InfoSonics Reports Third Quarter 2013 Results

                InfoSonics Reports Third Quarter 2013 Results

Profitability on 84% Increase in Sales

PR Newswire

SAN DIEGO, Nov. 6, 2013

SAN DIEGO, Nov. 6, 2013 /PRNewswire/ --InfoSonics Corporation (NASDAQ: IFON),
the provider of verykool^® wireless handset solutions, today announced results
for its third quarter ended September 30, 2013.

"We are pleased to report a profitable quarter driven by an 84% increase in
sales of our verykool^® products over the same period last year, as well as
our fourth consecutive quarter of record unit shipments," said Joseph Ram,
president and CEO of InfoSonics. "We shipped 477,000 handsets this quarter, a
166% increase compared to unit shipments in the particularly soft third
quarter last year. Sales to customers in South America more than doubled, and
sales in Central America increased by 59%. Our efforts to realign our cost
structure reduced total operating expenses by 23% compared to the prior year
period and produced a profitable quarter. We continued to refresh our product
portfolio by expanding our Xtreme line of ruggedized handsets with the
verykool^®RS90 "Vortex" smartphone and introduced the verykool^®s470 "Black
Pearl," a powerful smartphone with a quad-core processor, Android 4.2 and a
4.7" HD screen."

InfoSonics reported net sales for the third quarter of 2013 of $9.9 million,
which represented a $4.5million, or 84%, increase from $5.4 million for the
third quarter of 2012. As noted above, net sales to carrier customers in
South America doubled and sales to customers in Central America grew 59%.
Sales were also strong to U.S. based distributors selling to customers in
Latin America and Mexico.

Gross profit for the third quarter of 2013 was $1.8 million, a 60% increase
from $1.1 million in the 2012 third quarter, reflecting the significantly
higher level of net sales. Gross margin as a percent of net sales in the 2013
third quarter was 18.5% compared to 21.2% in the 2012 third quarter. The
lower gross margin this year reflects the sale of slow moving inventory at
reduced prices and margins, as well as a decrease of private label sales to
customers in EMEA and APAC.

Operating expenses in the third quarter of 2013 of $1.8 million declined 23%
compared to $2.3 million in the 2012 third quarter. Reduced spending in a
number of areas resulted in a 13% decrease in selling, general and
administrative expenses. R&D expenses fell by 58%, reflecting savings
associated with the consolidation of our China development team earlier in the
year into one location in Shenzhen.

Net income for the third quarter of 2013 was $34,000, or $0.00 per share,
compared to a net loss of $1.2million, or $0.08 per share, in the third
quarter of 2012.

At September 30, 2013, the Company had $15.8 million in working capital,
including $1.9 million in cash and restricted cash, and no outstanding
indebtedness. Cash and restricted cash balances declined by $4.5million
compared to the June 30, 2013 balances primarily as a result of increased
accounts receivable incident to the increased sales level.

About InfoSonics Corporation
InfoSonics is a San Diego-based designer, manufacturer and provider of
wireless handsets and related products to OEMs, carriers, distributors and
consumers in the United States, Latin America, Europe, Africa and Asia
Pacific. The company is committed to delivering quality products with
innovative industrial designs that appeal to consumers and offer exceptional
value. InfoSonics sells and supports its own 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 our China R&D
group to develop new verykool^® handsets and successfully deliver them on a
timely basis; (3)the ability of the Company to have access to adequate
capital to fund its operations; (4)extended general economic downturn in
world markets; (5)inability to secure adequate supply of competitive products
on a timely basis and on commercially reasonable terms; (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)cancellation of
customer orders or delays in requested delivery dates; (9) 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; (10)significant changes in supplier terms and relationships,
shortages in critical components or delays in product supply or manufacturing
lead times that could impact our ability to fulfill customer orders; (11)loss
of business from one or more significant customers; (12)customer and
geographical accounts receivable concentration risk and other related risks;
(13)rapid product improvement and technological change resulting in inventory
obsolescence; (14)uncertain political and economic conditions
internationally, including terrorist or military actions; (15)the loss of a
key executive officer or other key employees and the integration of new
employees; (16)changes in consumer demand for multimedia wireless handset
products and features; (17)our failure to adequately adapt to industry
changes and to manage potential growth and/or contractions; (18)seasonal
buying patterns; (19)the resolution of any litigation for or against the
Company; 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     Nine months ended

                              September 30,          September 30,
                              2013        2012         2013        2012
Net sales                   $       $       $       $    
                                9,867    5,373      26,030     25,842
Cost of sales               8,039       4,234        21,090      20,392
Gross profit                1,828       1,139        4,940       5,450
Operating expenses:
     Selling, general and    1,572       1,804        5,114       5,262
     administrative
     Research and            221         527          1,119       1,523
     development
                              1,793       2,331        6,233       6,785
Operating income (loss)     35          (1,192)      (1,293)     (1,335)
Other income (expense):
     Other income (expense) (2)         -            584         (65)
     Interest, net          4           3            15          53
Income (loss) before         37          (1,189)      (694)       (1,347)
provision for income taxes
Provision for income taxes  (3)         -            (28)        (2)
                              $       $        $       $    
Net income (loss)                  (1,189)       (722)  (1,349)
                              34
Net income (loss) per
share:
     Basic                  $       $       $       $     
                                 0.00   (0.08)       (0.05)   (0.09)
     Diluted                $       $       $       $     
                                 0.00   (0.08)       (0.05)   (0.09)
Weighted-average number of
common shares outstanding:
     Basic                  14,184      14,184       14,184      14,184
     Diluted                14,199      14,184       14,184      14,184



InfoSonics Corporation
Consolidated Balance Sheets
(Amounts in thousands, except per share data)
                                        September 30,       December 31,
                                                              2012
                                        2013
                                        (unaudited)         (audited)
ASSETS
Current assets:
 Cash and cash equivalents            $       1,639  $       
                                                              5,230
 Restricted cash                      275                   1,003
 Trade accounts receivable, net of
 allowance for doubtful accounts of     11,738                10,247
 $374 and $339, respectively
 Other accounts receivable            103                   95
 Inventory                            2,888                 3,429
 Prepaid assets                       3,020                 1,521
  Total current assets            19,663                21,525
Property and equipment, net           215                   367
Other assets                          218                   229
  Total assets                    $      20,096    $     
                                                              22,121
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                     $             $       
                                        869                   1,514
 Accrued expenses                     3,034                 3,786
  Total current liabilities       3,903                 5,300
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
 September 30, 2013 and December 31,    14                    14
 2012
 Additional paid-in capital           32,386                32,282
 Accumulated other comprehensive loss (23)                  (13)
 Accumulated deficit                  (16,184)              (15,462)
  Total stockholders' equity      16,193                16,821
  Total liabilities and            $      20,096    $     
 stockholders' equity                                        22,121



InfoSonics Corporation

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)
                                              For the Nine Months Ended

                                              September 30,
                                              2013             2012
Cash flows from operating activities:
 Net loss                                   $         $       
                                               (722)         (1,349)
 Adjustments to reconcile net loss to net
 cash used in operating activities:
     Depreciation                           201              208
     Loss on disposal of fixed assets       48               66
     Provision for bad debts                34               225
     Provision for obsolete inventory       (187)            51
     Stock-based compensation expense       104              174
     (Increase) decrease in:
          Trade accounts receivable         (1,525)          1,654
          Other accounts receivable         (8)              (23)
          Inventory                         728              (2,360)
          Prepaids                          (1,499)          1,038
          Other assets                      11               (238)
     Decrease in:
          Accounts payable                  (645)            (308)
          Accrued expenses                  (752)            (1,053)
                 Net cash used in operating  (4,212)          (1,915)
                 activities
Cash flows from investing activities:
 Purchase of property and equipment         (97)             (266)
 (Increase) decrease in restricted cash     728              (2)
     Net cash provided by (used in)          631              (268)
     investing activities
Effect of exchange rate changes on cash     (10)             102
Net decrease in cash and cash equivalents   (3,591)          (2,081)
 Cash and cash equivalents, beginning of     5,230            11,422
 period
 Cash and cash equivalents, end of period   $         $       
                                               1,639           9,341
 Cash paid for interest                     $         $       
                                                   -          -
 Cash paid for taxes                        -                -

SOURCE InfoSonics Corporation

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