SOURCE: iSatori

iSatori

April 16, 2013 16:25 ET

iSatori, Inc. Reports 2012 Operating Results

Highlights of Year Include Completion of Merger, Acquisition of Growth Capital, Upgrade of Internet Marketing Infrastructure, and Preparation for Mass Market Expansion

DENVER, CO--(Marketwired - Apr 16, 2013) - iSatori, Inc. (OTCQB: IFIT) ("the Company"), an emerging leader in the development and marketing of scientifically engineered nutritional supplements for healthier lifestyles, today announced its fourth quarter and twelve months 2012 financial results, which are summarized in the following table. A complete report of the Company's (GAAP) financial results will be available via its annual report for the same periods filed with the Securities and Exchange Commission today on Form 10-K. The link to this Form 10-K is http://www.sec.gov/cgi-bin/browse-edgar?company=&match=&CIK=ifit&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany

 
iSatori, Inc.
Summary of Fourth Quarter and Twelve Months Results
for Calendar Years 2011 and 2012 ($000's)
 
  Fourth Quarter: December 31 Twelve Months: December 31
  2012 2011 2012 2011
Gross Sales $ 2,643 $ 2,734 $ 10,848 $ 10,968
Operating Profit (Loss) $ 65 $ 120 ($ 71) $ 842
After Tax Profit (Loss) per GAAP ($ 673) ($ 194) ($ 1,031) $ 603
Add: Non-Recurring Expenses1 $ 0 N/A $562 N/A
Add: Derivatives Valuation2 $ 606 N/A $ 858 N/A
Non-GAAP After Tax Profit (Loss)3 ($ 67) ($ 194) $ 389 $ 603
1)   Full year 2012 non-recurring expenses include $195,988 in operating expenses related to the Company's April 2012 merger with and into Integrated Security Systems, Inc. ("IZZI").
2)   Includes non-cash costs of $858,322 for the full year 2012 and $605,661 in the fourth quarter related to the valuation of the Company's securities derivatives (warrants and options) held by management and selected third parties using the Black-Scholes methodology.
3)   Non-GAAP recomputed Company's pre-tax profit for the applicable periods, excluding $562,137 of non-recurring operating expenses (see Note 1, above) and derivative valuation costs of $858,322 (see Note 2, above).
     

Gross sales for the quarter ended December 31, 2012, at $2,643,206, compared with fourth quarter 2011 gross sales of $2,734,467. The Company's after-tax loss for the 2012 fourth quarter of ($672,903) included non-cash derivative valuation costs of $605,661. A non-GAAP loss of ($67,242) in the fourth quarter of 2012 compared with a non-GAAP loss of ($193,885) in the fourth quarter of 2011. (Non-GAAP adjusted net income is described in greater detail at the end of this press release).

For the year ended December 31, 2012, the Company's gross revenues totaled $10,847,741 compared with $10,968,458 in 2011. A pre-tax loss of ($1,030,638) was recorded in 2012, compared with a 2011 pre-tax profit of $603,234. However, when non-recurring operating expenses related to the merger of $562,137 and non-cash derivative valuation costs of $858,322 are excluded, the Company's 2012 non-GAAP pre-tax profit totaled $389,821, compared with a 2011 non-GAAP profit of $603,234. The Company maintains a $28 million net operating loss carry forward acquired in connection with its April 2012 merger with IZZI and intends to utilize this asset on a going-forward basis.

Commenting on the Company's financial results, Stephen Adele, CEO of iSatori noted, "2012 was an exciting year for iSatori. After completing an important merger that allowed us to become a publicly traded company and provided significant growth capital, our balance sheet remains strong. While our 2012 financial results were negatively impacted by non-recurring and mostly non-cash expenses related to the merger with IZZI, we are very excited about the growth opportunities available to the Company in 2013 and beyond.

"Our optimism regarding the future revolves around a number of strategic initiatives that we began implementing during the second half of 2012. Specifically, we have successfully upgraded our Internet marketing infrastructure in a manner that has increased our customer response rate and is expected to lead to improved customer loyalty in our direct-to-consumer marketing programs. We have also accelerated our research and development activities in order to achieve our goal of introducing at least four new products annually. During the past nine months, we have launched three successful nutritional supplement products, and six viable new products are currently in the pipeline. And finally, we achieved a major breakthrough in our 'mass market' expansion initiative with our entry into Walgreens, which is now carrying our time-released Energize pill product in over 6,486 of its drug stores throughout the United States. Our objective is to establish relationships with two more leading national mass merchandisers during 2013, as we aggressively pursue the mass-market channel, which is responsible for more than 70 percent of all nutritional supplement sales in the U.S. We believe iSatori can replicate the success it has achieved in specialty retail and direct-to-consumer marketing within the mass market sales channel, thereby opening the door to much greater sales potential in the future.

"Shareholders should expect results from these activities to become more visible as we proceed through 2013 and to be fully evident in our 2014 operating results. Our goal to achieve annualized revenue of $25 to $50 million over the next several years is predicated on the Company's ability to gain additional mass market distribution and to grow specialty retail and Internet sales through the successful introduction of new products," concluded Adele.

Non-GAAP Financial Measures

iSatori, Inc. has provided supplemental financial information and other disclosures in and attached to this release that have not been totally presented in accordance with GAAP.  This information includes non-GAAP after tax profit (loss).  iSatori uses such non-GAAP financial measures in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating iSatori's ongoing core business operational performance.  As noted, the non-GAAP financial measures discussed above include certain expenses/income, including, 1) non-recurring operating expenses related to the merger with IZZI, and 2) non-cash derivative valuation costs. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

About iSatori, Inc.

iSatori, Inc. is a consumer products firm that develops and sells nutritional products in the performance, weight loss, and energy markets through online marketing, Fortune 500 retailers, and thousands of retail stores around the world. More information about the Company is available at www.iSatori.com.

Forward-Looking Statements

Statements made in this news release relating to the Company's future sales, expenses, revenue, product developments, and all other statements except statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are both subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in demand for the Company's products, the availability and price of ingredients necessary to manufacture such products, and the outcome of any current or future litigation regarding such products or similar products of competitors. All forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update any such statement.

   
   
iSatori, Inc.  
Consolidated Balance Sheets  
   
  December 31,     December 31,  
  2012     2011  
ASSETS              
Current assets:              
  Cash and cash equivalents $ 1,655,453     $ 364,608  
  Investments   965,886       -  
  Accounts receivable              
    Trade, net of allowance for doubtful accounts   1,240,736       937,841  
  Income tax receivable   102,452       54,841  
  Other receivables - current portion   9,850       44,722  
  Inventories   1,292,105       757,250  
  Assets held for sale   29,338       168,474  
  Deferred tax asset, net   119,032       35,746  
  Prepaid expenses   156,431       119,147  
    Total current assets   5,571,283       2,482,629  
               
Property and equipment:              
  Vehicle   -       67,135  
  Furniture and fixtures   56,680       50,304  
  Office equipment   36,600       32,131  
  Computer equipment   323,648       262,737  
  Dies and cylinders   49,422       49,422  
  Less accumulated depreciation   (333,388 )     (324,257 )
               
    Net property and equipment   132,962       137,472  
               
Note Receivable - net of current portion   81,714       81,714  
               
Other assets:              
  Deferred tax asset, net   97,844       216,498  
  Deposits and other assets   42,956       37,257  
  Debt Issuance Costs   4,375       157,242  
  Deferred Offering Costs   -       141,826  
    Total other assets   145,175       552,823  
               
      Total assets $ 5,931,134     $ 3,254,638  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Current liabilities:              
  Trade accounts payable $ 518,150     $ 695,775  
  Accrued expenses   242,301       446,950  
  Line of credit, less debt discount   1,173,155       785,044  
  Current portion of vendor payables   -       1,000  
  Current portion of notes payable   -       489,352  
    Total current liabilities   1,933,606       2,418,121  
               
Long-term liabilites              
  Note payable, less current maturities and debt discounts   -       478,729  
  Derivative liability   701,852       92,606  
    Total long-term liabilities   701,852       571,335  
               
    Commitments and contingencies (Notes 1,2,5,6,and 14)              
               
Stockholders' Equity:              
  Convertible preferred stock, $0.01 par value, 750,000 shares authorized; 22,500 shares issued and outstanding ($450,000 of liquidation value)   225       -  
  Common stock, $0.01 par value, 56,250,000 shares authorized; 12,622,756 and 6,680,203 shares issued and outstanding, respectively   126,228       66,802  
  Additional paid-in capital   4,343,069       (22,818 )
  Retained earnings (accumulated deficit)   (1,173,846 )     221,198  
    Total stockholders' equity   3,295,676       265,182  
               
      Total liabilities and stockholders' equity $ 5,931,134     $ 3,254,638  
               
   
               
               
               
iSatori, Inc.  
Consolidated Statements of Operations  
           
  For the Years Ended  
  December 31  
  2012     2011  
Revenues:              
  Product revenue (Net of returns and discounts) $ 9,130,530     $ 9,103,983  
  Royalty revenue   109,613       106,361  
  Other revenue   148,051       247,791  
    Total revenue   9,388,194       9,458,135  
               
Cost of sales   3,477,741       3,255,702  
    Gross profit   5,910,453       6,202,433  
               
Operating Expenses:              
  Selling and marketing   2,602,566       3,071,918  
  Salaries and labor related expenses   1,918,033       1,656,990  
  Administration   1,381,560       549,332  
  Depreciation and amortization   79,525       82,334  
    Total operating expenses   5,981,684       5,360,574  
               
Income (loss) from operations   (71,231 )     841,859  
               
Gain on sale of product lines   499,525       -  
Other income (expense)   (686,470 )     95,573  
Financing expense   (566,634 )     (394,144 )
Interest expense   (205,091 )     (165,504 )
               
Income (loss) before income taxes   (1,029,901 )     377,784  
               
Income tax benefit (expense)   (737 )     225,450  
               
Net income (loss) $ (1,030,638 )   $ 603,234  
               
Net income (loss) per common share              
  Basic $ (0.09 )   $ 0.09  
  Diluted $ (0.09 )   $ 0.09  
               
Weighted average shares outstanding:              
  Basic   11,103,585       6,680,203  
  Diluted   11,103,585       6,886,770  
               

Contact Information

  • Contacts:
    iSatori, Inc.
    Stephen Adele
    303-215-9174
    Email Contact

    R.J. Falkner & Company, Inc.
    Jerry Falkner
    800-377-9893
    Email Contact