InfoSonics Reports Second Quarter 2013 Results

SAN DIEGO, Aug. 14, 2013 /PRNewswire/ -- InfoSonics Corporation (NASDAQ: IFON), the provider of verykool® wireless handset solutions, today announced results for its second quarter ended June 30, 2013.

"We are pleased with a number of achievements this quarter," said Joseph Ram, president and CEO of InfoSonics.  "Our results reflect the shipment of 432,000 handsets, the third consecutive quarter of record unit shipments.  We were also pleased with our gross profit margin that topped 20%.  Operating expenses included one-time costs related to the second quarter restructuring of our development team, which we estimate will result in annual savings of approximately $500,000.  Other operating metrics for the quarter were also encouraging as we generated $1.8 million of positive cash flow, reduced our days-sales-outstanding in accounts receivable and increased our inventory turns.  We continue to search for ways to expand our business in both existing and new geographic markets."

InfoSonics reported net sales for the second quarter of 2013 of $8.3 million, which represented a $231,000, or 3%, increase from $8.1 million for the second quarter of 2012.  We enjoyed a 64% increase in net sales to carrier customers in Central America and an 8% increase in South America.  In addition, sales to U.S. distributors were greatly improved over the prior year quarter when we first re-entered the U.S. market.  Partially offsetting these improvements was a $1.0 million decline in private label sales, as well as a decrease in sales to non-carrier Latin American distributors.

Gross profit margin as a percent of sales in the second quarter of 2013 was 20.7% compared to 25.3% in the 2012 second quarter.  The higher gross margin in the prior year was principally the result of disproportionately higher margins on private label sales to customers in EMEA and APAC which were nominal in the current quarter.

Operating expenses in the second quarter of 2013 of $2.3 million declined 3% compared to $2.4 million in the 2012 second quarter.  The current quarter included approximately $192,000 in nonrecurring costs related to the June consolidation of our R&D team in Shenzhen, China and the associated reduction of our Beijing workforce.  We also had higher expenses related to legal fees, product certification, personnel and other administrative costs.  The increases were offset by reductions in other areas, primarily a $235,000 reduction in bad debt expense as the 2012 second quarter included a large reserve against the receivable of a former distribution customer.

Other income in the second quarter of 2013 included $527,000 related to the legal defeasance of a previously recorded supplier obligation that had been included in accrued expenses on our balance sheet.

The net loss for the second quarter of 2013 was $47,000, or $0.00 per share, compared to a net loss of $265,000, or $0.02 per share, in the second quarter of 2012.

At June 30, 2013, the Company had $15.7 million in working capital, including $6.4 million in cash, and no outstanding indebtedness.  Cash and restricted cash balances grew by $1.8 million compared to the March 31, 2013 balances primarily as a result of reductions in accounts receivable and inventories.

About InfoSonics Corporation
InfoSonics is a San Diego-based designer, manufacturer and provider of wireless handsets and related products to OEMs, carriers, distributors and consumers in the United States, Latin America, Europe, Africa and Asia Pacific.  The company is committed to delivering quality products with innovative industrial designs that appeal to consumers and offer exceptional value.  InfoSonics sells and supports its own line of products under the verykool® and other private label brands.  Additional information can be found on our corporate website at www.infosonics.com and www.verykool.net.

Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict.  Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as "believes," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates" and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Factors that could cause or contribute to such differences include, without limitation: (1) intense competition internationally, including competition from alternative business models, such as manufacturer-to-carrier sales, which may lead to reduced prices, lower sales, lower gross margins, extended payment terms with customers, increased capital investment and interest costs, bad debt risks and product supply shortages; (2) the ability of our China R&D group to develop new verykool® handsets and successfully deliver them on a timely basis; (3) the ability of the Company to have access to adequate capital to fund its operations; (4) extended general economic downturn in world markets; (5) inability to secure adequate supply of competitive products on a timely basis and on commercially reasonable terms; (6) foreign exchange rate fluctuations, devaluation of a foreign currency, adverse governmental controls or actions, political or economic instability, or disruption of a foreign market, including, without limitation, the imposition, creation, increase or modification of tariffs, taxes, duties, levies and other charges and other related risks of our international operations which could significantly increase selling prices of our products to our customers and end-users; (7) the ability to attract new sources of profitable business from expansion of products or services or risks associated with entry into new markets, including geographies, products and services; (8) cancellation of customer orders or delays in requested delivery dates; (9) an interruption or failure of our information systems or subversion of access or other system controls may result in a significant loss of business, assets, or competitive information; (10) significant changes in supplier terms and relationships, shortages in critical components or delays in product supply or manufacturing lead times that could impact our ability to fulfill customer orders; (11) loss of business from one or more significant customers; (12) customer and geographical accounts receivable concentration risk and other related risks; (13) rapid product improvement and technological change resulting in inventory obsolescence; (14) uncertain political and economic conditions internationally, including terrorist or military actions; (15) the loss of a key executive officer or other key employees and the integration of new employees; (16) changes in consumer demand for multimedia wireless handset products and features; (17) our failure to adequately adapt to industry changes and to manage potential growth and/or contractions; (18) seasonal buying patterns; (19) the resolution of any litigation for or against the Company; and (20) the ability of the Company to generate taxable income in future periods.  Reference is also made to other factors detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. 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.

 

 

 InfoSonics Corporation 

 Consolidated Statements of Operations 

 (Amounts in thousands, except per share data) 

 (Unaudited) 






























 Three months ended 


 Six months ended 



 June 30, 


 June 30, 



2013


2012


2013


2012

 Net sales

$   8,342


$   8,111


$   16,163


$   20,469

 Cost of sales

6,612


6,056


13,051


16,158

 Gross profit

1,730


2,055


3,112


4,311










 Operating expenses: 









 Selling, general and administrative

1,799


1,874


3,542


3,458


 Research and development

500


496


898


996



2,299


2,370


4,440


4,454

 Operating loss

(569)


(315)


(1,328)


(143)










 Other income (expense): 









 Other income (expense)

535


-


586


(65)


 Interest, net

5


50


11


50

 Loss before provision for income taxes

(29)


(265)


(731)


(158)

 Provision for income taxes

(18)


-


(25)


(2)

 Net loss

$      (47)


$    (265)


$       (756)


$       (160)










 Net loss per share (basic and diluted)

$   (0.00)


$   (0.02)


$     (0.05)


$     (0.01)










 Weighted-average number of common shares outstanding 









 Basic and diluted

14,184


14,184


14,184


14,184

 

 InfoSonics Corporation 

 Consolidated Balance Sheets 

 (Amounts in thousands, except per share data) 














 June 30, 


 December 31, 



2013


2012



 (unaudited) 


 (audited) 

 ASSETS 




 Current assets: 





 Cash and cash equivalents

$              6,435


$               5,230


 Restricted cash

-


1,003


 Trade accounts receivable, net of allowance for doubtful accounts of $373 and $339, respectively

7,587


10,247


 Other accounts receivable

90


95


 Inventory

2,456


3,429


 Prepaid assets

2,768


1,521


      Total current assets

19,336


21,525

 Property and equipment, net

235


367

 Other assets

177


229


      Total assets

$           19,748


$            22,121






 LIABILITIES AND STOCKHOLDERS' EQUITY 




 Current liabilities: 





 Accounts payable

$                 881


$               1,514


 Accrued expenses

2,712


3,786


      Total current liabilities

3,593


5,300






 Stockholders' equity: 





 Preferred stock, $0.001 par value, 10,000 shares authorized (no shares issued and outstanding)

-


-


 Common stock, $0.001 par value, 40,000 shares authorized, 14,184 shares issued and outstanding as of June 30, 2013 and December 31, 2012





14


14


 Additional paid-in capital

32,374


32,282


 Accumulated other comprehensive loss

(15)


(13)


 Accumulated deficit

(16,218)


(15,462)


      Total stockholders' equity

16,155


16,821


      Total liabilities and stockholders' equity

$           19,748


$            22,121

 

 InfoSonics Corporation 

 Consolidated Statements of Cash Flows 

 (Amounts in thousands) 

 (Unaudited) 












 For the Six Months Ended 






 June 30, 






2013


2012

 Cash flows from operating activities: 





 Net loss

$   (756)


$     (160)


 Adjustments to reconcile net loss to net cash provided by (used in) 





    operating activities: 






 Depreciation

143


131



 Loss on disposal of fixed assets

47


57



 Provision for bad debts

34


225



 Provision for obsolete inventory

(104)


25



 Stock-based compensation expense

92


117



 (Increase) decrease in: 







 Trade accounts receivable

2,626


1,502




 Other accounts receivable

5


(23)




 Inventory

1,077


(1,720)




 Prepaids

(1,247)


217




 Other assets

52


(246)



 Decrease in: 







 Accounts payable

(633)


(191)




 Accrued expenses

(1,074)


(755)





 Net cash provided by (used in) operating activities

262


(821)





 Cash flows from investing activities: 





 Purchase of property and equipment

(58)


(144)


 (Increase) decrease in restricted cash

1,003


(1)


           Net cash used in investing activities

945


(145)









 Effect of exchange rate changes on cash

(2)


43









 Net increase (decrease) in cash and cash equivalents

1,205


(923)


 Cash and cash equivalents, beginning of period

5,230


11,422


 Cash and cash equivalents, end of period

$  6,435


$  10,499










 Cash paid for interest

$           -


$             -


 Cash paid for taxes

-


-

SOURCE InfoSonics Corporation



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