SOURCE: Monster Digital, Inc.

Monster Digital, Inc.

May 19, 2017 08:00 ET

Monster Digital, Inc. Reports Financial Results for the First Quarter Ended March 31, 2017

Company Also Announces Review of Strategic Alternatives

SIMI VALLEY, CA--(Marketwired - May 19, 2017) - Monster Digital, Inc. (NASDAQ: MSDI), ("Monster Digital" or "the Company"), which develops, markets and distributes Monster Digital® branded products for use in high-performance consumer electronics, mobile products and computing applications, today announced its unaudited financial results for the quarter ended March 31, 2017.

Monster Digital reported revenues of $951,000 for the three-month period ended March 31, 2017 compared to revenues of $538,000 for the comparable 2016 fiscal period. The Company's product mix has shifted significantly away from memory products to higher margin sports action and VR camera products. 

The Company also announced it has retained New York City-based investment bank, The Benchmark Company, LLC ("Benchmark") as financial advisor, to assist the Board of Directors in conducting a comprehensive review of strategic alternatives. The review is focused on maximizing the value of the Company, and the possible alternatives under review may include a business combination or merger, an equity or debt financing, disposition of assets or similar alternative. No assurance can be given that any strategic alternative will be carried out.

David H. Clarke, Chairman and CEO, commented, "Although we believe we have excellent products offered under a well known brand name, we have clearly had difficulty getting sufficient sales traction. Recent months have seen increasing competition in sports action and virtual reality cameras resulting in declining prices for most of our products. Under these circumstances, it is entirely appropriate to conduct a review to determine if there is a course of action which will enhance our prospects and value to our shareholders."

Financial Highlights for the First Quarter Ended March 31, 2017

Net sales for the three months ended March 31, 2017 increased approximately 77% to $951,000 from $538,000 for the three months ended March 31, 2016. In the three months ended March 31, 2017, sales in our action sports camera line represented 87% of our total sales. In three months ended March 31, 2016, sales in our action sports camera line represented 24% of our total sales.

Gross profit as a percentage of net sales was (4.9%) in the three months ended March 31, 2017, compared to a gross profit 8.7% in the three months ended March 31, 2016. In the current quarter of 2017, as we continue to disengage from lower margin memory product sales, we have sold certain memory product items for which we no longer have a customer base at a negative gross margin and have reduced prices on certain sports action and virtual reality cameras in order to be more competitive.

The net loss for the three months ended March 31, 2017 was approximately $2.2 million, or $(0.28) per basic and diluted share, compared to a net loss of approximately $1.9 million, or $(0.50) per basic and diluted share, for the three months ended March 31, 2016.

       
Unaudited   Three Months Ended March 31,  
(Dollars in thousands, except earnings per share)   2017     2016  
                 
Net sales   $ 951     $ 538  
Cost of goods sold     998       491  
Gross profit     (47 )     47  
Gross profit margin     -4.9 %     8.7 %
Loss from operations     (2,308 )     (1,629 )
Net loss   $ (2,241 )   $ (1,881 )
Basic and diluted loss per share   $ (0.28 )   $ (0.50 )
Basic and diluted weighted average     7,992       3,748  
                 

About Monster Digital, Inc.
Monster Digital develops, markets and distributes Monster branded products for use in high-performance consumer electronics, mobile products and computing applications. The Company designs and engineers premium action sports cameras and accessories, in addition to advanced data storage and memory products for professionals and consumers.

Monster and Monster Digital are registered trademarks of Monster Products, Inc. in the U.S. and other countries.

For more information about the company, please visit http://www.monsterdigital.com

About The Benchmark Company, LLC

The Benchmark Company is a full-service investment banking and financial advisory firm with a sales & trading platform servicing institutional clients in all major markets in the US and internationally; a team of research analysts covering companies in the Technology, Defense & Homeland Security, Media, Publishing, Broadcasting, Business Services, Consumer/Retail, China and Healthcare sectors; and an investment banking team providing corporate finance and advisory services to small- and mid-sized companies. Benchmark is headquartered in New York with offices in 10 other financial centers in the US.

For more information about The Benchmark Company, LLC, visit its website at http://www.benchmarkcompany.com

Forward-Looking Statements:
Some of the statements in this release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. Such forward looking statements include, but are not limited to, those such as: maximizing the value of the Company and possible alternatives under review. These statements relate to future events, future expectations, plans and prospects. Although Monster Digital believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Monster Digital has attempted to identify forward-looking statements by terminology including "possible", "may", "believe" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed under the heading "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2017 and in our Quarterly Report on Form 10-K filed with the Securities and Exchange Commission on May 19, 2017. Any forward-looking statements contained in this release speak only as of its date. We undertake no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.

   
MONSTER DIGITAL INC. AND SUBSIDIARY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Dollars in thousands, except per share amounts)  
(unaudited)  
    For the Three Months Ended  
    March 31,     March 31,  
    2017     2016  
             
Net sales   $ 951     $ 538  
Cost of goods sold     998       491  
  Gross Profit     (47 )     47  
                 
Operating expenses                
  Research and development     70       49  
  Selling and marketing     700       635  
  General and administrative     1,491       992  
      2,261       1,676  
    Loss from operations     (2,308 )     (1,629 )
Other expense, net                
  Interest and finance expense     1       252  
  Gain on settlement of customer refund     (68 )     -  
  Total other expenses     (67 )     252  
    Loss before income taxes     (2,241 )     (1,881 )
Provision for income taxes     -       -  
Net Loss   $ (2,241 )   $ (1,881 )
                 
Loss Per Share                
Basic and Diluted   $ (0.28 )   $ (0.50 )
Number of Shares used in Computation                
Basic and Diluted     7,992       3,748  
                 
                 
   
MONSTER DIGITAL INC. AND SUBSIDIARY  
CONSOLIDATED BALANCE SHEETS  
(Dollars in Thousands, except par value)  
    March 31,     December 31,  
    2017     2016  
ASSETS   (unaudited)        
Current assets                
  Cash   $ 150     $ 1,453  
  Accounts receivable, net of allowances of $273 and $253 respectively     817       856  
  Inventories     638       1,105  
  Prepaid expenses and other     421       619  
    Total current assets     2,026       4,033  
                 
  Trademark, net of amortization of $218 and $185, respectively     2,384       2,417  
  Deposits and other assets     14       14  
    Total assets   $ 4,424     $ 6,464  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 667     $ 268  
  Accrued expenses     1,473       1,786  
  Customer deposits and credits     1,225       1,840  
  Due to related parties     34       44  
  Notes payable     38       38  
    Total current liabilities     3,437       3,976  
                 
Shareholders' equity                
  Preferred stock; 10,000,000 shares authorized; none issued     -       -  
  Common stock; $.0001 par value; 100,000,000 shares authorized; 8,278,489 and 7,785,011 shares issued and outstanding     1       1  
  Additional paid-in capital     35,315       34,575  
  Accumulated deficit     (34,329 )     (32,088 )
  Total shareholders' equity     987       2,488  
    Total liabilities and shareholders' equity   $ 4,424     $ 6,464  
                 

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