SOURCE: Zurvita Holdings, Inc.

Zurvita Holdings, Inc.

March 18, 2010 07:25 ET

Zurvita Holdings, Inc. Reports Second Quarter Fiscal 2010 Financial Results

Strong Revenue Gains Driven by Growth in Advertising Sales, Energy Commissions and Increases in Marketing Fees From Growing Representative Base

HOUSTON, TX--(Marketwire - March 18, 2010) - 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 second quarter of its 2010 fiscal year ended January 31, 2010.

Second Quarter 2010 Highlights

--  Revenues increased 38.5% to $1.7 million
--  Gross profit remained steady at $581 thousand
--  Gross margin was 35.1%
--  Signed marketing agreement with OmniReliant Holdings for
    online business advertising solutions
--  Increased total number of sales representatives by nearly 100%

"We are excited by the progress and results we achieved in the second quarter as we continued to increase our revenues and position the company for further growth. Our top line results were driven by new revenue streams resulting from advertising sales and commissions relating to energy sales as well as increases in marketing fees due to the growth in our sales representative base," said Mr. Mark Jarvis, Co-Chief Executive Officer of Zurvita Holdings, Inc. "We continue to see strong upside potential for our innovative suite of productions and services and believe we have the right team in place and the right approach to increase shareholder value and grow our business exponentially."

Second Quarter 2010 Results

Revenue for the second fiscal quarter ended January 31, 2010, increased 35.1% to $1.7 million. The increase was primarily attributable to new revenue streams from advertising sales related to the Company's Local Search Engine directory and commissions related to energy sales, which together accounted for approximately $347 thousand of the increase in the Company's revenues for the three months ended January 31, 2010. The increase in administrative website sales and marketing fees is a direct result of growth in the total sales representative base which was approximately 13.7 thousand at January 31, 2010, compared to approximately 6.9 thousand at January 31, 2009.

Gross profit increased slightly to $581 thousand. Gross margin for the quarter was 35.1%.

Operating expenses for the fiscal second quarter were $1.9 million, compared to $1.7 million a year earlier. The slight increase was primarily attributable higher office related expenses, payroll and benefits, and selling and marketing expenses as the Company expanded its operations and hired additional employees to operate the Company's online advertising program.

For the second quarter of fiscal 2010, the company recorded a net loss of $1.7 million, or $0.03 per diluted share, versus a loss of $1.2 million, or $0.02 per diluted share for the same prior year period. Diluted earnings per share were calculated using a weighted average share count of 56.7 million in the second fiscal quarter of 2010, compared to 49.2 million a year ago.

Six Month Results

Revenues for the first six months of the 2010 fiscal year were $2.9 million, up 41% from $2.1 million in the same period a year ago. Gross profit was $640 thousand, or 22% of sales, versus a loss of $20 thousand in the first six months of fiscal 2009. Operating expenses for the six months ended January 31, 2010, were $3.3 million, versus operating expenses of $3.4 million for the same prior year period. Operating loss improved to $2.7 million versus $3.4 million for the six months ended January 31, 2009. The Company reported a net loss of $7.3 million, or $0.13 per diluted share, versus a net loss of $3.4 million, or $0.07 per diluted share, for the same prior year period.

Financial Condition

As of January 31, 2010, the Company had cash and cash equivalents of $67 thousand and working capital of $779 thousand. Net cash used in operating activities for the first six months of fiscal 2010 was $1.9 million, down from $3.5 million for the same period in 2009. Total liabilities and stockholders' deficit was $5.3 million as of January 31, 2010.

On January 29, 2010, the Company entered into a Securities Purchase Agreement with an accredited investor and sold 1,000,000 shares of its newly designated Series C Convertible Preferred Stock and Series C Common Stock Purchase Warrants to purchase an aggregate of 4,000,000 shares of the Company's common stock. The Company received aggregate proceeds from the Sale of the Private Placement Securities equal to $1.0 million.

Recent Events

The Company entered into the growing online advertising market with the second quarter launch of a proprietary local advertising search directory service. The Local Search Engine Directory service is a proprietary local search and advertising software program owned by OmniReliant Holdings. The Local Search Engine Directory platform connects consumers who visit high-volume websites with thousands of national and local advertisers, thereby increasing brand identity and exposure, and ultimately customer revenue, by geo-targeting advertising placements in local markets, where they make the most impact.

From March 5th to March 8th, 2010, the Company held its "Freedom Crusade" national conference at the Hilton Americas in Houston, Texas, which drew over 650 attendees. The three day conference featured training and presentations by Zurvita marketing leaders who discussed how the Company's unique business-to-business model generates significant opportunities for independent business owners and entrepreneurs. The Company formally launched its new digital video phone services powered by WorldGate at the Freedom conference. In addition, the Company introduced a new energy technology platform that provides its representatives with a web-based portal to manage energy sales. The Company is focusing its resources on these new products thereby enhancing its ability to attract and retain consultants.

Business Outlook

"We look forward with anticipation to the remainder of fiscal 2010 and are excited about the new offerings we have put together in online business advertising, digital video and voice services, and in commercial energy sales and support, which have already started to supply additional streams of revenues to the business," said Mr. Jay Shafer, Zurvita Co-Chief Executive Officer of Zurvita Holdings, Inc. "The Company is focusing its efforts and resources on these new products thereby enhancing its ability to attract and retain consultants. Zurvita is committed to the growth and success of is consultant base, and we are already directing our attention to preparing for our 'Champion's Weekend,' which is the Company's next national meeting to be held from July 22 to July 24 in Orlando, Florida. We believe the positive results we have seen driven by the growth in our sales representative base and exciting new products and services should position the Company for significant increases in top line growth and profits going forward."

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.

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.

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


                       For the Three Months Ended  For the Six Months Ended
                              January 31,               January 31,
                           2010         2009         2010         2009
                        -----------  -----------  -----------  -----------
REVENUES
  Administrative
   websites             $   513,770  $   234,119  $   998,135  $   414,741
  Advertising sales         251,819            -      255,591            -
  Commissions                95,520          594      156,841          614
  Marketing fees and
   materials                555,105      489,991      951,227      797,602
  Membership fees           236,696      468,770      539,751      845,413
                        -----------  -----------  -----------  -----------
    Total revenues        1,652,910    1,193,474    2,901,545    2,058,370

COST OF SALES
  Benefit and service
   cost                     352,953      150,610      630,246      333,390
  Sales commissions         719,027      530,407    1,630,876    1,744,798
                        -----------  -----------  -----------  -----------
    Total cost of sales   1,071,980      681,017    2,261,122    2,078,188

GROSS PROFIT (LOSS)         580,930      512,457      640,423      (19,818)

OPERATING EXPENSES
  Depreciation                8,824        8,362       17,276       11,241
  Office related
   expenses                  85,575       68,627      168,888      126,647
  Payroll and employee
   benefits                 442,390      294,085      762,970      599,797
  Professional fees         442,723      564,356      748,897    1,077,134
  Selling and marketing     838,693      686,010    1,490,807    1,327,420
  Travel                     52,285       67,415      106,033      221,416
                        -----------  -----------  -----------  -----------
    Total operating
     expenses             1,870,490    1,688,855    3,294,871    3,363,655
                        -----------  -----------  -----------  -----------

Loss from operations
 before other income
 (expense)               (1,289,560)  (1,176,398)  (2,654,448)  (3,383,473)

OTHER INCOME (EXPENSE)
  Gain on change in fair
   value of share
   conversion feature        28,103            -       32,295            -
  Interest expense          (79,666)           -     (108,096)           -
  Loss on change in fair
   value of marketable
   securities              (400,000)           -     (530,000)           -
  Loss on change in fair
   value of warrants          2,162            -   (4,039,665)           -
                        -----------  -----------  -----------  -----------
    Total other expense    (449,402)           -   (4,645,466)           -
                        -----------  -----------  -----------  -----------

Loss before income
 taxes                   (1,738,962)  (1,176,398)  (7,299,914)  (3,383,473)

Income taxes                 10,357        8,354       20,142       14,409
                        -----------  -----------  -----------  -----------

Net loss                $(1,749,319) $(1,184,752) $(7,320,056) $(3,397,882)
                        ===========  ===========  ===========  ===========

Basic and diluted loss
 per share              $     (0.03) $     (0.02) $     (0.13) $     (0.07)
                        ===========  ===========  ===========  ===========

Basic and diluted
 weighted average
 number of common
 shares outstanding      56,653,792   49,240,000   56,546,896   49,240,000
                        ===========  ===========  ===========  ===========

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




                          ZURVITA HOLDINGS, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS


                                                 (Unaudited)
                                                  January 31,   July 31,
                                                     2010         2009
                                                  -----------  -----------
ASSETS
  Current assets
    Cash                                          $    66,615  $ 1,390,953
    Security sale proceeds in escrow                  982,500            -
    Marketable securities (at fair value)             240,000            -
    Accounts receivable                               121,512       47,732
    Agent advanced compensation                       945,617      927,002
    Deferred expenses                                 294,620            -
    Deferred marketing costs                          328,700      657,400
                                                  -----------  -----------
      Total current assets                          2,979,564    3,023,087

  Property, plant and equipment (net)                 101,457      112,036

  Agent advanced compensation                               -      271,344
  Marketing agreement                               2,000,000            -
  Merchant account deposit                            115,333      115,333
  Other assets                                         61,698       24,126
                                                  -----------  -----------
      Total assets                                $ 5,258,052  $ 3,545,926
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT
  Current liabilities
    Accounts payable                              $   256,642  $   471,081
    Accounts payable - related party                  211,886            -
    Notes payable - current                           288,142      787,237
    Accrued expenses                                  239,396      148,001
    Deferred revenue                                1,204,999      934,321
    Income tax payable                                      -       35,276
                                                  -----------  -----------
      Total current liabilities                     2,201,065    2,375,916

    Notes payable - long term                       1,647,621      284,967
    Fair value of share conversion feature            561,131            -
    Fair value of warrants                          6,017,438      549,780
                                                  -----------  -----------
      Total liabilities                            10,427,255    3,210,663
                                                  -----------  -----------

  Redeemable preferred stock                        2,848,747    1,211,000

  Stockholders' deficit
    Common stock ($.0001 par value, 300,000,000
     shares authorized; 64,692,161 and 64,440,000
     shares issued and 56,692,161 and 56,440,000
     shares outstanding as of January 31, 2010
     and July 31, 2009, respectively)                   6,469        6,444
    Treasury stock                                   (210,000)    (210,000)
    Additional paid-in capital                      9,272,000    9,094,182
    Accumulated deficit                           (17,086,419)  (9,766,363)
                                                  -----------  -----------
      Total stockholders' deficit                  (8,017,950)    (875,737)
                                                  -----------  -----------

      Total liabilities and stockholders' deficit $ 5,258,052  $ 3,545,926
                                                  ===========  ===========

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





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


                                                 For the Six Months Ended
                                                 January 31,   January 31,
                                                    2010          2009
Cash flows from operating activities            ------------  ------------
Net loss                                        $ (7,320,056) $ (3,397,882)
Adjustments to reconcile net loss to net cash
 used in operating activities:
     Amortization on note payable discount            52,254             -
     Amortization on deferred marketing costs        328,700             -
     Depreciation                                     17,276        11,241
     Share-based compensation                        243,583        84,802
     Gain on change in fair value of share
      conversion liability                           (32,295)            -
     Loss on change in fair value of marketable
      securities                                     530,000             -
     Loss on change in fair value of warrants      4,039,665             -
   Changes in operating assets and liabilities
     Increase in accounts receivable                 (56,280)       (7,478)
     Decrease (increase) in agent advanced
      compensation                                   252,729      (127,843)
     Increase in deferred expenses                  (294,620)     (352,785)
     Increase in merchant account deposits                 -      (115,333)
     Increase in other assets                        (15,541)       (8,216)
     Increase (decrease) in accounts payable
      and accrued expenses                            84,234       (12,996)
     Increase in deferred revenue                    270,678       408,817
                                                ------------  ------------
Net cash used in operating activities             (1,899,673)   (3,517,673)
                                                ------------  ------------

Cash flows from investing activities
     Purchase of property and equipment               (6,698)     (126,101)
     Purchase of marketable securities              (770,000)            -
                                                ------------  ------------
Net cash used in investing activities               (776,698)     (126,101)
                                                ------------  ------------

Cash flows from financing activities
     Contributions of capital from The Amacore
      Group, Inc.                                          -     3,490,198
     Proceeds from sale of preferred stock         2,000,000             -
     Principal payments made on notes payable       (647,967)            -
                                                ------------  ------------
Net cash provided by financing activities          1,352,033     3,490,198
                                                ------------  ------------

Net change in cash balance                      $ (1,324,338) $   (153,576)

Beginning cash                                     1,390,953       174,585
                                                ------------  ------------

Ending cash                                     $     66,615  $     21,009
                                                ============  ============

Supplemental disclosure of cash flow
 information
     Cash paid for interest                     $     17,727  $          -
                                                ============  ============
     Cash paid for income taxes                 $          -  $          -
                                                ============  ============

The accompanying notes are an integral part of these 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