SAN DIEGO, Nov. 10, 2016 /PRNewswire/ -- InfoSonics
Corporation (NASDAQ: IFON), the provider of verykool®
wireless handset solutions and tablets, today announced results for
its third quarter ended September 30, 2016.
"During the quarter we saw the supply pendulum swing from
over-supply to under-supply as we experienced LCD panel shortages
and delivery constraints of memory and CPUs," said Joseph Ram,
President and CEO of InfoSonics. "These supply issues are
resulting in significant manufacturing cost increases, and
when combined with a soft market environment, have put significant
pressure on both our top and bottom lines. Our focus going
forward is to work aggressively to increase sales, and to improve
our gross margins by centering our efforts on more profitable
accounts. In addition, we are working to drive down operating
expenses by 20% in the fourth quarter compared to the third quarter
to reduce our breakeven point, a task that was aided by the
resolution in September of all our outstanding patent
litigation. Regarding our product offerings, over the last
year we have been in development of a software platform that will
support a suite of services and cloud-based solutions that we hope
to launch in the second quarter of 2017."
We had net sales for the 2016 third quarter of $9.0 million, which represented a $3.2 million, or 26%, decrease from
$12.2 million for the third quarter
of 2015. The decrease reflects our exit from the U.S. market,
as well as a lower level of sales to customers in South America and to U.S. based distributors
selling to Latin America. These declines were partially
offset by increased sales to big box retailers in Mexico. For
the nine months ended September 30,
2016, our net sales were $30.5
million, which represented a $7.1
million, or 19%, decrease from $37.6
million for the comparable nine month period of 2015.
Gross profit in the 2016 third quarter was $884,000, a 56% decrease compared to $2.0 million for the comparable period in
2015. Our gross profit margin as a percent of sales in the
2016 third quarter declined to 9.8% compared to 16.4% for the
comparable period in 2015. The margin erosion reflects
continued price pressure in a competitive market environment,
combined with rising costs from our manufacturing vendors.
For the nine months ended September 30,
2016, gross profit was $3.2 million, a 48% decrease from
$6.2 million for the comparable
period in 2015.
Operating expenses in the third quarter of 2016 were
$1.8 million, a 15% decrease compared
to $2.1 million in the 2015
third quarter. The decrease reflects expense reduction
actions we implemented during the 2016 second quarter. The
largest decreases were in wages and benefits, marketing, travel and
reduced sales commissions on the lower level of sales. We
took additional expense reduction actions at the end of the third
quarter of 2016 which we believe will further decrease operating
expenses in the fourth quarter of 2016. For the nine months
ended September 30, 2016, operating
expenses were $5.6 million, a 9%
reduction from $6.2 million in the
comparable period of 2015.
The net loss for the third quarter of 2016 was $945,000, $0.07 per
share, compared to a net loss of $138,000, $0.01 per
share, in the third quarter of 2015. For the nine months
ended September 30, 2016, the net
loss was $2,883,000, $0.20 per share, compared to a net loss of
$284,000, $0.02 per share, in the comparable period of
2015.
At September 30, 2016, we had
$1.7 million in cash, $10.3 million of net working capital and
$640,000 of outstanding funded
debt.
About InfoSonics Corporation
InfoSonics is a San Diego-based
manufacturer and provider of wireless handsets, tablets and related
products to carriers, distributors and consumers in the United States and Latin America under the verykool®
brand. The company is committed to delivering quality
products with innovative designs that appeal to consumers and offer
exceptional value. Additional information can be found on our
corporate website at www.infosonics.com and www.verykool.net.
Past performance in any period may not be indicative of future
results in the next period or the same period in a subsequent
year. We also experience seasonal revenue fluctuations that
can be significant from one quarter to another. 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) our ability to source our
verykool® handsets and successfully introduce
them into target markets; (3) our ability to have access to
adequate capital to fund operations, including the availability of
vendor credit and availability under the Company's bank line of
credit; (4) our ability to secure adequate supply of
competitive products on a timely basis and on commercially
reasonable terms; (5) our ability to increase sales and improve our
gross margins despite intense competition; (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 and decrease profitability; (7) the ability to
attract new sources of profitable business from expansion of
products or services including iOT devices, applications and
cloud-based solutions, or risks associated with entry into new
markets, including geographies, products and services; (8) 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; (9) significant
changes in supplier terms and relationships or shortages in product
supply, including, but not limited to, those caused by recent and
continuing industry consolidation of component suppliers;
(10) loss of business from one or more significant customers;
(11) customer and geographical accounts receivable
concentration risk and other related risks; (12) rapid product
improvement and technological change resulting in inventory
obsolescence; (13) uncertain political and economic conditions
internationally, including terrorist or military actions;
(14) the loss of a key executive officer or other key
employees and the integration of new employees; (15) changes
in consumer demand for multimedia wireless handset products and
features; (16) our failure to adequately adapt to industry
changes and to manage potential growth and/or contractions;
(17) seasonal buying patterns; (18) the resolution of any
litigation for or against the Company, including claims for
infringement of intellectual property; and (19) 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 and Subsidiaries
|
Consolidated
Statements of Operations and Comprehensive Loss
|
(Amounts in
thousands, except per share data)
|
(unaudited)
|
|
|
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
sales
|
|
$
8,989
|
|
$ 12,179
|
|
$ 30,525
|
|
$ 37,641
|
Cost of
sales
|
|
8,105
|
|
10,178
|
|
27,306
|
|
31,478
|
Gross
profit
|
|
884
|
|
2,001
|
|
3,219
|
|
6,163
|
Selling, general
and administrative expenses
|
|
1,775
|
|
2,084
|
|
5,605
|
|
6,185
|
Operating
loss
|
|
(891)
|
|
(83)
|
|
(2,386)
|
|
(22)
|
Other
expense:
|
|
|
|
|
|
|
|
|
Other
expense
|
|
—
|
|
—
|
|
(321)
|
|
—
|
Interest,
net
|
|
(54)
|
|
(55)
|
|
(173)
|
|
(259)
|
Loss before
provision for income taxes
|
|
(945)
|
|
(138)
|
|
(2,880)
|
|
(281)
|
Provision for
income taxes
|
|
—
|
|
—
|
|
(3)
|
|
(3)
|
Net
loss
|
|
$
(945)
|
|
$
(138)
|
|
$ (2,883)
|
|
$
(284)
|
Net loss per share
(basic and diluted)
|
|
$
(0.07)
|
|
$
(0.01)
|
|
$
(0.20)
|
|
$
(0.02)
|
Basic and diluted
weighted-average number of common shares outstanding
|
|
14,389
|
|
14,388
|
|
14,389
|
|
14,377
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
(945)
|
|
$
(138)
|
|
$ (2,883)
|
|
$
(284)
|
Foreign currency
translation adjustments
|
|
(220)
|
|
(545)
|
|
(851)
|
|
(834)
|
Comprehensive
loss
|
|
$ (1,165)
|
|
$
(683)
|
|
$ (3,734)
|
|
$ (1,118)
|
InfoSonics
Corporation
|
Consolidated
Balance Sheets
|
(Amounts in
thousands, except per share data)
|
|
|
September
30,
2016
|
|
December 31,
2015
|
|
(unaudited)
|
|
(audited)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,689
|
|
$
2,647
|
Trade accounts
receivable, net of allowance for doubtful accounts of $114 and $95,
respectively
|
7,525
|
|
9,291
|
Other accounts
receivable
|
71
|
|
96
|
Inventory
|
4,726
|
|
6,637
|
Prepaid
assets
|
1,982
|
|
2,025
|
Total current
assets
|
15,993
|
|
20,696
|
Property and
equipment, net
|
153
|
|
156
|
Other
assets
|
312
|
|
129
|
Total
assets
|
$
16,458
|
|
$
20,981
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
2,730
|
|
$
4,398
|
Accrued
expenses
|
2,357
|
|
2,343
|
Line of
credit
|
640
|
|
—
|
Total current
liabilities
|
5,727
|
|
6,741
|
Commitments and
Contingencies (Note 12)
|
|
|
|
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; 14,389 and 14,389 shares
issued and outstanding as of September 30, 2016 and December 31,
2015, respectively
|
14
|
|
14
|
Additional paid-in
capital common stock
|
33,084
|
|
32,859
|
Accumulated other
comprehensive loss
|
(2,443)
|
|
(1,592)
|
Accumulated
deficit
|
(19,924)
|
|
(17,041)
|
Total stockholders'
equity
|
10,731
|
|
14,240
|
Total liabilities and
stockholders' equity
|
$
16,458
|
|
$
20,981
|
InfoSonics
Corporation
|
Consolidated
Statements of Cash Flows
|
(Amounts in
thousands)
|
(unaudited)
|
|
|
For the Nine
Months Ended
September 30,
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$ (2,883)
|
|
$
(284)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation
|
65
|
|
73
|
Provision for
obsolete inventory
|
(98)
|
|
(113)
|
Provision for bad
debts
|
19
|
|
—
|
Stock-based
compensation
|
225
|
|
156
|
(Increase) decrease
in:
|
|
|
|
Trade accounts
receivable
|
1,747
|
|
5,382
|
Other accounts
receivable
|
25
|
|
(24)
|
Inventory
|
2,009
|
|
(959)
|
Prepaid
assets
|
43
|
|
474
|
Other
assets
|
(183)
|
|
(59)
|
Increase (decrease)
in:
|
|
|
|
Accounts
payable
|
(1,668)
|
|
53
|
Accrued
expenses
|
14
|
|
(460)
|
Net cash provided by
(used in) operating activities
|
(685)
|
|
4,239
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property
and equipment
|
(62)
|
|
(111)
|
Net cash used in
investing activities
|
(62)
|
|
(111)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings on line of
credit
|
1,578
|
|
4,460
|
Repayments on line of
credit
|
(938)
|
|
(7,185)
|
Cash received from
exercise of stock options
|
—
|
|
27
|
Net cash provided by
(used in) financing activities
|
640
|
|
(2,698)
|
Effect of exchange
rate changes on cash
|
(851)
|
|
(834)
|
Net increase
(decrease) in cash and cash equivalents
|
(958)
|
|
596
|
Cash and cash
equivalents, beginning of period
|
2,647
|
|
1,464
|
Cash and cash
equivalents, end of period
|
$
1,689
|
|
$ 2,060
|
Cash paid for
interest
|
$
185
|
|
$
287
|
Cash paid for
income taxes
|
$
—
|
|
$
—
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/infosonics-reports-third-quarter-2016-results-300360405.html
SOURCE InfoSonics Corporation