Guitammer Second Quarter Revenue Increases 23% To $344,000

WESTERVILLE, Ohio, Aug. 13, 2012 /PRNewswire/ -- The Guitammer Company (OTC BB: GTMM), a leader in low frequency sound and creator of the award-winning line of ButtKicker®-brand low frequency audio transducers that provide an immersive entertainment experience for audiences, today announced second quarter 2012 revenue rose 23% to approximately $344,000 and the higher revenue combined with a 500 basis point improvement in gross margin to 42.1% drove a 39% year-over-year increase in gross profit, which totaled approximately $145,000 in the three months ended June 30, 2012.  

For the first six months of 2012, Guitammer's revenue improved 9.5% over the comparable period in 2011 to $1.1 million and total gross profit improved 15.6% to approximately $451,000.  Total revenue and gross profit for all of fiscal 2011 was $1.3 million and $547,412, respectively.  

Reflecting total financings and debt extinguishment to date in 2012, Guitammer's balance sheet and financial flexibility continue to improve, providing the Company with a solid platform to significantly grow revenues in the second half of 2012 and beyond. 

2012 Second Quarter Financial Highlights and Recent Developments

• Revenues rose 23% year-over-year to approximately $344,000 and gross profit increased 39% to approximately $145,000, reflecting a 500 basis point gross margin improvement to 42.1%.  In the first half of fiscal 2012, total revenues rose 9.5% to approximately $1.1 million and total gross profit of $451,000 compares favorably to total gross profit of $391,000 in the year-ago period.  Approximately 46% of 2012 first half sales were derived from international markets.
• Adjusted EBITDA loss (see reconciliation on page 6 of this press release) improved by 14.6%, or approximately $23,000, to $136,037.  Adjusted EBITDA improved 30%, or $68,000, in the first six months of 2012, compared to the same period a year ago.
• Extinguished $150,000 in debt (inclusive of accrued interest) and reflecting this reduction and prior debt extinguishment, interest expense declined 33% or approximately $38,000 for the quarter and for the first six months of 2012, interest expense declined 35%, or approximately $73,000.
• Raised $770,000 in the second quarter in private placements and reflecting additional proceeds secured subsequent to the end of the 2012 second quarter, year-to-date, Guitammer has raised $1.2 million in growth capital.
• OEM orders from Palliser, a leading Canadian furniture manufacturer, continue to grow as their home theater seats factory-equipped with the ButtKicker Individual Seat Control System and optional wireless system continue to gain traction with consumers in the US and Canada.
• Continues to expand relationship with China-based Sichuan Lumiere Cinema Co. Ltd. (Lumiere Pavilions) to add ButtKicker "4D" experience seats at their theaters with agreements for two additional theaters in quarter. Including an aggregate of previously completed and committed future installations, Lumiere Pavilions has increased its total to approximately 640 of Guitammer's ButtKicker "4D" experience seats and intends to add additional seats in at least one auditorium at all new Lumiere cinemas.
• Back orders as of June 30, 2012 totaled in excess of $300,000.

Mark Luden, CEO of Guitammer stated, "Our second quarter and first half results demonstrate the increasing demand for our innovative products with revenue growth continuing to accelerate as total revenues through the first half of 2012 nearly match the total revenues we achieved in all of 2011.  The momentum is evident across all of our important financial metrics as in addition to the revenue improvement, we continue to grow gross profit, reduce our Adjusted EBITDA loss and interest expense by significant percentages and are achieving consistent progress with improving and strengthening our balance sheet. 

"ButtKicker brand products are clearly gaining in popularity with consumers, retailers, entertainment exhibitors, and musicians around the world.  Accordingly, we see a clear path to further growth in the second half of 2012 as we currently expect to generate significant revenue increases in the third quarter compared to the year-earlier period and also are confident that this momentum will continue into the 2012 fourth quarter.   Further, the unique experiences enabled by our array of products are helping to drive new and/or expanded relationships with strategic partners such as Lumiere Pavilions, Palliser and growing international distributions with companies like AV-Industry (Son-Video) in France.  These relationships combined with our expectations for new strategic initiatives with leading companies in other industries will provide Guitammer with additional growth opportunities."

Recent Developments for Patented ButtKicker Live!® Technology
In addition to growing momentum for the Company's core product set, Guitammer continues to progress with the development and commercialization path of its patented broadcast technology, ButtKicker LIVE!  ButtKicker LIVE! is an emerging technology that enables the excitement, impact and feeling of sporting events to be broadcast along with the sound and video.  Guitammer recently engaged Global Inventures, Inc., a leading alliance management company, (www.inventures.com), to create a framework for its Technology Advisory Group that will bring together a team of technology, broadcast, sports and entertainment industry experts for the purposes of advancing the development and roll-out of ButtKicker LIVE!  In addition, earlier this year Guitammer conducted a successful "alpha" test of ButtKicker LIVE! with a major professional sports league and following this pilot test, the ButtKicker LIVE! technology has been approved for an expanded test in the next few months with a "beta" broadcast test expected to commence late in 2012 in early 2013. 

Mr. Luden added, "ButtKicker LIVE! is a unique, scalable technology that can generate increased viewership and fan loyalty, which in turn would drive additional revenue opportunities for content providers such as sports leagues and programmers, networks and broadcasters, and distributors and operators, as well as for advertisers.  We are making solid progress towards the commercialization of ButtKicker LIVE!, which would complement the growth we are achieving in our core business by opening up new, high-margin, recurring revenue and technology licensing channels."

About The Guitammer Company
The Guitammer Company is a leader in low frequency sound products and technology.  Its innovative and award winning line of patented ButtKicker-brand low frequency audio transducers let users feel low-frequency sound (bass). ButtKicker brand products are used around the world by leading entertainment and theater companies such as AMC, IMAX and Disney in movie theaters and attractions; by world-famous musicians; in home theaters, simulators and for car audio. ButtKicker brand products are distributed by Pearl Drums for musicians under the trade name, "Pearl's Throne Thumper by ButtKicker", and factory installed in home theater seating by Palliser Furniture.  ButtKicker brand products' patented design makes them musically accurate, powerful and virtually indestructible.  The Company is headquartered in Westerville, OH. 

The Guitammer Company's newly patented broadcast technology, ButtKicker LIVE! enables the excitement, impact and feeling of sporting events to be broadcast along with the sound and video. ButtKicker LIVE! puts you into the action, whether you're at home or at the event.  ButtKicker Live! technology is available for cable, satellite, fiber optic, IPTV and over-the-air broadcast and has been successfully tested with several major content (sports) providers.  ButtKicker® and ButtKicker Live!® are registered trademarks of The Guitammer Company.  For additional information, visit www.thebuttkicker.com and www.shakemycouch.com

Safe Harbor:
This letter contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby.  Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability of the Company to successfully implement its turnaround strategy, changes in costs of raw materials, labor, and employee benefits, as well as general market conditions, competition and pricing.  Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this letter will prove to be accurate.  In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as representation by the Company or any other person that the objectives and plans of the Company will be achieved.  In assessing forward-looking statements included herein, readers are urged to carefully read those statements. When used in the Annual Report on Form 10-K, the words "estimate," "anticipate," "expect," "believe," and similar expressions are intended to be forward-looking statements.

- financial tables follow -

Reconciliation of U.S. GAAP Net loss to EBITDA and Adjusted EBITDA:

EBITDA is defined as earnings (loss) before net interest expense, taxes, depreciation and amortization.  Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization, stock warrant expense, payment of stock and warrants to consultants and employee stock-based compensation. Although EBITDA and Adjusted EBITDA are measures of performance calculated in accordance with generally accepted accounting principles ("GAAP"), Guitammer believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate meaningful comparison of the results in the current period to those in prior periods and future periods.  However, investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining Guitammer's operating performance that is calculated in accordance with GAAP.  A reconciliation of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, net loss, follows:

                                                                                                     

SOURCE The Guitammer Company