Xspand Products Lab Inc (NASDAQ: XSPL) is a company that we’ve followed for some time now, and for good reason. At the moment, we are in a world driven by innovation, and Xspand Products Lab is a company that has found a way to capitalize on both, the consumers’ desire for innovative products, and the inventors’ desire to bring their products to market.
A Brief Look At What XSPL Has To Offer
As mentioned above, Xspand Products Lab is in the business of innovation, both feeding the growth in the desire for innovative products among consumers and helping to fuel innovation among inventors. In particular, the company helps to take an initial idea and not only turn it into a product, but manage the process from development to production to commercialization. Here’s a deeper dive into the services offered by the company:
- Product Development – XSPL has an experienced in house team that specializes in product design, engineering, 3D printing, mock-ups, retail packaging and design, multi-language requirements, cost analysis, safety testing, quality assurance testing, compliance, branding, licensing, patents and trademarks and more! Essentially, an inventor with little-to-no experience could bring his idea to the team at Xspand on a napkin, and the team has the ability to turn the napkin design into a real product mock-up, ready for the next step of the process.
- Manufacturing – Once the product has made it through the development process, it’s off to manufacturing. As you could imagine, Xspand has that covered. With manufacturing facilities in both the United States and China as well as two dedicated factories that only produce the company’s products, XSPL is capable of manufacturing more than 20 million units per year. In fact, the company has been in the manufacturing business for more than 50 years, producing products for clients that range from garage inventors to fortune five hundred companies and bringing these products directly to the end consumer.
- Sourcing – When bringing products to the market, sourcing agents can cut into the bottom line. Not to mention, sourcing headaches can cost valuable time. However, XSPL helps save time and reduce costs with their own sourcing experts in the United States and China. Not to mention, with an expansive factory list that provide specialties with reasonable MOQs, the company is capable of offering incredibly competitive pricing.
- Fulfillment & Logistics – Currently, XSPL owns more than 325,000 square feet of warehouse space. Combining this with a full-time logistics team, the company offers a comprehensive scale of logistics services, including:
- Warehouse & Distribution
- Just-in-Time Manufacturing
- Automated Pick & Pack Fulfillment
- Packaging Products & Contract Packaging Fulfillment
- Custom Experts
- Corporate Discount Rates With All Major Parcel Services
- Sales And Marketing – Finally, XSPL helps their clients with the sales and marketing process on a global scale. The company has a dedicated in-house sales and marketing team that has established relationships with Fortune 500 entertainment companies. The company also has a track record of an uncanny ability to use real-time data to strategically market products online, including the sale of products on 3rd-party eCommerce websites like Amazon and Ebay.
Recent News Outlines Exciting Times Ahead
Over the past month, Xspand Products Lab has offered 3 press releases, updating investors on the positive moves it’s making to drive value. On June 7th, the company announced that it has signed a Letter of Intent to build a new facility in Alpha, New Jersey. The facility will be a production facility, designed to improve the company’s U.S.-based production capabilities. The facilities is expected to be approximately 80,000 square feet and will give XSPL the ability to accept and produce orders that exceed the company’s current capabilities with it’s 30,000 square foot facility it currently operates out of in the United States.
In the release, the company also said that it will be consolidated its U.S. based operations of its facilities into the new facility upon completion of the build. As a result, the combined overhead expenses of these subsidiaries are expected to see a meaningful decrease.
One key line of products, known as Pirasta will be one of the first lines heading into development at the new facility. Currently being manufactured at the company’s New Jersey facility, the line has several new brands that will be launching during the upcoming holiday season, being marketed under a sub-line of products known as “made in the USA.”
In a statement, Chris Ferguson, CEO at XSPL, had the following to offer:
The new manufacturing facility being put in place will allow us to grow rapidly and service larger customers and orders, some of which we’ve needed to outsource in the past… In addition, we are looking forward to consolidating both of our wholly owned U.S. subsidiaries—SRM and Fergco—into a central location, which is expected to create numerous cost savings and operational efficiencies.
On June 18th, Xpand Products Lab announced the coming launch of a new product line. In the release, the company announced that it has begun the development of the new line, which will feature interactive light-up consumer products. These products, designed for sale in theme parks and entertainment venue markets, win include wands, swords, necklaces, headwear and other role-play items. The interactive products allow one consumer to throw the color of light chosen on the product to another consumer’s product. Also, these products will read colors and have the ability to mimic the color of the surface they are sat on. Mr. Ferguson outlined the opportunity with the following statement:
Theme parks are always looking for new ways to enhance the customer experience and create an interactive, immersive environment for their patrons… With our new line of interactive light-up consumer products, theme park patrons will be able to interact with each other like never before, allowing any entertainment venue or gathering to become a vibrant and imaginative parade of color.
The light up category has been a rewarding category for Xspand. Our patented light chaser that we launched more than twenty years ago has been and continues to be one of the company’s most successful items. We are truly excited to bring this magical experience to our theme park and entertainment venue partners worldwide.
In the most recent news offered on July 2nd, XSPL announced a key acquisition. The company announced that it has signed a member purchase agreement surrounding 100% of the common membership interest of Edison Nation, LLC. The acquisition came at a total cost of $850,000 cash and 990,000 shares of common stock. Xspand will also assume all Edison Nation debt.
Edison Nation is a company that falls right in line with what Xspand has to offer. Operating in the open innovation space, the company has received more than a hundred thousand idea submissions from just about every class of inventors. As a result, the company has successfully been part of the licensing and sales of products in excess of $250 million at retail. Also, XSPL has agreed to allow Louis Foreman, Founder, CEO and majority shareholder of Edison Nation to join the company as an Independent Director. In a statement, Louis Foreman, CEO at Edison Nation, had the following to offer:
Today, innovation is alive and well, but the needs of our community have grown… With the advent of crowdfunding and e-commerce, the way new products are brought to market has changed. Innovators now need the ability to not only share their ideas but also introduce them to consumers quickly and effectively. Our acquisition by Xspand Products Lab meets these needs by unleashing services and resources to not only develop products, but also to manufacture and distribute them. For 10 years, Edison Nation has been the trusted marketplace for innovators to share their ideas, this is not going to change, it’s only going to get bigger.
The above statement was followed up by Mr. Ferguson with the following:
We are very pleased to welcome the Edison Nation community to the Xspand family… The acquisition of Edison Nation provides not only an experienced team and wholesale selection of micro-brands for us to leverage, but more importantly, provides a platform that I believe will drive future growth for years to come. The ability to efficiently aggregate innovation, combined with Xspand’s de-risked product development model, will enable innovators to rapidly address opportunities in the most efficient manner possible.
We look forward to working with the Edison Nation community to bring their ideas and inventions to life. Together, I am confident that we will be a driving force behind the next wave of internationally recognized products, which we believe may lead to significant value creation both for innovators and our shareholders.
The Opportunity Could Be Tremendous
Digging into a shift we’re seeing in the retail space shows that the company may be in the right place at the right time, and that time may be now. Ultimately, there are three key shifts that we’re seeing in retail, and Xspand Products Lab is at the center of all three:
- Brick And Mortar Locations Are Closing Faster Than They’re Opening – At the moment, we’re seeing a massive decrease in spending at brick and mortar retail locations. In fact, retail stores are closing at a faster rate than they are opening as a shift in how consumers spend their money is taking place. Today, etail is the trend as more consumers spend more money online than ever before. This is perfect for Xspand, a company that has an uncanny ability to use real-time data to expand online sales.
- What Brand Loyalty? – Today, consumers are showing less loyalty to big brands than ever before. As a result, we’re seeing a rise in the sales of independent products that offering innovative answers to consumer problems at a decent price. Once again, this is a specialty of XSPL.
- Innovation – Today’s consumer is more inclined to choose an innovative option over a traditional option in just about any product purchase. This cultural shift only adds value to the products and services being offered by Xspand.
A Stock Worth Considering
For the past few sessions, XSPL has seen declines. However, considering the positive news recently released by the company, I believe that these declines only represent a potential opportunity in the making. At the end of the day, with a new and improved development facility being built, the acquisition of Edison Nation, and the coming launch of a new product line, the company seems to be headed in the right direction. After a successful recent uplisting to the NASDAQ and positive updates from the company, we believe that XSPL is a stock that is well worth consideration.
The author of this article has no positions in any stock mentioned herein and no plans to initiate any positions within the next 72 hours. CNA Finance does have a business relationship with a third party related to Xspand Products Lab. For all relevant disclaimers and disclosures, click here.