the Greentree is required to
convert the entire amount of principal and interest outstanding on the Greentree
Note at that time, at a price of $2.00 per share, unless an event of default (as
such events are described in the Greentree Note) under the Greentree Note has
occurred, in which case the Greentree 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
Greentree Note mandatorily converts. The Greentree Note also contains a
conversion limitation provision, which prohibits Greentree from converting the
Greentree 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 Greentree with 61
days prior notice, and (ii) Greentree cannot waive the conversion limitation if
conversion of the Greentree Note would result in Greentree having beneficial
ownership of greater than 9.9% of the total issued and outstanding shares of
common stock. On July 23, 2020, the Company issued 320,000 shares of common
stock to Greentree Financial Group, Inc. to satisfy $360,000 principal and
$131,889 interest and fees against a note issued on January 23, 2020. On August
4, 2020, the Company issued 370,000 shares of common stock to Greentree
Financial Group, Inc.in satisfaction of $740,000 principal against a note issued
on January 23, 2020. As of the date of this filing, the Greentree Note is paid
in full.



  49







Greentree Warrant

Pursuant to the Greentree Loan Agreement, the Company also issued Greentree 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
Greentree Warrant. The Greentree 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 Greentree Warrant is greater than $2.00
per share, the Greentree Warrant may be exercised cashlessly, based on a
cashless exercise formula. The Greentree Warrant reiterates the registration
rights set forth in the Greentree Loan Agreement and the Greentree Note. The
Greentree Warrant also contains a repurchase provision, which at any time after
the Company's registration statement is effective and the Company's 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 Greentree
Warrant at a price of $1.00 per share.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results
of operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America, or GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities as of the date of the consolidated financial statements
as well as the reported expenses during the reporting periods. The accounting
estimates that require our most significant, difficult and subjective judgments
have an impact on revenue recognition, the determination of share-based
compensation and financial instruments. We evaluate our estimates and judgments
on an ongoing basis. Actual results may differ materially from these estimates
under different assumptions or conditions.



Our significant accounting policies are more fully described in Note 2 to our
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q.

Components of our Results of Operations

Revenues



We sell consumer products across a variety of categories, including toys, plush,
homewares and electronics, to retailers, distributors and manufacturers. We also
sell consumer products directly to consumers through e-commerce channels.



Cost of Revenues



Our cost of revenues includes inventory costs, materials and supplies costs,
internal labor costs and related benefits, subcontractor costs, depreciation,
overhead and shipping and handling costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of selling, marketing, advertising, payroll, administrative, finance and professional expenses.

Rental Income

We earn rental income from a month-to-month lease on a portion of the building located in Washington, New Jersey that we own.

Interest Expense, Net

Interest expense includes the cost of our borrowings under our debt arrangements.

  50







Results of Operations

Three Months Ended September 30, 2020 versus Three Months Ended September 30, 2019

The following table sets forth information comparing the components of net (loss) income for the three months ended September 30, 2020 and 2019:

                                           Three Months Ended                  Period over
                                              September 30,                   Period Change
                                          2020             2019             $               %
Revenues, net                         $  4,251,147     $  3,532,645     $  718,502           20.34 %
Cost of revenues                         2,668,864        2,544,058        124,806            4.91 %
Gross profit                             1,582,283          988,587        593,696           60.06 %

Operating expenses:
Selling, general and administrative      3,474,844        3,296,323        178,521            5.42 %
Operating loss                          (1,892,561 )     (2,307,736 )      415,175          -17.99 %

Other (expense) income:
Rental income                               25,704           25,704              -            0.00 %
Interest expense                        (1,004,626 )       (349,172 )     (655,454 )        187.72 %
Total expense                             (978,922 )       (323,468 )     (655,454 )        202.63 %
Loss before income taxes                (2,871,483 )     (2,631,204 )     (240,279 )          9.13 %
Income tax expense                               -                -              -            0.00 %
Net loss                                (2,871,483 )     (2,631,204 )     (240,279 )          9.13 %
Net loss attributable to                   (37,439 )        (49,103 )       11,664          -23.75 %
noncontrolling interests
Net loss attributable to Vinco        $ (2,834,044 )   $ (2,582,101 )   $ (251,943 )          9.76 %
Ventures, Inc.




Revenue



For the three months ended September 30, 2020, revenues increased by $718,502 or
20.34%, as compared to the three months ended September 30, 2019. The increase
was primarily attributable to the increases in the Company's revenue through its
Ferguson Containers subsidiary and Cloud B branded products compared to the

prior year.



Cost of Revenues



For the three months ended September 30, 2020, cost of revenues increased by
$124,806 or 4.91%, as compared to the three months ended September 30, 2019. The
increase was primarily attributable to the increase in total consolidated
revenues.



Gross Profit



For the three months ended September 30, 2020, gross profit increased by
$593,696, or 60.06%, as compared to the three months ended September 30, 2019.
The increase was primarily a result of the increase in revenues. For the three
months ended September 30, 2020, gross profit percentage increased to 37.2%, as
compared to 28.0% for the three months ended September 30, 2019. The increase in
gross margin was due to the increase in the Ferguson Containers business and
fixed costs included in cost of goods sold that did not increase with the
revenue increase. In addition, the Company had favorable product mix of goods
sold to customers related to increased sales in our higher margin Cloud B
branded business.



Operating Expenses

Selling, general and administrative expenses were $3,474,828 and $3,296,323 for
the three months ended September 30, 2020 and 2019, respectively, representing
an increase of $178,521, or 5.42%. The largest increases included an increase of
stock-based compensation of approximately $1,008,000 and approximately $329,000
selling expense offset by wages and benefits of approximately $318,000, general
expense of approximately $244,000, investor relations of approximately $157,000,
legal of approximately $155,000, professional fees of approximately $222,000,
and travel of approximately $96,000.



Rental Income

Rental income was $25,704 for both the three months ended September 30, 2020 and 2019.

  51







Interest expense



Interest expense was $1,004,626 for the three months ended September 30, 2020
versus $349,172 in the previous three months ended September 30, 2019. The
increase in interest expense was related to increased borrowings of debt during
2020.



Income tax expense

There was no income tax expense for the three months ended September 30, 2020 and September 30, 2019.

Nine Months Ended September 30, 2020 versus Nine Months Ended September 30, 2019

The following table sets forth information comparing the components of net (loss) income for the nine months ended September 30, 2020 and 2019:

                                            Nine Months Ended                   Period over
                                              September 30,                    Period Change
                                          2020             2019              $               %
Revenues, net                         $ 14,798,283     $ 15,239,434     $   (441,151 )        -2.89 %
Cost of revenues                         9,977,060       10,413,868         (436,808 )        -4.19 %
Gross profit                             4,821,223        4,825,566           (4,343 )        -0.09 %

Operating expenses:

Selling, general and administrative     10,438,487        9,738,107        

 700,380           7.19 %
Operating loss                          (5,617,264 )     (4,912,541 )       (704,723 )        14.35 %

Other (expense) income:
Rental income                               77,111           77,111                -           0.00 %
Other income                             4,911,760                -        4,911,760         100.00 %
Interest expense                        (2,575,737 )       (875,036 )     (1,700,701 )       194.36 %
Total other expense                      2,413,134         (797,925 )      3,211,059        -402.43 %
Loss before income taxes                (3,204,130 )     (5,710,466 )      2,506,336         -43.89 %
Income tax expense                               -           74,200          (74,200 )      -100.00 %
Net loss                                (3,204,130 )     (5,784,666 )      2,580,536         -44.61 %
Net income attributable to
noncontrolling interests                   (15,198 )        (31,858 )         16,660         -52.29 %
Net loss attributable to Vinco
Ventures, Inc.                        $ (3,188,932 )   $ (5,752,808 )   $  2,563,876         -44.57 %




Revenue



For the nine months ended September 30, 2020, revenues decreased by $441,151 or
2.89%, as compared to the nine months ended September 30, 2019. The decrease was
primarily the result of lower revenues from our amusement park business offset
by increases in our Edison Medical business.



Cost of Revenues

For the nine months ended September 30, 2020, cost of revenues decreased by $436,808 or 4.19%, as compared to the nine months ended September 30, 2019. The decrease was primarily attributable to the decrease in total consolidated revenues.

Gross Profit



For the nine months ended September 30, 2020, gross profit decreased by $4,343,
or 0.09%, as compared to the nine months ended September 30, 2019. The decrease
was primarily a result of the decrease in revenues. For the nine months ended
September 30, 2020, gross profit percentage increased to 32.6%, as compared to
31.7% for the nine months ended September 30, 2019. The increase in gross margin
was due to the increase in the Ferguson Containers business and fixed costs
included in cost of goods sold that did not increase with the revenue increase.



  52







Operating Expenses



Selling, general and administrative expenses were $10,438,487 and $9,738,107 for
the nine months ended September 30, 2020 and 2019, respectively, representing an
increase of $700,380, or 7.19%. The largest increases included an increase of
stock-based compensation of approximately $1,900,00 and approximately $900,000
selling expense offset by wages and benefits of approximately $143,000, general
expenses of approximately $233,000, investor relations of approximately
$209,000, legal of approximately $128,000, professional fees of approximately
$950,000 and travel of approximately $214,000.



Rental Income

Rental income was $77,111 for both the nine months ended September 30, 2020 and 2019.

Interest expense



Interest expense was $2,575,737, an increase of 194.36%, for the nine months
ended September 30, 2020 versus $875,036 in the previous nine months ended
September 30, 2019. The increase in interest expense was related to increased
borrowings of debt during 2020.



Income tax expense



Income tax expense was $0 for the nine months ended September 30, 2020, a
decrease of $74,200 or 100.0%, compared to $74,200 for the nine months ended
September 30, 2019. The decrease was primarily due to the decrease in income
from our foreign operations as well as net operating losses for our domestic
operations.



Non-GAAP Measures

EBITDA and Adjusted EBITDA

The Company defines EBITDA as net loss before interest, taxes and depreciation
and amortization. The Company defines Adjusted EBITDA as EBITDA, further
adjusted to eliminate the impact of certain non-recurring items and other items
that we do not consider in our evaluation of our ongoing operating performance
from period to period. These items will include stock-based compensation,
restructuring and severance costs, transaction costs, acquisition costs, certain
other non-recurring charges and gains that the Company does not believe reflects
the underlying business performance.

For the three and nine months ended September 30, 2020 and 2019, EBITDA and Adjusted EBITDA consisted of the following:

                                            Three Months                       Nine Months
                                         Ended September 30,               Ended September 30,
                                        2020             2019             2020             2019
Net (loss) income                   $ (2,871,483 )   $ (2,631,204 )   $ (3,204,130 )   $ (5,784,666 )

Interest expense, net                  1,004,624          349,172        2,575,735          875,036
Income tax expense                             -                -                -           74,200
Depreciation and amortization            326,437          318,449          938,843          952,019
EBITDA                                (1,540,422 )     (1,963,583 )        310,448       (3,883,411 )
Stock-based compensation               1,176,595          168,097        2,765,022          876,585

Restructuring and severance costs        168,074          153,182          599,219          324,164
Transaction and acquisition costs              -          224,370           82,736          447,908
Other non-recurring costs                 13,109          100,772           53,969          724,137
Gain on divestiture                            -                -       (4,911,760 )              -
Adjusted EBITDA                     $   (182,644 )   $ (1,317,162 )   $ (1,100,366 )   $ (1,510,617 )

EBITDA and Adjusted EBITDA is a financial measure that is not calculated in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP"). Management believes that because Adjusted EBITDA excludes
(a) certain non-cash expenses (such as depreciation, amortization and
stock-based compensation) and (b) expenses that are not reflective of the
Company's core operating results over time (such as restructuring costs,
litigation or dispute settlement charges or gains, and transaction-related
costs), this measure provides investors with additional useful information to
measure the Company's financial performance, particularly with respect to
changes in performance from period to period. The Company's management uses
EBITDA and Adjusted EBITDA (a) as a measure of operating performance, (b) for
planning and forecasting in future periods, and (c) in communications with the
Company's board of directors concerning the Company's financial performance. The
Company's presentation of EBITDA and Adjusted EBITDA are not necessarily
comparable to other similarly titled captions of other companies due to
different methods of calculation and should not be used by investors as a
substitute or alternative to net income or any measure of financial performance
calculated and presented in accordance with U.S. GAAP. Instead, management
believes EBITDA and Adjusted EBITDA should be used to supplement the Company's
financial measures derived in accordance with U.S. GAAP to provide a more
complete understanding of the trends affecting the business.



Although Adjusted EBITDA is frequently used by investors and securities analysts
in their evaluations of companies, Adjusted EBITDA has limitations as an
analytical tool, and investors should not consider it in isolation or as a
substitute for, or more meaningful than, amounts determined in accordance with
U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical
tool are (a) they do not reflect the Company's interest income and expense, or
the requirements necessary to service interest or principal payments on the
Company's debt, (b) they do not reflect future requirements for capital
expenditures or contractual commitments, and (c) although depreciation and
amortization charges are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and non-GAAP measures do
not reflect any cash requirements for such replacements.



  53

Liquidity and Capital Resources

For the nine months ended September 30, 2020, our operations lost $5,617,264, of which approximately $3,703,865 was non-cash and approximately $544,741 was related to transaction costs and restructuring charges for payroll and rents.

At September 30, 2020, we had total current assets of $6,723,083 and current
liabilities of $10,115,092 resulting in negative working capital of $3,392,009,
of which $1,214,698 was related party notes payable and $219,396 was accrued
related party interest expense. At September 30, 2020, we had total assets of
$24,405,755 and total liabilities of $13,780,773 resulting in stockholders'
equity of $10,624,982.



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 condensed 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 three and nine months ended September 30,
2020 included $3,703,865 and related to depreciation, amortization and
stock-based compensation, respectively. In addition, approximately $554,741 was
related to transaction costs, restructuring charges and other non-recurring and
redundant costs which are being removed or reduced.



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:

? Subsequent to September 30, 2020, the Company received $125,000 through a

receivables financing agreement;

? Raise further capital through the sale of additional equity of between $5 to

$10 million;

? Borrow money under debt securities;

? The deferral of payments to related party debt holders for both principal of

$2,667,513 and related interest expense of $219,396;

? Cost saving initiatives related to synergies and the elimination of redundant

costs of approximately $1,500,000, of which approximately $168,000 impacted the

three months ended September 30, 2020;

? Possible sale of certain brands to other customers or manufacturers;

? Edison Nation Medical's procurement of Personal Protective Equipment ("PPE")

and hand sanitizers and the subsequent sale of PPE items and hand sanitizers to

governmental agencies, educational facilities, medical facilities and

   distributors;

? Entry into joint ventures or total/partial acquisitions of operational entities

to expand the sale of PPE and proprietary hand sanitizer through Edison Nation

   Medical; and

? Additional headcount reductions.

  54







Our operating needs include the planned costs to operate our business, including
amounts required to fund working capital and capital expenditures. Our future
capital requirements and the adequacy of our available funds will depend on many
factors, including our ability to successfully commercialize our products and
services, competing technological and market developments, and the need to enter
into collaborations with other companies or acquire other companies or
technologies to enhance or complement our product and service offerings.



Cash Flows

During the nine months ended September 30, 2020 and 2019, our sources and uses of cash were as follows:

Cash Flows from Operating Activities

Net cash used in operating activities for the nine months ended September 30,
2020 was $3,311,310, which included a net loss of $3,204,130. The net loss
included $1,140,875 of cash used by changes in operating assets and liabilities
which was offset by stock-based compensation of $2,765,022 and amortization of
debt issuance costs of $2,015,422. Net cash used in operating activities for the
nine months ended September 30, 2019 was $2,298,186, which included a net loss
of $5,784,666. That net loss included $782,561 of cash provided by changes in
operating assets and liabilities, which were offset by stock-based compensation
of $876,585, depreciation and amortization of $952,019, amortization of debt
issuance costs of $658,126 and amortization of right of use assets of $217,189.

Cash Flows from Investing Activities

Cash used in investing activities for the nine months ended September 30, 2020
was $193,429 which related to the purchase of property and equipment of
$193,429. Cash used in investing activities for the nine months ended September
30, 2019 was $113,612 which related to the purchase of property and equipment.

Cash Flows from Financing Activities

Cash provided by financing activities for the nine months ended September 30,
2020 was $3,476,624 which related to borrowings under lines of credit,
convertible notes payable and notes payable. Cash provided by financing
activities for the nine months ended September 30, 2019 was $1,573,370 which
related mostly to net cash received borrowings under new debt instruments offset
by repayments.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any
relationships with any organizations or financial partnerships, such as
structured finance or special purpose entities, that would have been established
for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes.

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