Cool Holdings Provides Corporate Update

MIAMI, Dec. 2, 2019 /PRNewswire/ -- Cool Holdings, Inc. (OTCQB: AWSM) (the "Company" or "Cool Holdings"), the parent company of Simply Mac, Inc., the largest Apple Premier Partner in the U.S., provided a corporate update today regarding its recent accomplishments and its future plans.  Having recently completed the acquisition of Simply Mac, the Company has a target to achieve positive EBITDA and restructure its balance sheet in 2020.

Reinier Voigt, President and Chief Executive Officer of Cool Holdings, commented: "We believe that the key to getting our Company profitable was provided to us on September 25, 2019 when we completed the acquisition of Simply Mac.  Owning the largest Apple Premier Partner in the U.S. provides us with a superb platform upon which to build and transform our Company.  Not unexpectedly, when Interbrand, the global brand consulting firm, recently published its 2019 ranking of top brands, Apple ranked #1 for the 7^th consecutive year.  Simply Mac has been a Premier Partner since 2006 and we continue to believe in the longevity of Apple as a company and its constant innovation and roadmap of future products."

Continuing, Mr. Voigt noted: "With this 'key' now in our possession, we still have a lot of work to do to unlock Simply Mac's potential.  Some of that work includes continual improvements in product purchasing, especially for third party accessories, and avoiding the pitfalls of having excess inventories which hampers working capital, margins and administrative management.  We will endeavor to properly stock our stores with inventory at the peak seasonal sales periods.  Improving our inventory turns and cash-to-cash cycle will be important to achieving profitability, especially in a constrained capital environment.  Simply Mac is one of the top providers of service for Apple products in the U.S. and we need to leverage that.  Service is a category that generates our highest gross margins and we have plans to open smaller footprint stores that focus almost entirely on this offering.  In fiscal 2018, Simply Mac reported $90.2 million in sales.  With that level of sales, for every 1% improvement in gross margin and/or operating profit margin we are able to achieve, we could add approximately $900,000 to the bottom line.  Additionally, we will work with our current debt holders to deleverage our balance sheet and add more permanent capital to our Company, as well as seek new equity for growth."

The Executive Team
Cool Holdings is led by Reinier Voigt, who was appointed in June 2019 as a Director and the Company's President and Chief Executive Officer.  Prior to that, he served as Chief Operating Officer since December 2016.  From May 2015 until August 2016, Mr. Voigt was President and Chief Operating Officer of TEReI International, a merchant bank focused on debt and equity opportunities in the small to mid-cap markets in North and South America, and from September 2006 until April 2015 he was the Chief Operation Officer of Facey Telecom.  Mr. Voigt has more than twenty years of experience in business operations which includes a focus on profit and loss optimization, strategic planning, finance and financial reporting.

The Company's Chief Financial Officer is Vernon A. LoForti, who was appointed to that position in June 2019.  Prior to that, he served the Company as its Vice President and Secretary, beginning after the merger with Cooltech Holding in March 2018.  Mr. LoForti previously served as the Chief Financial Officer of InfoSonics from July 2010 through the date of the merger.  Prior to InfoSonics, Mr. LoForti served as CEO of Overland Storage, Inc., a global supplier of data protection appliances, where he worked for 14 years and led the company's initial public offering as its CFO.  Beginning his career in public accounting with Price Waterhouse in Los Angeles, Mr. LoForti has thirty-five years of experience as a financial executive with U.S. publicly-held companies.

Key to the management team of Simply Mac is Howard Young, Vice President of Sales and Operations.  Mr. Young has over 19 years of sales and operations management experience, and is continually focused on revenue and margin generation, cost savings and process improvements, while ensuring Simply Mac maintains best in class customer service and strong relationships with Apple.  Prior to joining the company in 2011, Mr. Young worked for almost 4 years for Apple as a store leader, and prior to that was in management positions at Best Buy and Pottery Barn.

Store Base
After the opening on November 16, 2019 of the newest Simply Mac store in Louisville, Kentucky, Cool Holdings currently operates a total of 58 Apple retail stores under its 2 brands:  Simply Mac and OneClick.  Located primarily in smaller cities close to a university where Apple has no presence, Simply Mac is an important provider of Apple authorized service in the U.S. There are 42 Simply Mac stores located in 18 states in the U.S. as follows:

The 16 OneClick stores are located as follows:  7 in the Dominican Republic, 6 in Argentina and 3 in Florida.

Immediate Store-Level Focus
Cool Holdings immediate focus will be on the following areas of store operations and performance:

• Florida OneClick Store Rebranding.  Beginning in 2020, the Company plans to rebrand the 3 OneClick stores in Florida as Simply Mac stores in order to consolidate all U.S. locations under the strength of the Simply Mac brand name.
• Capitalize on the synergies between OneClick and Simply Mac.  The Company has already begun the process of cross pollinating the strengths of the two brands.  Simply Mac stores generate superior margins by selling Certified Preowned ("CPO") Apple products and their own brand of extended warranty called "Simple Care."  The Company's OneClick stores are now beginning to offer these products.  One Click did a better job at product management of third-party accessories in terms of a better portfolio of products and better pricing as it took advantage of direct relationships with manufacturers.  This strength is now being implemented at Simply Mac, who previously relied primarily on purchasing accessories only from its distribution suppliers.
• Maximize Simply Mac's strength in repair service.  Simply Mac is a market leader in warranty repair and service of Apple products.  It intends to identify markets and locations where it can open smaller footprint locations focused almost entirely on service.  Such locations would have lower labor, operating and occupancy costs, as well as only minimal inventory or product display levels.  This would translate into significantly higher operating profit margins.
• Examine SKUs sold in each store.  The 80/20 rule is usually in effect in that 20% of retail SKUs generate 80% of gross profit.  This is especially true in third party accessories.  The Company is focusing on buying smarter and managing inventory better to avoid excess inventory and write-downs, increase inventory turns and minimizing working capital needs. The Company's business is very seasonal with peak sales periods occurring around holidays periods throughout the year, consistent with consumer electronic buying patterns.  Consequently, the Company is working to ensure its stores are properly stocked during those periods to maximize ROI.
• Strive to provide superior customer service.  Adopting Simply Mac's founding vision, Cool Holdings will strive to be one of America's Premier Technology Retailers.  Superior customer service is critical to making this a reality, and it is a metric that Apple monitors closely.  The Company will strive to continue to hire the best people, train them properly and provide them with the right incentives to be successful.  Then, as stated in our Simply Mac pledge, "we must take great care of our customers, or someone else will."
• Evaluate under-performing stores to improve overall profitability.  The Company monitors the performance of each and every retail store on a daily basis against the prior year and budget.  Management works to promptly identify underperforming stores, isolate reasons for underperformance, assess management and staffing, find ways to increase sales and/or reduce operating costs and consider relocation where necessary.

Partnership with Torque Esports
On October 29, 2019, Cool Holdings signed a 3-year agreement with Torque Esports Corp., formerly Millennial Esports Corp. (TSX VENTURE: GAME, OTCQB: MLLLF) ("Torque").  This partnership is designed to drive more traffic to all the Simply Mac stores.  Under the agreement, Simply Mac is now the named sponsor and sole and exclusive supplier of Apple products for "America's Fastest Gamer" events produced by Ideas & Cars. Commenting on the partnership, Darren Cox, Torque President and CEO, stated:  "We were thrilled to be working with Simply Mac to not only showcase their brand to the millions of television viewers who watch the documentary series of World's Fastest Gamer around the world, but also to use the incredible tools from Apple they provide to us to actually create the series content.  At Torque, we're not only using Apple MacBook Pros and iMacs to create the documentary series, but we also used the iPhone 11 Pro to shoot our social media content produced throughout the #CaliforniaDreamin finals tour."

Recapitalization Efforts
At September 30, 2019, Cool Holdings had negative shareholders' equity of $11.5 million and $24.2 million principal amount of debt, including $7.9 million owed to GameStop Corp. ("GameStop") in connection with the Simply Mac purchase.  In late October, the Company made an offer to holders of the $16.3 million of promissory and convertible notes, excluding GameStop, to convert those notes into shares of our common stock.  Holders of just over 50% of the notes with an aggregate principal value of $8.3 million elected to convert.  The Company continues to work with its debtholders to manage the remaining outstanding balances while seeking short-term working capital funding to execute its strategy as noted above.

About Cool Holdings, Inc.
Cool Holdings is a Miami-based company currently comprised of Simply Mac and OneClick, two chains of retail stores and an authorized reseller under the Apple Premier Partner, APR (Apple Premium Reseller) and AAR MB (Apple Authorized Reseller Mono-Brand) programs and Cooltech Distribution, an authorized distributor to the OneClick stores and other resellers of Apple products and other high-profile consumer electronic brands.  Additional information can be found on its website at www.coolholdings.com.

Forward-looking and cautionary statements
Forward-looking statements in this press release and all other statements that are not historical facts are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, including those related to our target to achieve positive EBITDA and restructure our balance sheet by the fourth quarter of 2020, our ability to improve the gross margin and operating margin of Simply Mac stores, future expansion of Simply Mac stores, our ability to improve inventory turns, hire the best people, provide superior customer service and evaluate under-performing stores to improve profitability, involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements, including actions by third parties, including Apple.  A list and description of various risk factors related to Cool Holdings, Inc. can be found and reviewed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, both of which can be accessed under the Company's profile at www.sec.gov. These forward-looking statements speak only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release, except as required by law.

All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement. 

SOURCE Cool Holdings, Inc.

Related Links

http://www.coolholdings.com

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