InfoSonics Reports Third Quarter 2012 Results

                InfoSonics Reports Third Quarter 2012 Results

PR Newswire

SAN DIEGO, Nov. 14, 2012

SAN DIEGO, Nov. 14, 2012 /PRNewswire/ --InfoSonics Corporation (NASDAQ:
IFON), a provider of wireless handset solutions serving Latin America, Europe,
Africa and Asia Pacific, today announced results for its third quarter ended
September 30, 2012.

"This was a very challenging quarter characterized by softness in many of our
core markets," said Joseph Ram, president and CEO of InfoSonics. "Many of our
carrier and open market customers reported soft consumer sales which in turn
resulted in a slowing of orders to us as those customers worked to minimize
their inventory levels and delayed orders until the fourth quarter."

Commenting further on the results, Mr. Ram noted, "Despite the softness in
this quarter, we remain confident in our strategy. We have four new
smartphones under development planned for launch in the coming quarter to
address the market shift that is in progress. Through the nine months ended
September 30, 2012, sales of our verykool® products are up 78% over the same
period last year, our gross profit is up 86% for that same period and we have
invested more in marketing to elevate our brand. In addition, based on the
progress of shipments and customer orders during the current quarter, we
believe that sales in the fourth quarter of 2012 should rebound from their
third quarter levels."

InfoSonics reported net sales for the third quarter of 2012 of $5.4 million,
which represented a $1.8million, or 25%, decline from $7.2 million for the
third quarter of 2011. The primary reason for the decline was the absence of
low-margin Samsung distribution sales in the third quarter of 2012 compared to
$1.2million in distribution sales in the third quarter of 2011. The Company
transitioned away from this low-margin business in March 2012. The Company
noted that although sales of verykool® products declined by $0.6million, or
10%, unit shipments increased 22% during the quarter. The average selling
price per unit declined 26% as a result of a shift in product mix to lower‑end
products and more aggressive pricing during the quarter. Net sales for the
nine months ended September 30, 2012 amounted to $25.8 million, which
represented a $2.9 million, or 13%, increase from $23.0 million for the same
period of 2011. During the nine month period, net sales of verykool® products
grew by $10.1million, or 78%, offset partially by a $7.2 million decline in
distribution sales.

Gross profit margin as a percent of sales in the third quarter of 2012
improved to 21.2% compared to 17.0% in the 2011 third quarter, primarily as a
result of the absence of low-margin distribution sales in the 2012 third
quarter. Gross profit in the third quarter of 2012 was $1.1million, a 6%
decline from $1.2 million in the 2011 third quarter. Gross profit for the
nine months ended September 30, 2012 amounted to $5.5million, a $2.5 million,
or 86%, increase from $2.9 million for the same period of 2011. During the
nine month period, the gross profit margin as a percent of sales improved to
21.1% from 12.8% in the prior year period, also reflecting the significant
decline in low-margin distribution sales during the period.

Operating expenses in the third quarter of 2012 were $2.3 million, an increase
of 42% compared to $1.6million in the 2011 third quarter. This reflects a
44% increase in SG&A expenses primarily attributable to increases in
marketing, the Company's annual sales meeting and increased compensation
expense for new employees and contractors. In addition, R&D expenses rose by
37% primarily as a result of expansion of the Company's China-based
development team. For similar reasons, operating expenses for the nine
months ended September 30, 2012 amounted to $6.8million, a 33% increase from
$5.1 million for the same period of 2011.

The net loss for the third quarter of 2012 was $1.2 million, or $0.08 per
share, compared to a net loss of $413,000, or $0.03 per share, in the third
quarter of 2011. The net loss for the nine months ended September 30, 2012
declined to $1.3 million, or $0.09 per share, compared to a net loss of
$2.1million, or $0.15 per share, for the same period of 2011.

At September 30, 2012, the Company had $10.3 million in cash, restricted cash
and cash equivalents, $17.3million of net working capital and no outstanding
indebtedness. Cash balances declined by $1.2million compared to the June 30,
2012 balances primarily as a result of the loss for the quarter. An increase
in inventories and reduction of payables and accruals was offset by reductions
in accounts receivable and prepaid inventory deposits.

About InfoSonics Corporation
InfoSonics is a provider of wireless handsets and related products to OEMs,
carriers and distributors in Latin America, Europe, Africa and Asia Pacific.
The Company designs, develops, manufactures, markets, sells and provides
after-sales support for its own proprietary 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 the Company's R&D
group to develop new verykool^® handsets and successfully introduce them into
new emerging 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 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, disruptions in production at contract manufacturers or
shortages in product supply; (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; (19)the ability of the Company to have
access to adequate capital to fund its operations; 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  Nine months ended
                                  September 30,       September 30,
                                  2012         2011     2012        2011
                                  $       $     $       $    
Net sales                         5,373            25,842     22,960
                                               7,173
Cost of sales                    4,234        5,955    20,392      20,027
Gross profit                     1,139        1,218    5,450       2,933
Operating expenses:
   Selling, general and          1,804        1,256    5,262       3,966
   administrative
   Research and development      527          384      1,523       1,135
                                  2,331        1,640    6,785       5,101
Operating loss from continuing   (1,192)      (422)    (1,335)     (2,168)
operations
Other income (expense):
   Other income (expense)        -            2        (65)        30
   Interest, net                 3            -        53          11
Loss from continuing operations
before                            (1,189)      (420)    (1,347)     (2,127)

provision for income taxes
Provision for income taxes       -            -        (2)         (2)
Loss from continuing operations  (1,189)      (420)    (1,349)     (2,129)
Income from discontinued         -            7        -           -
operations, net of tax
                                  $        $     $       $    
Net loss                        (1,189)           (1,349)    (2,129)
                                               (413)
Net loss per share (basic and
diluted):
                                  $       $     $       $    
   Continuing operations          (0.08)             (0.09)    (0.15)
                                               (0.03)
   Discontinued operations       -            -        -           -
                                  $       $     $       $    
   Net loss                       (0.08)             (0.09)    (0.15)
                                               (0.03)
Basic and diluted
weighted-average number ofcommon 14,184       14,184   14,184      14,184
shares outstanding
Comprehensive loss:
                                  $        $     $       $    
   Net loss                      (1,189)           (1,349)    (2,129)
                                               (413)
   Foreign currency translations 59           (46)     102         7
   adjustments
                                  $        $     $       $    
   Comprehensive loss (1,130)           (1,247)    (2,122)
                                               (459)



InfoSonics Corporation
Consolidated Balance Sheets
(Amounts in thousands, except per share data)
                                     September 30,         December 31,
                                     2012                  2011
                                     (unaudited)         (audited)
ASSETS
Current assets:
 Cash and cash equivalents          $       9,341  $      11,422
 Restricted cash                    1,002                 1,000
 Trade accounts receivable, net of
 allowance for doubtful accounts of  6,731                 8,610
 $322 and $97, respectively
 Other accounts receivable          99                    76
 Inventory                          4,547                 2,238
 Prepaid assets                     1,447                 2,485
  Total current assets          23,167                25,831
Property and equipment, net         303                   311
Other assets                       307                   69
  Total assets                  $      23,777    $      26,211
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
 Accounts payable                   $       2,198  $       
                                                           2,506
 Accrued expenses                   3,666                 4,719
  Total current liabilities     5,864                 7,225
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 andoutstanding as of 14                    14
 September 30, 2012 and December 31,
 2011
 Additional paid-in capital         32,225                32,051
 Accumulated other comprehensive    (15)                  (117)
 loss
 Accumulated deficit               (14,311)              (12,962)
  Total stockholders' equity    17,913                18,986
  Total liabilities and         $      23,777    $      26,211
 stockholders' equity



InfoSonics Corporation
Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
                                              For the Nine Months Ended
                                              September 30,
                                              2012             2011
Cash flows from operating activities:
 Net loss                                    $         $       
                                              (1,349)          (2,129)
 Adjustments to reconcile net loss to net
 cash provided by (used in)operating
 activities:
      Depreciation                           208              138
      Loss on disposal of fixed assets       66               12
      Provision for (recover of) bad debts   225              (100)
      Provision for obsolete inventory       51               124
      Stock-based compensation expense       174              135
      (Increase) decrease in:
                 Trade accounts receivable   1,654            7,187
                 Other accounts receivable   (23)             520
                 Inventory                   (2,360)          (1,561)
                 Prepaids                   1,038            (1,196)
                 Other assets               (238)            10
      Increase (decrease) in:
                 Accounts payable            (308)            (2,796)
                 Accrued expenses            (1,053)          68
Cash provided by (used in) continuing        (1,915)          412
operations
Cash provided by discontinued operations     -                710
Net cash provided by (used in) operating     (1,915)          1,122
activities
Cash flows from investing activities:
 Purchase of property and equipment          (266)            (167)
 Sale of property and equipment              -                6
 Increase in restricted cash                 (2)              -
  Net cash used in investing        (268)            (161)
 activities
Effect of exchange rate changes on cash      102              7
Net increase (decrease) in cash and cash     (2,081)          968
equivalents
 Cash and cash equivalents, beginning of     11,422           12,484
 period
 Cash and cash equivalents, end of period   $         $       
                                               9,341          13,452
 Cash paid for interest                      $         $       
                                                   -          -
 Cash paid for taxes                         -                -



SOURCE InfoSonics Corporation

Website: http://www.infosonics.com
Contact: Vernon A. LoForti, Chief Financial Officer, +1-858-373-1675,
vern.loforti@infosonics.com
 
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