SOURCE: iSatori

iSatori

November 09, 2012 18:04 ET

iSatori, Inc. Reports Third Quarter Operating Results

Company Expects Strengthened Internet Marketing Capabilities to Benefit Fourth Quarter and 2013 Results as iSatori Prepares for Entry Into Mass Market Retail Channel

GOLDEN, CO--(Marketwire - Nov 9, 2012) - iSatori, Inc. (OTCQB: IFIT), an emerging leader in the development and marketing of scientifically engineered nutritional supplements for healthier lifestyles, announced its operating results for the third quarter and first nine months of 2012 today. A summary of these results is provided in the following table. A complete report of the Company's operating results will be filed later today with the Securities and Exchange Commission on Form 10-Q.

The Company's product revenue improved slightly (net of returns and discounts) during the nine months ending September 30, 2012, to $6.99 million, compared with $6.97 million in the first nine months of 2011. Income (loss) from continuing operations declined from $529,000 in the first nine months of 2011 to a loss of ($243,000) in the first nine months of 2012. However, when the extraordinary gain on the divestiture by the Company of its dormant product line of children's vitamins (approximately $500,000) and merger costs ($562,000) in connection with the Company's merger into the "shell" corporation, Integrated Security Systems, Inc., are excluded, the Company's recorded 2012 restated (non-GAAP) nine-month pretax loss of ($181,000) compared with restated pretax income of $529,000 in the first nine months of 2011.

Third quarter product revenue (net of returns and discounts) declined 17% from $2.815 million in the three months ending September 30, 2011 to $2.349 million in the comparable 2012 period. The Company's income (loss) from continuing operations for the 2012 third quarter of ($517,000) compared with a loss from continuing operations in the 2011 third quarter of ($44,000).

"Our third quarter results were impacted by planned increases in Internet product marketing costs, as well as higher than expected professional fees," noted Stephen Adelé, Chief Executive Officer of iSatori. "We continue to strategically deploy the working capital procured through our merger with IZZI into projects that should benefit operating results as we move into 2013 and prepare our Company for entry into the Mass Market retail channel."

In related news, iSatori confirmed it is in the process of procuring an initial stocking order for its newly reconstituted energy product, Energize™, from Walgreens, a Fortune 500 company and the largest drug retailer in the United States. Walgreens, a major mass merchandiser with over 8,300 retail outlets, distributes a variety of consumer goods, including nutritional supplements and energy products. iSatori anticipates receiving an initial stocking order before the end of the year from Walgreens. Other terms and conditions regarding this potential commercial relationship may be publicly disclosed if and when the commercial relationship matures.

The Company also announced it will be presenting at the LD Micro Conference (http://www.ldmicro.com/) at the Luxe Hotel in Los Angeles, California, on December 5, 2012. iSatori will join over 130 small- and micro-cap companies invited to present at the conference, which is expected to attract over 600 investment professionals and institutional investors from around the world. Additional details on the LD Micro Conference will be forthcoming in a later news release.

 
iSatori, Inc.
Summary of Third Quarter and Nine-Month Results
for Calendar Years 2011 and 2012 ($000)
 
  Third Quarter Ended Sept. 30 Nine Months Ended Sept. 30
  2012 2011 2012 2011
Product revenue (Net of returns and discounts) $2,349 $2,815 $6,990 $6,970
Income (loss) from operations ($428) $76 ($136) $722
Income (loss) from continuing operations ($517) ($44) ($243) $529
Less: Divestiture Gain1 n/a n/a ($500) n/a
Less: Merger Costs2 n/a n/a $562 n/a
Restated Income (loss) from continuing operations3 ($517) ($44) ($181) $529
     
1)   Includes gain on sale of Company's dormant product line of children's vitamins.
2)   Includes all costs related to Company's merger into IZZI (see above).
3)   Non-GAAP restatement of Company's profit (or loss) for the applicable periods taking into account its divestiture gain (see Note 1, above) and its merger costs (see Note 2, above).
     

iSatori, Inc. is a consumer products firm which 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.

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 relationships with our distributors, the results of our marketing efforts, entrance into mass market retail distributors, 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., iSatori Technologies, Inc. and iSatori Technologies, LLC  
Condensed Consolidated Balance Sheets  
    September 30,     December 31,  
    2012     2011  
ASSETS            
Current assets:                
  Cash and cash equivalents   $ 2,425,419     $ 364,608  
  Accounts receivable                
      Trade, net of allowance for doubtful accounts     1,003,198       937,841  
  Income tax receivable     -       54,841  
  Other receivables - current portion     35,828       44,722  
  Inventories     1,200,348       757,250  
  Assets held for sale     29,338       168,474  
  Deferred tax asset, net     35,747       35,746  
  Prepaid expenses     178,721       119,147  
    Total current assets     4,908,599       2,482,629  
                 
Property and equipment                
  Vehicle     -       67,135  
  Furniture and fixtures     56,680       50,304  
  Office equipment     36,600       32,131  
  Computer equipment     312,883       262,737  
  Dies and cylinders     49,422       49,422  
  Less accumulated depreciation     (312,484 )     (324,257 )
                 
      Total property and equipment     143,101       137,472  
                 
Note Receivable - net of current portion     81,714       81,714  
                 
Other assets:                
  Deferred tax asset, net     216,498       216,498  
  Deposits and other assets     19,234       37,257  
  Debt Issuance Costs     6,250       157,242  
  Deferred Offering Costs     -       141,826  
    Total other assets     241,982       552,823  
                 
      Total assets   $ 5,375,396     $ 3,254,638  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities:                
  Trade accounts payable   $ 608,670     $ 695,775  
  Accrued expenses     190,433       446,950  
  Line of credit, less debt discount     673,155       785,044  
  Current portion of vendor payables     -       1,000  
  Current portion of notes payable     -       489,352  
    Total current liabilities     1,472,258       2,418,121  
                 
Long-term liabilites                
  Note payable, less current maturities and debt discounts     -       478,729  
  Other long-term liabilities     128,422       92,606  
    Total long-term liabilities     128,422       571,335  
                 
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 5,610,100 shares issued and outstanding, respectively     126,228       100,000  
  Additional paid-in capital     4,149,208       (56,017 )
  Retained earnings (accumulated deficit)     (500,945 )     221,199  
    Total stockholders' equity     3,774,716       265,182  
                 
      Total liabilities and stockholders' equity   $ 5,375,396     $ 3,254,638  
                 
                 
                                 
iSatori, Inc., iSatori Technologies, Inc. and iSatori Technologies, LLC  
Condensed Consolidated Statements of Operations  
(Unaudited)  
                         
    For the Three Months Ended     For the Nine Months Ended  
    September 30,     September 30,  
    2012     2011     2012     2011  
Revenues:                                
  Product revenue (Net of returns and discounts)   $ 2,348,773     $ 2,814,966     $ 6,989,596     $ 6,969,690  
  Royalty revenue     22,439       31,559       83,105       91,632  
  Other revenue     93,389       114,333       135,103       218,457  
    Total revenue     2,464,601       2,960,858       7,207,804       7,279,779  
                                 
Cost of sales     931,095       937,778       2,763,694       2,397,795  
  Gross profit     1,533,506       2,023,080       4,444,110       4,881,984  
                                 
Operating Expenses:                                
  Selling and marketing     1,189,092       1,271,886       2,098,778       2,411,218  
  Salaries and labor related expenses     393,303       522,124       1,420,976       1,337,388  
  Administration     357,782       153,228       1,003,302       349,971  
  Depreciation and amortization     21,256       (214 )     57,000       61,633  
    Total operating expenses     1,961,433       1,947,024       4,580,056       4,160,210  
                                 
Income (loss) from operations     (427,927 )     76,056       (135,946 )     721,774  
                                 
Gain on sale of product lines     -       -       499,525       -  
Other income (expense)     (2,096 )     -       13,933       433  
Financing expense     (91,277 )     (71,508 )     (379,403 )     (106,355 )
Interest expense     4,776       (48,523 )     (241,301 )     (87,059 )
                                 
Income (loss) from continuing operations     (516,524 )     (43,975 )     (243,192 )     528,793  
                                 
Income tax benefit (expense)     (2,244 )     (3,156 )     (114,543 )     268,326  
                                 
Net income (loss)   $ (518,768 )   $ (47,131 )   $ (357,735 )   $ 797,119  
                                 
Net income (loss) per common share   $ (0.04 )   $ (0.01 )   $ (0.03 )   $ 0.12  
                                 
Weighted average shares outstanding:                                
  Basic and fully diluted     12,622,756       6,680,203       10,591,630       6,680,203  
                                 
                                 
                                 

Contact Information

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

    R.J. Falkner & Company, Inc.
    R. Jerry Falkner
    CFA
    (800) 377-9893
    www.rjfalkner.com