Parametric Sound Corporation Reports Third Quarter Fiscal 2013 Financial Results

Parametric Sound Corporation Reports Third Quarter Fiscal 2013 Financial Results 
Company Demonstrates Success of Pilot Programs for HyperSound(TM) 
SAN DIEGO, CA -- (Marketwired) -- 08/08/13 --  Parametric Sound
Corporation (NASDAQ: PAMT), a leading innovator of audio technology
and solutions, today announced financial results for its third fiscal
quarter ended June 30, 2013. The Company also reported progress in
each of its business sectors: commercial, consumer and health
applications.  
Recent Highlights: 


 
--  Definitive merger agreement with market share leader in gaming audio -
    The merger will combine Parametric's audio innovations with Turtle
    Beach's significant financial, technical, design, sales and marketing
    resources. The Company expects that Parametric's strong research and
    development capabilities will be leveraged to accelerate innovation
    enabling the combined company to deliver sustained growth and
    shareholder value. Turtle Beach has strong market share in established
    gaming markets, including a 53% dollar share of the U.S. gaming
    headset market as of year-end 2012 according to The NPD Group, and a
    growing market share in the broader consumer audio market. As a
    result, Turtle Beach has built a profitable business with
    approximately $205 million in revenues in 2012.
--  Continued growth of commercial business - The Company is seeing a
    global acceleration in commercial product activity and is growing its
    pipeline with new project opportunities resulting from increased sales
    focus and successful pilot projects. The Company has commenced
    additional pilot projects and prior pilots continue to convert to
    broader based customer rollouts. This demand is expected to result in
    continued revenue growth during the balance of 2013 and throughout
    2014.
--  Technology developments - The Company is aggressively adding to its
    intellectual property portfolio by filing new patents. Customer
    demonstrations of the new consumer focused emitter technology have
    commenced and the Company is advancing related production processes.
--  First round of clinical testing of HyperSound Audio System - Results
    from our a clinical protocol stud
y of the company's HyperSound audio
    system indicated that more than 70% of persons with hearing loss
    prefer the clarity of HyperSound and many participants reported
    dramatic improvement in hearing and clarity. We believe the data
    collection to support an FDA filing is now complete.

  
Management Commentary: 
"We believe that Turtle Beach's financial, technical and distribution
strengths will provide us with additional tools to succeed in
deploying HyperSound technology across our three business sectors,"
said Kenneth Potashner, executive chairman. "With details of the
merger now in place we can resume targeted licensing of our
technology in the consumer product sector. We have an experienced
team to drive our commercial business sector forward through high
volume retailers, and we are confident in our outlook and our growth
prospects for commercial sales. We continue to see very positive
results from health applications of HyperSound, a business sector
that we believe we can deliver a compelling solution." 
Third Quarter Fiscal 2013 Financial Summary:  
Revenue totaled $212,000 during the third quarter of fiscal 2013, as
compared to $34,000 during the same period last year, reflecting an
increase in commercial product sales. Gross profit was $101,000
compared to $16,000 for the prior year. 
Selling, general and administrative expenses during the third quarter
of fiscal 2013 totaled $1.4 million as compared to $1.3 million
during the same period last year. Third quarter expense included
non-cash stock based compensation from stock options of $405,000
compared to $777,000 for the prior year. During the third quarter,
the company incurred $295,000 of strategic transaction costs
consisting primarily of legal, accounting and investment banking fees
and expenses related to reviewing strategic opportunities, conducting
due diligence of Turtle Beach and preparing and negotiating the
merger documents with Turtle Beach. Other selling, general and
administrative costs increased as the Company increased staffing and
marketing related to the commercialization of its technology.  
Research and development expenses totaled $561,000 during the third
quarter of fiscal 2013 including stock option expense of $114,000.
Research and development expenses during the third quarter of fiscal
2012 were $404,000 including $72,000 of stock option expense. The
increase was primarily the result of adding employees to support
technology development and costs associated with prototypes and
testing for licensing initiatives. 
Net loss for the third quarter of fiscal 2013 was $1.9 million, or
$(0.28) per basic and diluted common share, as compared to a net loss
of $1.7 million, or $(0.27) per basic and diluted common share for
the same quarter last year. The net loss for the third quarters of
fiscal 2013 and 2012 included $518,000 and $849,000 of non-cash stock
based compensation expense, respectively. 
Cash and cash equivalents totaled $3.2 million at June 30, 2013,
compared to $5.5 million at September 30, 2012. During nine month
period ended June 30, 2013, Company received $1.1 million in cash
from the exercise of stock purchase warrants and options. 
Conference Call Information: 
Members of the Company's management team will host a conference call
at 5:00 P.M. ET today to discuss the Company's financial results.
Juergen Stark, CEO of Turtle Beach, will also join the call to
provide additional business and financial information with respect to
Turtle Beach and discuss the recently announced merger. Investors and
interested parties may participate in the call by dialing (877)
303-9855 and referring to Conference ID: 28171887. It is suggested
that you dial into the conference center approximately 10 minutes
prior to the scheduled start time to ensure that all participants are
on line at the start of the call. The conference call is also being
webcast and is available via the investor relations section of the
Company's website, www.parametricsound.com. A replay of the webcast
will be archived on the Company's website for 60 days. 
About Parametric Sound Corporation
 Parametric Sound Corporation is a
pioneering innovator of directed audio solutions. With a substantial
body of intellectual property, Parametric Sound is the foremost
authority in the application of acoustic technology to beam sound to
target a specific listening area without the ambient noise of
traditional speakers. Distinct from surround sound, HyperSound(TM)
immerses listeners in a robust 3D audio experience from just two
speakers. The Company's disruptive technology is being marketed to
three global market sectors: Consumer Markets -- for PCs, gaming,
TVs, home theater and handhelds, Commercial Markets -- for digital
signage, kiosks and retail stores, and Health Care -- for an
out-of-ear solution being developed for the hearing impaired. For
more information, visit www.parametricsound.com. 
Cautionary note on forward-looking statements
 This press release
includes forward-looking information and statements. Except for
historical information contained in this release, statements in this
release may constitute forward-looking statements regarding
assumptions, projections, expectations, targets, intentions or
beliefs about
 future events including, without limitation,
management's expectations regarding the proposed merger with Turtle
Beach and its benefits; management's expectations of continued
revenue growth in 2013 and 2014; and management's expectations
regarding progress, customer interest and other developments across
its business sectors. Forward looking statements are based on
management's belief, as well as assumptions made by, and information
currently available to, management.  
While the Company believes that its expectations are based upon
reasonable assumptions, there can be no assurances that its goals and
strategy will be realized. Numerous factors, including risks and
uncertainties, may affect actual results and may cause results to
differ materially from those expressed in forward-looking statements
made by the Company or on its behalf. Some of these factors include
the substantial uncertainties inherent in evaluating, pursuing and
finalizing strategic discussions including, but not limited to the
proposed merger with Turtle Beach, licensing, or other corporate
transactions, acceptance of existing and future products regardless
of initial pilot successes or positive end-user feedback, the
difficulty of commercializing and protecting new technology such as
the Company's new emitter technology, the impact of competitive
products and pricing, general business and economic conditions, and
other factors detailed in the Company's Annual Report on Form 10-K
and other periodic reports filed with the SEC. Except as required by
law, the Company specifically disclaims any obligation to update or
revise any forward-looking statement whether as a result of new
information, future developments or otherwise. 
Important Additional Information for Investors and Stockholders 
This material is not a substitute for the proxy statement that
Parametric will file with the SEC. Investors and security holders are
urged to read the proxy statement (including any amendments or
supplements) and other documents filed with the SEC carefully in
their entirety when they become available because they will contain
important information about Parametric, Turtle Beach and the proposed
transaction. The definitive proxy statement will be mailed to the
stockholders of Parametric. 
Investors and security holders will be able to obtain free copies of
the proxy statement (when available) and other relevant documents
filed with the SEC by Parametric at the SEC's web site at
www.sec.gov. Free copies of the proxy statement (when available) and
other documents filed with the SEC also can be obtained by directing
a request to Parametric, Attention: Investor Relations, telephone:
(888) 477-2150. In addition, investors and security holders may
access copies of the documents filed with the SEC by Parametric on
Parametric's website at www.parameticsound.com. 
Parametric and its directors and executive officers and other persons
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction described in this release.
Information regarding Parametric's directors and executive officers
is available in Parametric's annual report on Form 10-K for the year
ended September 30, 2012, which was filed with the SEC on November
28, 2012 and Parametric's definitive proxy statement for its 2013
annual meeting of stockholders, which was filed with the SEC on
January 10, 2013. If and to the extent that any of the Parametric
participants will receive any additional benefits in connection with
the proposed transaction that are unknown as of the date of this
release, the details of those benefits will be described in the
definitive proxy statement relating to the proposed transaction.
Investors and stockholders can obtain more detailed information
regarding the direct and indirect interests of Parametric's directors
and executive officers in the proposed transaction by reading the
definitive proxy statement when it becomes available.  


 
                                                                            
                                                                            
                        Parametric Sound Corporation                        
                    Condensed Consolidated Balance Sheets                   
                   (000's omitted except per share amount)                  
                                 (unaudited)                                
                                                  June 30,     September 30,
                                                    2013           2012     
                                                      $              $      
ASSETS                                                                      
  Current                                                                   
    Cash                                                3,283          5,528
    Accounts receivable                                   190             39
    Inventories, net                                      465            443
    Prepaid expenses and other current assets             121             63
                                               -------------- --------------
  Total current assets                                  4,059          6,073
  Property, equipment and tooling, net                    248            177
  Intangible assets, net                                1,380          1,315
                                               -------------- --------------
  Total assets                                          5,687          7,565
                                               ============== ==============
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
  Current                                                                   
    Accounts payable                                      580            173
    Accrued liabilities                                   146            140
    Capital lease obligation - current                     37              -
                                               -------------- --------------
  Total current liabilities                               763            313
  Long-term capital lease obligation                      104              -
                                               -------------- --------------
  Total liabilities                                       867            313
                                               -------------- --------------
  Stockholders' equity                                  4,820          7,252
                                               -------------- --------------
  Total liabilities and stockholders' equity            5,687          7,565
                                               ============== ==============
                                                                            
                                                                            
                                                                            
                        Parametric Sound Corporation                        
              Condensed Consolidated Statements of Operations               
                  (000's omitted except per share amount)                   
                                (
unaudited)                                 
                                                                            
                                 For the three months   For the nine months 
                                    ended June 30,        ended June 30,    
                                    2013       2012       2013       2012   
                                     $          $          $          $     
Revenues                               212         34        476        159 
Cost of revenues                       111         19        244         71 
                                 ---------  ---------  ---------  --------- 
  Gross profit                         101         15        232         88 
Operating expenses: (i)                                                     
  Selling, general and                                                      
   administrative                    1,431      1,326      3,791      2,390 
  Research and development             561        403      1,541        903 
                                 ---------  ---------  ---------  --------- 
Total operating expenses             1,992      1,729      5,332      3,293 
                                 ---------  ---------  ---------  --------- 
Loss from operations                (1,891)    (1,714)    (5,100)    (3,205)
Other income (expenses)                 (1)         7          1          5 
                                 ---------  ---------  ---------  --------- 
Net loss                            (1,892)    (1,707)    (5,099)    (3,200)
                                 =========  =========  =========  ========= 
Loss per basic and diluted                                                  
 common share                        (0.28)     (0.27)     (0.78)     (0.66)
                                 =========  =========  =========  ========= 
                                                                            
Weighted average shares used to                                             
 compute net loss per basic and                                             
 diluted common share                6,700      6,329      6,515      4,872 
                                 =========  =========  =========  ========= 
                                                                            
(i) includes share-based compensation expense as follows:                   
                                                                            
                                 For the three months   For the nine months 
                                    ended June 30,        ended June 30,    
                                    2013       2012       2013       2012   
Selling, general and                                                        
 administrative                        405        777      1,291      1,214 
Research and development               114         72        271        195 
                                 ---------  ---------  ---------  --------- 
  Total share-based compensation                                            
   expense                             519        849      1,562      1,409 
                                 =========  =========  =========  ========= 

  
CONTACT:
Tracy Neumann
888-HSS-2150, Ext. 509
tneumann@parametricsound.com 
INVESTOR RELATIONS CONTACT:
Dave Mossberg
Three Part Advisors, LLC
(817) 310-0051 
 
 
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