InfoSonics Reports Fourth Quarter 2012 Results

                InfoSonics Reports Fourth Quarter 2012 Results

PR Newswire

SAN DIEGO, March 22, 2013

SAN DIEGO, March 22, 2013 /PRNewswire/ --InfoSonics Corporation (NASDAQ:
IFON), the provider of verykool® wireless handset solutions, today announced
results for its fourth quarter ended December 31, 2012.

"There are both positive and negative aspects to our fourth quarter results,"
said Joseph Ram, president and CEO of InfoSonics. "We were pleased to report
a 57% growth in sales in the fourth quarter compared to the preceding third
quarter, along with record sales in our core Latin American market and record
total unit shipments for both the fourth quarter and the year as a whole.
However, our gross profit margin was lower than the third quarter and we
incurred higher R&D, marketing and carrier certification expenses which
resulted in the loss for the quarter. Our gross margin was impacted by more
aggressive pricing and special customer incentives formulated to stimulate
sales, some of which may benefit future quarters. Our operating expenses
included a high level of R&D spending as we invested heavily in a new line of
ruggedized smartphones. The concurrent development of these models over the
last two quarters required an expansion of our team. But now that the work is
mostly behind us, we have reduced the size of the team and recorded a
restructuring reserve in the quarter as we streamline all our China
operations. We have also taken steps to reduce our other operating expenses.
Beginning with the second quarter of 2013, we expect approximately $1.5
million in annual savings from these collective actions compared to the fourth
quarter 2012 run-rate."

Expanding his comments, Mr. Ram noted, "We are encouraged by the pace of
orders in the first quarter of 2013. In addition, our R&D investment will
enable us to launch a number of new smartphones during the second quarter of
2013 and we are expanding our sales efforts into the U.S. market. We remain
committed to our strategy."

InfoSonics reported net sales for the fourth quarter of 2012 of $8.4 million,
which represented a $3.5million, or 29%, decline from $11.9 million for the
fourth quarter of 2011. The reason for the decline was the absence of
low-margin Samsung distribution sales in the fourth quarter of 2012 compared
to $3.5million in distribution sales in the fourth quarter of 2011. The
Company transitioned away from this low-margin business in March 2012. The
Company noted that although sales of verykool® products were flat compared to
the prior year quarter, unit shipments increased 73%. The average selling
price per unit declined 42% as a result of a shift in product mix to lower‑end
products and more aggressive pricing during the quarter. Net sales for the
year ended December 31, 2012 amounted to $34.3 million, which represented a
$0.6 million, or 2%, decrease from $34.9 million for the 2011 year. Net sales
of verykool® products during 2012 grew by $10.1million, or 47%, compared to
2011, but were more than offset by a $10.7 million decline in distribution
sales.

Gross profit margin as a percent of sales in the fourth quarter of 2012
improved to 16.0% compared to 13.5% in the 2011 fourth quarter, primarily as a
result of the absence of low-margin distribution sales in the 2012 third
quarter. Gross profit in the fourth quarter of 2012 was $1.4million, a 16%
decline from $1.6 million in the 2011 fourth quarter. Gross profit for the
year ended December 31, 2012 amounted to $6.8million, a $2.3 million, or 50%,
increase from $4.5 million for the 2011 year. The gross profit margin as a
percent of sales for 2012 improved to 19.9% from 13.0% in the prior year
period, also reflecting the significant decline in low-margin distribution
sales during the year.

Operating expenses in the fourth quarter of 2012 were $2.5 million, an
increase of 28% compared to $2.0million in the 2011 fourth quarter. This
reflects an 18% increase in SG&A expenses primarily attributable to increases
in marketing expenses and increased compensation for new employees and
contractors. In addition, R&D expenses rose by 64% primarily as a result of
expansion of the Company's China-based development team and a $100,000 accrual
for the restructuring planned for the first quarter of 2013. For similar
reasons, operating expenses for the year ended December 31, 2012 amounted to
$9.3million, a 32% increase from $7.1 million for the 2011 year.

The net loss for the fourth quarter of 2012 was $1.2 million, or $0.08 per
share, compared to a net loss of $359,000, or $0.03 per share, in the fourth
quarter of 2011. The net loss for both years ended December 31, 2012 and 2011
amounted to $2.5million, or $0.18 per share.

At December 31, 2012, the Company had $6.2 million in cash, restricted cash
and cash equivalents, $16.2million of net working capital and no outstanding
indebtedness. Cash balances declined by $4.1million compared to the
September 30, 2012 balances primarily as a result of the growth in receivables
generated by the significantly higher level of sales in the fourth quarter, as
well as the loss for the quarter.

About InfoSonics Corporation
InfoSonics is a provider of wireless handsets and related products to OEMs,
carriers and distributors in Latin America, Europe, Africa, Asia Pacific and
the United States. 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
(Amounts in thousands, except per share data)
(Unaudited)
                              Three months ended     Year ended
                              December 31,           December 31,
                              2012         2011        2012         2011
                              (Unaudited)            (Audited)
Net sales                   $  8,452   $  11,924  $  34,294   $  34,884
Cost of sales               7,096        10,317      27,488       30,344
Gross profit                1,356        1,607       6,806        4,540
Operating expenses:
   Selling, general and      1,813        1,543       7,075        5,479
   administrative
   Research and development 695          423         2,218        1,588
                              2,508        1,966       9,293        7,067
Operating loss              (1,152)      (359)       (2,487)      (2,527)
Other income (expense):
   Other income (expense)   (7)          -           (72)         30
   Interest, net            8            -           61           11
Loss before provision for    (1,151)      (359)       (2,498)      (2,486)
income taxes
Provision for income taxes  -            -           (2)          (2)
Net loss                    $ (1,151)   $        $  (2,500)  $ 
                                           (359)                    (2,488)
Net loss per share (basic    $  (0.08)  $         $          $  
and diluted)                              (0.03)      (0.18)       (0.18)
Basic and diluted
weighted-average number of
   common shares             14,184       14,184      14,184       14,184
   outstanding



InfoSonics Corporation
Consolidated Balance Sheets
(Amounts in thousands, except per share data)
(Audited)
                                                December 31,  December 31,
                                                2012            2011
ASSETS
Current assets:
 Cash and cash equivalents                    $         $     
                                                5,230          11,422
 Restricted cash                              1,003           1,000
 Trade accounts receivable, net of allowance
 for doubtful accounts of $339 and $97,         10,247          8,610
 respectively
 Other accounts receivable                    95              76
 Inventory                                    3,429           2,238
 Prepaid assets                               1,521           2,485
  Total current assets                    21,525          25,831
Property and equipment, net                   367             311
Other assets                                  229             69
  Total assets                            $          $     
                                                22,121         26,211
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                             $         $      
                                                1,514          2,506
 Accrued expenses                             3,786           4,719
  Total current liabilities               5,300           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               14              14
 andoutstanding as of December 31, 2012 and
 December 31, 2011
 Additional paid-in capital                   32,282          32,051
 Accumulated other comprehensive loss         (13)            (117)
 Accumulated deficit                          (15,462)        (12,962)
  Total stockholders' equity              16,821          18,986
  Total liabilities and stockholders'      $          $     
 equity                                        22,121         26,211



InfoSonics Corporation
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Audited)
                                               For the Year Ended
                                               December 31,
                                               2012            2011
Cash flows from operating activities:
 Net loss                                    $ (2,500)       $ (2,488)
 Adjustments to reconcile net loss to net
 cash provided by (used in)
  operating activities:
         Depreciation                        276             172
         Loss on disposal of fixed assets    64              12
         Provision for (recover of) bad       242             (100)
         debts
         Provision for obsolete inventory    171             7
         Stock-based compensation expense    231             195
         (Increase) decrease in:
                    Trade accounts            (1,879)         3,729
                    receivable
                    Other accounts            (19)            532
                    receivable
                    Inventory                (1,362)         (557)
                    Prepaids                 964             (1,889)
                    Other assets             (160)           (1)
         Increase (decrease) in:
                    Accounts payable         (992)           (1,690)
                    Accrued expenses         (933)           1,493
Cash used in continuing operations           (5,897)         (585)
Cash provided by discontinued operations     -               710
Net cash provided by (used in) operating      (5,897)         125
activities
Cash flows from investing activities:
 Purchase of property and equipment          (396)           (201)
 Increase in restricted cash                 (3)             (1,000)
  Net cash used in investing         (399)           (1,201)
 activities
Effect of exchange rate changes on cash      104             14
Net decrease in cash and cash equivalents    (6,192)         (1,062)
 Cash and cash equivalents, beginning of      11,422          12,484
 period
 Cash and cash equivalents, end of period    $  5,230       $ 11,422
 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