SAN DIEGO, Aug. 4, 2016 /PRNewswire/ -- InfoSonics
Corporation (NASDAQ: IFON), the provider of verykool®
wireless handset solutions and tablets, today announced results for
its second quarter ended June 30, 2016.
"Although we were pleased with the 29% increase in sales for the
quarter, the bottom line loss was a direct result of our concerted
effort to reduce inventories, streamline operations and increase
balance sheet liquidity," said Joseph Ram, President and CEO
of InfoSonics. "During the quarter we cut our inventory
levels by 45% from last quarter and generated $3.1 million in cash as a result. Although
it was costly, this inventory liquidation was part of our strategy
to reposition our Company toward future integration of our products
with iOT devices, applications and solutions. Over the past
several quarters, we have been developing our own proprietary
cloud-based solutions, applications and other products that can be
monetized in the future by leveraging our installed customer
base. We currently have over 400,000 users and devices
registered in our system. Our goal is to create value beyond
the pure sale of handsets and open opportunities for us to develop
vertical solutions in areas such as health and lifestyle, sports,
education and general smart connected devices. Our first
offering in this strategy was launched shortly after the end of the
quarter, with the introduction of our very first iOT device called
the verykool Fit, with an associated free APP that can be
downloaded from the Google Play Store."
Commenting further, Mr. Ram noted, "Given the industry's
moderate growth expectations for mobile phone handsets, we plan to
maintain these lower inventory levels to drive faster inventory
turns and prepare for the future launch of integrated
products. This will help shorten our cash-to-cash cycle and
increase liquidity. We were pleased that during the quarter
we also reduced accounts receivable by over $900,000 and brought our Days Sales Outstanding
("DSO") level to the lowest point in over four years. As a
consequence, we ended the quarter with $2.8
million in cash, an increase of almost $2.4 million from last quarter. Finally, we
are retooling certain of our operations for greater focus and
efficiency and took a number of cost cutting actions at the end of
the quarter to reduce operating expenses in the second half of the
year."
We had net sales for the 2016 second quarter of $12.1 million, which represented a $1.2 million, or 11%, increase from
$10.9 million for the second quarter
of 2015. The increase was primarily attributable to a
doubling of sales to big box retail customers in Mexico and almost triple the sales to carrier
customers in Central America. These gains were partially
offset by reduced sales to customers in South America and the United States.
Unit shipments during the quarter grew by 30% versus the comparable
period in 2015, while the average selling price per unit fell 13%,
reflecting the deep price discounting used to liquidate
inventories. For the six months ended June 30, 2016, our net sales were $21.5 million, which represented a $3.9 million, or 15%, decrease from $25.5 million for the comparable six month period
of 2015.
Gross profit in the 2016 second quarter was $1.2 million, a 28% decrease compared to
$1.6 million for the comparable
period in 2015. Our gross profit margin as a percent of sales
in the 2016 second quarter declined to 9.5% compared to 14.7% for
the comparable period in 2015. The margin erosion reflects
the price discounting discussed above. For the six months
ended June 30, 2016, gross profit was
$2.3 million, a 44% decrease
from $4.2 million for the comparable
period in 2015.
Operating expenses in the second quarter of 2016 were
$2.0 million, an 11% decrease
compared to $2.2 million in the
2015 first quarter. The most significant reduction was in
marketing expenses, partially offset by employee termination
benefits and increased legal fees and settlements. For the
six months ended June 30, 2016,
operating expenses were $3.8 million,
a 7% reduction from $4.1 million in
the comparable period of 2015.
Also in the second quarter of 2016, other expense of
$156,000 consisted primarily of
losses on forward exchange contracts to hedge currency exposure
against the Mexican Peso. For the six months ended
June 30, 2016, such losses aggregated
$321,000. No such expense was
incurred in the comparable periods of 2015.
The net loss for the second quarter of 2016 was $1,035,000, $0.07
per share, compared to a net loss of $678,000, $0.05 per
share, in the second quarter of 2015. For the six months
ended June 30, 2016, the net loss was
$1,938,000, $0.13 per share, compared to a net loss of
$146,000, $0.01 per share, in the comparable period of
2015.
At June 30, 2016, we had
$2.8 million in cash, $11.4 million of net working capital and no
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 new
verykool® handsets, including LTE models, at a
sufficient pace and successfully introduce them into target
markets; (3) extended general economic downturn in world
markets; (4) inability to secure adequate supply of
competitive products on a timely basis and on commercially
reasonable terms; (5) the ability of the Company to maintain and
improve its 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; (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; (19) the ability of the
Company to have access to adequate capital to fund its operations,
including the availability of vendor credit and availability under
the Company's bank line of credit; 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 and Comprehensive Loss
(Amounts in
thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June
30,
|
|
Six months
ended
June
30,
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
sales
|
$
12,126
|
|
$
10,945
|
|
$
21,536
|
|
$
25,462
|
Cost of
sales
|
10,969
|
|
9,337
|
|
19,201
|
|
21,300
|
Gross
profit
|
1,157
|
|
1,608
|
|
2,335
|
|
4,162
|
Selling,
general and administrative
|
1,973
|
|
2,205
|
|
3,830
|
|
4,101
|
Operating
income (loss)
|
(816)
|
|
(597)
|
|
(1,495)
|
|
61
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
(156)
|
|
-
|
|
(321)
|
|
-
|
|
Interest,
net
|
(63)
|
|
(81)
|
|
(119)
|
|
(204)
|
Loss before
provision for income taxes
|
(1,035)
|
|
(678)
|
|
(1,935)
|
|
(143)
|
Provision for
income taxes
|
-
|
|
-
|
|
(3)
|
|
(3)
|
Net
loss
|
$
(1,035)
|
|
$
(678)
|
|
$
(1,938)
|
|
$
(146)
|
|
|
|
|
|
|
|
|
|
Net loss per
share (basic and diluted
|
$
(0.07)
|
|
$
(0.05)
|
|
$
(0.13)
|
|
$
(0.01)
|
|
|
|
|
|
|
|
|
|
Basic and
diluted weighted-average number of common shares outstanding
|
|
|
|
|
|
|
|
14,389
|
|
14,381
|
|
14,389
|
|
14,371
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(1,035)
|
|
$
(678)
|
|
$
(1,938)
|
|
$
(146)
|
|
Foreign
currency translation adjustments
|
(189)
|
|
(168)
|
|
(631)
|
|
(289)
|
|
Comprehensive
loss
|
$
(1,224)
|
|
$
(846)
|
|
$
(2,569)
|
|
$
(435)
|
InfoSonics
Corporation
Consolidated
Balance Sheets
(Amounts in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
2016
|
|
December
31,
2015
|
|
|
(unaudited)
|
|
(audited)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
2,806
|
|
$
2,647
|
|
Trade accounts
receivable, net of allowance for doubtful accounts of $95 and $95,
respectively
|
7,838
|
|
9,291
|
|
Other accounts
receivable
|
71
|
|
96
|
|
Inventory
|
3,794
|
|
6,637
|
|
Prepaid
assets
|
2,078
|
|
2,025
|
|
Total current
assets
|
16,587
|
|
20,696
|
|
Property and
equipment, net
|
175
|
|
156
|
|
Other
assets
|
233
|
|
129
|
|
Total assets
|
$
16,995
|
|
$
20,981
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
3,395
|
|
$
4,398
|
|
Accrued
expenses
|
1,774
|
|
2,343
|
|
Total current
liabilities
|
5,169
|
|
6,741
|
|
|
|
|
|
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 June 30, 2016 and December 31, 2015, respectively
|
14
|
|
|
|
|
14
|
|
Additional
paid-in capital
|
33,014
|
|
32,859
|
|
Accumulated
other comprehensive loss
|
(2,223)
|
|
(1,592)
|
|
Accumulated
deficit
|
(18,979)
|
|
(17,041)
|
|
Total stockholders'
equity
|
11,826
|
|
14,240
|
|
Total liabilities and
stockholders' equity
|
$
16,995
|
|
$
20,981
|
InfoSonics
Corporation
Consolidated
Statements of Cash Flows
(Amounts in
thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June
30,
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Cash flows
from operating activities:
|
|
|
|
|
Net
loss
|
$
(1,938)
|
|
$
(146)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
43
|
|
48
|
|
|
Provision for
obsolete inventory
|
(98)
|
|
(120)
|
|
|
Stock-based
compensation expense
|
155
|
|
103
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
Trade accounts
receivable
|
1,453
|
|
6,694
|
|
|
|
Other accounts
receivable
|
25
|
|
(1)
|
|
|
|
Inventory
|
2,941
|
|
(854)
|
|
|
|
Prepaid
assets
|
(53)
|
|
476
|
|
|
|
Other
assets
|
(104)
|
|
(23)
|
|
|
Decrease
in:
|
|
|
|
|
|
|
Accounts
payable
|
(1,003)
|
|
(1,876)
|
|
|
|
Accrued
expenses
|
(569)
|
|
(164)
|
|
|
|
|
Net cash
provided by operating activities
|
852
|
|
4,137
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities:
|
|
|
|
|
Purchase of
property and equipment
|
(62)
|
|
(102)
|
|
|
Net cash used
in investing activities
|
(62)
|
|
(102)
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities:
|
|
|
|
|
Borrowings on
line of credit
|
938
|
|
4,460
|
|
Repayments on
line of credit
|
(938)
|
|
(7,185)
|
|
Cash received
from exercise of stock options
|
-
|
|
24
|
|
|
Net cash used
in financing activities
|
-
|
|
(2,701)
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash
|
(631)
|
|
(289)
|
|
|
|
|
|
|
|
|
Net increase in
cash and cash equivalents
|
159
|
|
1,045
|
|
Cash and
cash equivalents, beginning of period
|
2,647
|
|
1,464
|
|
Cash and
cash equivalents, end of period
|
$
2,806
|
|
$
2,509
|
|
|
|
|
|
|
|
|
|
Cash paid
for interest
|
$
122
|
|
$
245
|
|
Cash paid
for taxes
|
$
-
|
|
$
-
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/infosonics-reports-second-quarter-2016-results-300309020.html
SOURCE InfoSonics Corporation