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From the Wires
iSatori, Inc. Reports Third Quarter Operating Results
Company Expects Strengthened Internet Marketing Capabilities to Benefit Fourth Quarter and 2013 Results as iSatori Prepares for Entry Into Mass Market Retail Channel
By: Marketwire .
Nov. 9, 2012 06:04 PM
GOLDEN, CO -- (Marketwire) -- 11/09/12 -- iSatori, Inc. (OTCQB: IFIT), an emerging leader in the development and marketing of scientifically engineered nutritional supplements for healthier lifestyles, announced its operating results for the third quarter and first nine months of 2012 today. A summary of these results is provided in the following table. A complete report of the Company's operating results will be filed later today with the Securities and Exchange Commission on Form 10-Q. The Company's product revenue improved slightly (net of returns and discounts) during the nine months ending September 30, 2012, to $6.99 million, compared with $6.97 million in the first nine months of 2011. Income (loss) from continuing operations declined from $529,000 in the first nine months of 2011 to a loss of ($243,000) in the first nine months of 2012. However, when the extraordinary gain on the divestiture by the Company of its dormant product line of children's vitamins (approximately $500,000) and merger costs ($562,000) in connection with the Company's merger into the "shell" corporation, Integrated Security Systems, Inc., are excluded, the Company's recorded 2012 restated (non-GAAP) nine-month pretax loss of ($181,000) compared with restated pretax income of $529,000 in the first nine months of 2011. Third quarter product revenue (net of returns and discounts) declined 17% from $2.815 million in the three months ending September 30, 2011 to $2.349 million in the comparable 2012 period. The Company's income (loss) from continuing operations for the 2012 third quarter of ($517,000) compared with a loss from continuing operations in the 2011 third quarter of ($44,000). "Our third quarter results were impacted by planned increases in Internet product marketing costs, as well as higher than expected professional fees," noted Stephen Adelé, Chief Executive Officer of iSatori. "We continue to strategically deploy the working capital procured through our merger with IZZI into projects that should benefit operating results as we move into 2013 and prepare our Company for entry into the Mass Market retail channel." In related news, iSatori confirmed it is in the process of procuring an initial stocking order for its newly reconstituted energy product, Energize, from Walgreens, a Fortune 500 company and the largest drug retailer in the United States. Walgreens, a major mass merchandiser with over 8,300 retail outlets, distributes a variety of consumer goods, including nutritional supplements and energy products. iSatori anticipates receiving an initial stocking order before the end of the year from Walgreens. Other terms and conditions regarding this potential commercial relationship may be publicly disclosed if and when the commercial relationship matures. The Company also announced it will be presenting at the LD Micro Conference (http://www.ldmicro.com/) at the Luxe Hotel in Los Angeles, California, on December 5, 2012. iSatori will join over 130 small- and micro-cap companies invited to present at the conference, which is expected to attract over 600 investment professionals and institutional investors from around the world. Additional details on the LD Micro Conference will be forthcoming in a later news release.
iSatori, Inc.
Summary of Third Quarter and Nine-Month Results
for Calendar Years 2011 and 2012 ($000)
----------------------------------------------------------------------------
Third Quarter Ended Nine Months Ended
Sept. 30 Sept. 30
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
Product revenue (Net of returns and $2,349 $2,815 $6,990 $6,970
discounts)
----------------------------------------------------------------------------
Income (loss) from operations ($428) $76 ($136) $722
----------------------------------------------------------------------------
Income (loss) from continuing ($517) ($44) ($243) $529
operations
----------------------------------------------------------------------------
Less: Divestiture Gain(1) n/a n/a ($500) n/a
----------------------------------------------------------------------------
Less: Merger Costs(2) n/a n/a $562 n/a
----------------------------------------------------------------------------
Restated Income (loss) from ($517) ($44) ($181) $529
continuing operations(3)
----------------------------------------------------------------------------
1) Includes gain on sale of Company's dormant product line of children's
vitamins.
2) Includes all costs related to Company's merger into IZZI (see above).
3) Non-GAAP restatement of Company's profit (or loss) for the applicable
periods taking into account its divestiture gain (see Note 1, above) and
its merger costs (see Note 2, above).
iSatori, Inc. is a consumer products firm which develops and sells nutritional products in the performance, weight loss, and energy markets through online marketing, Fortune 500 retailers, and thousands of retail stores around the world. More information about the Company is available at www.iSatori.com. Statements made in this news release relating to the Company's future sales, expenses, revenue, product developments, and all other statements except statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are both subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in demand for the Company's products, the relationships with our distributors, the results of our marketing efforts, entrance into mass market retail distributors, the availability and price of ingredients necessary to manufacture such products, and the outcome of any current or future litigation regarding such products or similar products of competitors. All forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update any such statement.
iSatori, Inc., iSatori Technologies, Inc. and iSatori Technologies, LLC
Condensed Consolidated Balance Sheets
September 30, December 31,
2012 2011
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,425,419 $ 364,608
Accounts receivable
Trade, net of allowance for doubtful
accounts 1,003,198 937,841
Income tax receivable - 54,841
Other receivables - current portion 35,828 44,722
Inventories 1,200,348 757,250
Assets held for sale 29,338 168,474
Deferred tax asset, net 35,747 35,746
Prepaid expenses 178,721 119,147
------------- -------------
Total current assets 4,908,599 2,482,629
Property and equipment
Vehicle - 67,135
Furniture and fixtures 56,680 50,304
Office equipment 36,600 32,131
Computer equipment 312,883 262,737
Dies and cylinders 49,422 49,422
Less accumulated depreciation (312,484) (324,257)
------------- -------------
Total property and equipment 143,101 137,472
Note Receivable - net of current portion 81,714 81,714
Other assets:
Deferred tax asset, net 216,498 216,498
Deposits and other assets 19,234 37,257
Debt Issuance Costs 6,250 157,242
Deferred Offering Costs - 141,826
------------- -------------
Total other assets 241,982 552,823
------------- -------------
Total assets $ 5,375,396 $ 3,254,638
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 608,670 $ 695,775
Accrued expenses 190,433 446,950
Line of credit, less debt discount 673,155 785,044
Current portion of vendor payables - 1,000
Current portion of notes payable - 489,352
------------- -------------
Total current liabilities 1,472,258 2,418,121
Long-term liabilites
Note payable, less current maturities and
debt discounts - 478,729
Other long-term liabilities 128,422 92,606
------------- -------------
Total long-term liabilities 128,422 571,335
Stockholders' Equity:
Convertible preferred stock, $0.01 par
value, 750,000 shares authorized; 22,500
shares issued and outstanding ($450,000 of
liquidation value) 225 -
Common stock, $0.01 par value, 56,250,000
shares authorized; 12,622,756 and 5,610,100
shares issued and outstanding, respectively 126,228 100,000
Additional paid-in capital 4,149,208 (56,017)
Retained earnings (accumulated deficit) (500,945) 221,199
------------- -------------
Total stockholders' equity 3,774,716 265,182
------------- -------------
Total liabilities and stockholders'
equity $ 5,375,396 $ 3,254,638
============= =============
iSatori, Inc., iSatori Technologies, Inc. and iSatori Technologies, LLC
Condensed Consolidated Statements of Operations
(Unaudited)
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenues:
Product revenue (Net
of returns and
discounts) $ 2,348,773 $ 2,814,966 $ 6,989,596 $ 6,969,690
Royalty revenue 22,439 31,559 83,105 91,632
Other revenue 93,389 114,333 135,103 218,457
----------- ----------- ----------- -----------
Total revenue 2,464,601 2,960,858 7,207,804 7,279,779
Cost of sales 931,095 937,778 2,763,694 2,397,795
----------- ----------- ----------- -----------
Gross profit 1,533,506 2,023,080 4,444,110 4,881,984
Operating Expenses:
Selling and marketing 1,189,092 1,271,886 2,098,778 2,411,218
Salaries and labor
related expenses 393,303 522,124 1,420,976 1,337,388
Administration 357,782 153,228 1,003,302 349,971
Depreciation and
amortization 21,256 (214) 57,000 61,633
----------- ----------- ----------- -----------
Total operating
expenses 1,961,433 1,947,024 4,580,056 4,160,210
----------- ----------- ----------- -----------
Income (loss) from
operations (427,927) 76,056 (135,946) 721,774
----------- ----------- ----------- -----------
Gain on sale of product
lines - - 499,525 -
Other income (expense) (2,096) - 13,933 433
Financing expense (91,277) (71,508) (379,403) (106,355)
Interest expense 4,776 (48,523) (241,301) (87,059)
----------- ----------- ----------- -----------
Income (loss) from
continuing operations (516,524) (43,975) (243,192) 528,793
Income tax benefit
(expense) (2,244) (3,156) (114,543) 268,326
----------- ----------- ----------- -----------
Net income (loss) $ (518,768) $ (47,131) $ (357,735) $ 797,119
=========== =========== =========== ===========
Net income (loss) per
common share $ (0.04) $ (0.01) $ (0.03) $ 0.12
Weighted average shares
outstanding:
Basic and fully
diluted 12,622,756 6,680,203 10,591,630 6,680,203
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