SOURCE: Zurvita Holdings, Inc.

Zurvita Holdings, Inc.

January 11, 2011 07:00 ET

Zurvita Holdings, Inc. Reports Fiscal 2011 First Quarter Results

Financial Results Include Notable Increase in Gross Profits on Lower Cost of Sales

HOUSTON, TX--(Marketwire - January 11, 2011) - Zurvita Holdings, Inc. (OTCBB: ZRVT) ("Zurvita" or the "Company"), a dynamic direct-to-consumer network marketing company offering turn-key solutions for high-quality consumer and business products and services, today announced its financial results for the first quarter of the 2011 fiscal year, ended October 31, 2010.

First Quarter 2011 Highlights

--  Revenues increased 5% quarter-over-quarter to $1.3 million.
--  Gross profit rose 624% quarter-over-quarter to $431 thousand.
--  Gross profit increased to 33% versus 5% one year ago.
--  Loss from operations before other income and expenses decreased to $1.2
    million from $1.4 million one year ago.
--  Net income was $1.8 million, versus a net loss of $5.6 million one year
    ago.
--  Held "Decisive Moments National Leadership Conference" in California,
    Texas and New Jersey.
--  Strengthened executive team with appointment of a Vice President of
    Marketing.

"As demonstrated by our first quarter performance, Zurvita continues to make excellent progress in revenue and margin enhancement, further positioning Zurvita to deliver on its goals for growth," stated Jay Shafer, Zurvita Co-Chief Executive Officer. "Our increase in revenue was driven by further growth in administrative website, advertising and energy commission revenue from commercial energy sales; one of our innovative service offerings where we see excellent traction and long-term potential. Zurvita also experienced a sharp increase in gross profit, resulting from lower cost of goods as a result of cost of acquisition savings in our recruitment efforts as well as sales of our higher margin products. To support our growth, we continued to recruit the best talent and strengthened our leadership team during the quarter to take advantage of the tremendous opportunities we see ahead." Added Mr. Shafer, "We see a strong upside to our business for 2011 as we bring to market unique products in steady industries such as financial services, online advertising, and energy markets, and by providing our consultants the best tools and the expertise needed to create financial freedom."

First Quarter 2011 Results

Revenue for the fiscal 2011 first quarter ended October 31, 2010, increased 5% or approximately $64 thousand to $1.3 million from $1.2 million in the first quarter of fiscal 2010. The increase in total revenue was primarily a result of continued growth in administrative website, advertising and energy commission revenue.

Administrative websites sales and marketing fees were approximately $462 thousand and $349 thousand for the three months ended October 31, 2010, respectively, as compared to approximately $484 thousand and $396 thousand, respectively, for the three months ended October 31, 2009. The aggregate decrease in administrative website sales and marketing fees was approximately $23 thousand and $47 thousand, respectively. The decrease was a result of less recruiting during the three months ended October 31, 2010 as compared to 2009.

Gross profit for the fiscal first quarter ended October 31, 2010, increased 624% to $431 thousand compared to gross profit of approximately $59 thousand in the same period a year ago. The increase in gross profit was due to the decrease in the company's cost of sales, which fell by approximately $307 thousand to $882 thousand from $1.2 million for the same period a year ago.

The decrease in cost of sales was mainly a result of less non-traditional sales incentives used to attract and retain consultants and because the Company's had a greater product offering with increased margins. Gross margin for the fiscal first quarter ended October 31, 2010, increased to 33% versus 5% for the three months ended October 31, 2010.

Operating expenses for the fiscal first quarter were approximately $1.6 million, compared to $1.4 million one year earlier. Loss from operations before other income and expenses for the fiscal first quarter improved to $1.2 million versus $1.4 million for the three months ended October 31, 2009.

For the first quarter of fiscal 2011, the company recorded a net income of $1.8 million, or $0.02 per diluted share, versus a loss of $5.6 million, or $0.10 per diluted share for the same period last year. Diluted earnings per share were calculated using a weighted average share count of 109.1 million in the first fiscal quarter of 2011, compared to 56.4 million one year ago. Although the Company experienced an increase in revenues and improvement in gross margin, the increase in net income is attributable to non-cash unrealized gains, including a $3.1 million gain resulting from fair valuing the Company's outstanding liability warrants.

Financial Condition

As of October 31, 2010, the Company had cash and cash equivalents of $621 thousand. Net cash used in operating activities for the first three months of fiscal 2011 was approximately $1.3 million, up from $1.2 million for the same period last year. Total liabilities, redeemable preferred stock and stockholders' deficit was $1.5 million as of October 31, 2010 versus total liabilities, redeemable preferred stock and stockholders' deficit of $3.4 million for the year ended July 31, 2010.

Fiscal 2011 Outlook

"We are extremely confident about Zurvita's prospects in 2011, as we look at the introduction of dynamic new products and divisions based on the essential services that businesses and individuals use every day," commented Mark Jarvis, Zurvita Co-Chief Executive Officer. "With the recent completion of our technology transfer agreement with OmniReliant, we have now fully secured the technology to power 'ZLinked,' Zurvita's proprietary local search advertising and search engine directory. This technology has launched us into the trillion dollar online advertising and search directory services market. It is an exciting time for us as we look to fine-tune ZLinked, a platform which allows small- and medium-sized businesses to effectively connect with consumers on the internet by combining a suite of effective turn-key advertising solutions, including geo-targeted advertising placements. We believe providing our consultants with innovative and essential products such as these will allow us to continue our momentum of growth."

About Zurvita Holdings, Inc.

Zurvita is a dynamic direct-to-consumer marketing company offering high-quality products and services targeting individuals, families and small businesses. The company's highly differentiated services feature best in class consumer products and small business solutions through a growing network of independent sales consultants. Zurvita has rapid growth potential due to its experienced sales management team and its unique business-to-business strategy offering turnkey solutions for commercial and residential energy, advertising, telecommunications and financial services. For more information, please visit http://www.zurvita.com.

Follow Zurvita on Twitter at: http://twitter.com/Zurvita and on Zurvita's Facebook Fan Page at: www.facebook.com/Zurvita.

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

- FINANCIAL TABLES FOLLOW -

                          ZURVITA HOLDINGS, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                                                For the Three Months Ended
                                                        October 31,
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------
REVENUES
   Administrative websites                      $    461,728  $    484,365
   Advertising sales                                 241,273         3,772
   Commissions                                       111,091        61,321
   Marketing fees and materials                      349,227       396,122
   Membership fees                                   149,466       303,055
                                                ------------  ------------
      Total revenues                               1,312,785     1,248,635

COST OF SALES
   Benefit and service cost                          312,924       277,294
   Sales commissions                                 569,357       911,848
                                                ------------  ------------
      Total cost of sales                            882,281     1,189,142

GROSS PROFIT                                         430,504        59,493

OPERATING EXPENSES
   Depreciation                                        9,787         8,452
   Office related expenses                           126,699        83,313
   Payroll and employee benefits                     606,852       320,580
   Professional fees                                 292,886       306,174
   Selling and marketing                             523,488       652,114
   Travel                                             79,751        53,748
                                                ------------  ------------
      Total operating expenses                     1,639,463     1,424,381
                                                ------------  ------------

Loss from operations before other income
 (expense)                                        (1,208,959)   (1,364,888)

OTHER INCOME (EXPENSE)
   Gain on change in fair value of share
    conversion feature                               323,249         4,192
   Gain (loss) on change in fair value of
    warrants                                       3,124,000    (4,041,827)
   Interest expense                                  (83,629)      (28,429)
   Interest income                                     4,756             -
   Loss on change in fair value of marketable
    securities                                      (320,000)     (130,000)
                                                ------------  ------------
      Total other income (expense)                 3,048,376    (4,196,064)
                                                ------------  ------------

Income (loss) before income taxes                  1,839,417    (5,560,952)

Income taxes                                           1,302         9,785
                                                ------------  ------------

Net income (loss)                               $  1,838,115  $ (5,570,737)
                                                ============  ============

Basic earnings (loss) per share                 $       0.03  $   ( 0.10 )
                                                ============  ============

Diluted earnings (loss) per share               $       0.02  $   ( 0.10 )
                                                ============  ============

Basic weighted average number of common shares
 outstanding                                      61,498,713    56,440,000
                                                ============  ============

Diluted weighted average number of common
 shares outstanding                              109,098,713    56,440,000
                                                ============  ============

The accompanying notes are an integral part of these condensed consolidated
financial statements.




                          ZURVITA HOLDINGS, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS


                                                  (Unaudited)
                                                  October 31,    July 31,
                                                      2010         2010
                                                  -----------  -----------
ASSETS
   Current assets
      Cash                                        $   621,478  $   289,442
      Marketable securities (at fair value)           160,000      480,000
      Note recievable - related party                       -    1,702,000
      Accounts receivable                             183,766      137,123
      Agent advanced compensation                     174,743      448,553
      Deferred expenses                                78,068      127,351
      Other assets                                    108,986       41,173
                                                  -----------  -----------
         Total current assets                       1,327,041    3,225,642

   Property, plant and equipment (net)                 89,986       94,965

   Merchant account deposit                           115,333      115,333
                                                  -----------  -----------
            Total assets                          $ 1,532,360  $ 3,435,940
                                                  ===========  ===========

LIABILITIES, REDEEMABLE PREFERRED STOCK AND
 STOCKHOLDERS' DEFICIT
   Current liabilities
      Accounts payable                            $    90,526  $   249,762
      Accounts payable - related party                 39,711      127,733
      Notes payable - current                         229,018      284,967
      Accrued expenses                                307,383      332,217
      Deferred revenue                                620,046      808,957
      Deferred compensation - related party            97,546      110,238
      Income tax payable                                3,930        2,628
                                                  -----------  -----------
         Total current liabilities                  1,388,160    1,916,502

      Notes payable - long term                     1,717,352    1,639,268
      Fair value of share conversion feature          138,764      462,013
      Fair value of warrants                        3,246,000    6,370,000
                                                  -----------  -----------
         Total liabilities                          6,490,276   10,387,783
                                                  -----------  -----------

   Redeemable preferred stock                       4,550,747    4,550,747

   Stockholders' deficit
      Common stock ($.0001 par value, 300,000,000
       shares authorized; 69,498,713 and 69,497,713
       shares issued and 61,498,713 and 61,497,713
       shares outstanding as of October 31, 2010
       and July 31, 2010, respectively)                 6,950        6,950
      Treasury stock                                 (210,000)    (210,000)
      Additional paid-in capital                   10,134,550    9,978,738
      Accumulated deficit                         (19,440,163) (21,278,278)
                                                  -----------  -----------
         Total stockholders' deficit               (9,508,663) (11,502,590)
                                                  -----------  -----------

         Total liabilities, redeemable preferred
          stock and stockholders' deficit         $ 1,532,360  $ 3,435,940
                                                  ===========  ===========


The accompanying notes are an integral part of these condensed consolidated
financial statements.




                          ZURVITA HOLDINGS, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)


                                                For the Three Months Ended
                                                October 31,   October 31,
                                                    2010          2009
                                                ------------  ------------
Cash flows from operating activities
Net income (loss)                               $  1,838,115  $ (5,570,737)
Adjustments to reconcile net loss to net cash
 used in operating activities:
      Amortization of note payable discount           46,000        10,125
      Amortization of deferred marketing costs             -       164,350
      Depreciation                                     9,787         8,452
      Share-based compensation                       155,312        57,402
      Gain on change in fair value of share
       conversion feature                           (323,249)       (4,192)
      (Gain) loss on change in fair value of
       warrants                                   (3,124,000)    4,041,827
      Loss on change in fair value of
       marketable securities                         320,000       130,000
   Changes in operating assets and liabilities
      Increase (decrease) in accounts
       receivable                                    (46,643)       10,749
      Decrease in agent advanced compensation        273,810        98,360
      Decrease in deferred expenses                   49,283             -
      Increase in other assets                       (48,186)       (8,241)
      Decrease in accounts payable and accrued
       expenses                                     (238,535)     (297,223)
      (Decrease) increase in deferred revenue       (188,911)      183,501
      Decrease in deferred compensation related
       party                                         (12,692)            -
                                                ------------  ------------
Net cash (used in) operating activities           (1,289,909)   (1,175,627)
                                                ------------  ------------

Cash flows from investing activities
      Net proceeds from promissory note
       recievable                                  1,702,000             -
      Purchase of property and equipment           ( 4,979 )             -
      Purchase of marketable securities                    -      (770,000)
                                                ------------  ------------
Net cash provided by (used in) investing
 activities                                        1,697,021      (770,000)
                                                ------------  ------------

Cash flows from financing activities
      Proceeds from exercise of warrants                 500             -
      Proceeds from sale of preferred stock                -     2,000,000
      Principal payments made on notes payable       (75,576)     (593,218)
                                                ------------  ------------
Net cash (used in) provided by financing
 activities                                          (75,076)    1,406,782
                                                ------------  ------------

Net change in cash balance                           332,036      (538,845)

Beginning cash                                       289,442     1,390,953
                                                ------------  ------------

Ending cash                                     $    621,478  $    852,108
                                                ============  ============

Supplemental disclosure of cash flow
 information
      Cash paid for interest                    $      5,423  $      7,476
                                                ============  ============

      Cash paid for taxes                       $          -  $          -
                                                ============  ============

The accompanying notes are an integral part of these condensed consolidated
financial statements.

Contact Information

  • Company Contact:
    Zurvita Holdings, Inc.
    Jason Post, Chief Financial Officer
    Phone: 407.805.8900
    jason.post@amacoregroup.com

    Investor Relations Contact:
    Hampton Growth Resources, LLC
    Andrew W. Haag, Managing Partner
    Phone: 877 368 3566
    zrvt@hamptongrowth.com