The Guitammer Company Announces Strong 2012 Financial Results

WESTERVILLE, OH--(Marketwire - Mar 14, 2013) - The Guitammer Company (OTCQB: GTMM), a leader in low frequency sound and creator of the award-winning line of ButtKicker®-brand low frequency audio transducers that provide an immersive entertainment experience for audiences, today announced continued operating momentum as full year 2012 revenue rose 64 percent to approximately $2.13 million. The higher revenue drove a 55 percent, or approximately $303,000, year-over-year increase in gross profit, which totaled approximately $850,000 for the full year ended December 31, 2012.

2012 Full Year Financial Highlights and Recent Developments

• Revenues rose 64 percent year-over-year to approximately $2.13 million; gross margin was 40 percent.
• Approximately $1.7 million was raised in private placements in FY2012; adding to capital raised in FY2011, Guitammer has now raised approximately $2.1 million in growth capital.
• Continued an expanding relationship with China-based Sichuan Lumiere Cinema Co. Ltd. (Lumière Pavilions) by adding ButtKicker "4D" experience seats and securing a recent agreement for an additional theater. Including an aggregate of previously completed and this new installation, Lumière Pavilions has increased its total to approximately 1,380 of Guitammer's ButtKicker "4D" experience seats and intends to add additional seats in at least one auditorium at all new Lumière cinemas.
• Reinstallation of the ButtKicker "4D" cinema system for all 504 seats in the Kansas City Mainstreet Theatre, now operated by Alamo Drafthouse Cinema.
• Successful stage one, "Proof of concept" in-arena testing of the patented ButtKicker Live! broadcast technology with a major sports league during both the regular season and playoffs.
• Successful in-suite testing of ButtKicker Live! for patrons inside a glass-enclosed luxury box during a live major motorsports race.

Mark Luden, President of Guitammer, stated, "In 2012 we achieved significant and tangible milestones in sales growth, strengthening our balance sheet and the commercialization of our ButtKicker Live! broadcast technology. By reducing our debt, growing our sales, maintaining above industry average gross margins, continuing to win key customers, especially in the worldwide cinema market, and successfully testing ButtKicker Live! in two major venues, we believe we are positioned for a breakout year in 2013."

Additional 2012 Full Year Financial Highlights and Recent Developments

• Nearly $1.5 million in debt extinguishment over the past 13 months; interest expense decreased 40 percent, or approximately $187,000, for FY2012 compared to FY2011.
• Total debt decreased by approximately $689,000, or 28 percent, to approximately $1.78 million as compared to FY2011
• Inventory increased to approximately $629,000 at December 31, 2012, compared to approximately $56,000 at December 31, 2011, reflecting the equity raised and improving operating results.
• Total current assets increased approximately 380 percent, or approximately $682,000, to approximately $861,000, reflecting the effects of the debt extinguishment and equity raised.
• The working capital deficit was more than halved (a 52 percent reduction) to approximately $1.6 million at the end of FY2012, down from approximately $3.3 million year end 2011.
• International sales totaled approximately $1.17 million, or 55 percent, of total global sales. 
• Formation of the ButtKicker Live! "Technical Advisory Group" to facilitate the broadcast testing and rollout of this patented technology.

Adjusted EBITDA loss (see reconciliation table below) increased by approximately $80,000 in 2012, compared to 2011, which is attributable to significantly increased investments by the company of over $264,000 in FY2012 to expand and strengthen Research & Development, Advertising & Marketing, Public Relations and Sourcing. Without these investments, the Adjusted EBITDA loss would have been reduced by 50% from FY2011 to approximately $190,000.

Luden added: "I believe our full year 2012 results give further credence to the remarks I made with last year's Q3 release, when I said our improved balance sheet and financial flexibility are and will provide the Company with a solid platform for sustainable growth in our 'core' business, and that we were continuing to make steady progress with the development and commercialization of our patented broadcast technology, ButtKicker® LIVE!"

About The Guitammer Company

The Guitammer Company, based in Westerville, Ohio, is a leader in low frequency sound products and technology. Its innovative and award-winning line of patented ButtKicker-brand low frequency audio transducers let users feel low-frequency sound (bass). ButtKicker brand products are used around the world by leading entertainment and theater companies such as Alamo Drafthouse, IMAX, Disney and Lumiere Pavilions in movie theaters and attractions; by world-famous musicians; and in home theaters, by consumers for video games, simulators and car audio. ButtKicker brand products are distributed by Pearl Drums for musicians under the trade name, "Pearl's Throne Thumper by ButtKicker." ButtKicker brand products' patented design makes them musically accurate, powerful and virtually indestructible. 

The Guitammer Company's newly patented broadcast technology, ButtKicker LIVE! enables the excitement, impact and feeling of sporting events to broadcast along with the sound and video. ButtKicker LIVE! puts you into the action, whether you're at home or at the event. ButtKicker Live! technology is available for cable, satellite, fiber optic, IPTV and over-the-air broadcast and has been successfully tested with several major content (sports) providers. ButtKicker® and ButtKicker Live!® are registered trademarks of The Guitammer Company. 

For additional information on The Guitammer Company and detailed product information, visit www.guitammer.com and www.thebuttkicker.com

To like our Facebook page or follow us on Twitter for company updates, visit www.facebook.com/Guitammer and www.twitter.com/Guitammer 

Safe Harbor:
This letter contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability of the Company to successfully implement its turnaround strategy, changes in costs of raw materials, labor, and employee benefits, as well as general market conditions, competition and pricing. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this letter will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as representation by the Company or any other person that the objectives and plans of the Company will be achieved. In assessing forward-looking statements included herein, readers are urged to carefully read those statements. When used in the Annual Report on Form 10-K, the words "estimate," "anticipate," "expect," "believe," and similar expressions are intended to be forward-looking statements.

- Financial tables follow -

THE GUITAMMER COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
				Year Ended December 31,
				2012				2011
Total revenue				$	2,132,624			$	1,303,453
Cost of goods sold					1,282,168				756,041
		Gross profit			850,456				547,412
Operating expenses
	General and administrative				1,568,067				1,216,123
	Research and development				75,474				32,191
					1,643,541				1,248,314
		Loss from operations			(793,085	)			(700,902	)
Other income (expense)
	Interest expense				(278,928	)			(465,922	)
	Interest income				45				53
					(278,883	)			(465,869	)
		Loss before provision for income taxes			(1,071,968	)			(1,166,771	)
Provision for income taxes					-				-
		Net loss attributable to common stockholders		$	(1,071,968	)		$	(1,166,771	)
Basic and diluted loss per share				$	(0.02	)		$	(0.02	)
Basic and diluted weighted average common shares outstanding					64,861,800				50,657,255

THE GUITAMMER COMPANY
CONSOLIDATED BALANCE SHEETS
				December 31,				December 31,
				2012				2011
ASSETS
Current assets
	Cash and cash equivalents			$	79,136			$	55,132
	Accounts receivable, net				21,011				1,119
	Inventory				629,251				56,227
	Prepaid expenses and other current assets				131,639				66,832
		Total current assets			861,037				179,310
Property and equipment, net					12,208				14,015
Deferred financing costs, net					58,336				44,525
Other assets					28,780				36,088
		Total Assets		$	960,361			$	273,938
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
	Line of credit			$	39,523			$	39,523
	Accounts payable				757,060				837,742
	Accrued expenses				444,559				423,947
	Deferred revenue				129,385				199,239
	Current portion of long-term debt - related parties				517,004				569,929
	Current portion of long-term debt - non-related parties				554,124				1,435,894
		Total current liabilities			2,441,655				3,506,274
Long-term debt, net of current portion - related parties					317,348				462,534
Long-term debt, net of current portion - non related parties					391,018				-
Total Liabilites					3,150,021				3,968,808
Commitments					-				-
Stockholders' deficit
	Common stock, par value of $.001, 150,000,000 shares authorized; 68,779,482 and 56,428,039 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively				68,780				56,428
	Additional paid-in capital				5,641,492				3,076,666
	Accumulated deficit				(7,899,932	)			(6,827,964	)
Total Stockholders' deficit					(2,189,660	)			(3,694,870	)
		Total Liabilities and Stockholders' deficit		$	960,361			$	273,938

Reconciliation of U.S. GAAP Net loss to EBITDA and Adjusted EBITDA:

EBITDA is defined as earnings (loss) before net interest expense, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization, stock warrant expense, payment of stock and warrants to consultants and employee stock-based compensation. Although EBITDA and Adjusted EBITDA are measures of performance calculated in accordance with generally accepted accounting principles ("GAAP"), Guitammer believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate meaningful comparison of the results in the current period to those in prior periods and future periods. However, investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining Guitammer's operating performance that is calculated in accordance with GAAP. A reconciliation of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, net loss, follows:

Reconciliation of U.S. GAAP net loss
to EBITDA and Adjusted EBITDA
			December 31,				December 31,
			2012				2011
Net Loss			$	(1,071,968	)		$	(1,166,771	)
Adjustments
	Interest Expense			278,928				465,922
	Depreciation and Amortization			34,337				37,744
	Taxes			-				-
EBITDA				(758,703	)			(663,105	)
Less non-cash expenses from:
Stock warrant expense				80,141				220,212
Payment of stock and warrants to consultants				183,239				68,801
Employee stock options expense				41,002				-
Adjusted EBITDA			$	(454,321	)		$	(374,092	)