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8-K - 8-K - iSatori, Inc.ifit8k110912.htm

Exhibit 99.1


NEWS RELEASE

[exhibit991001.jpg]

 

 



FOR IMMEDIATE RELEASE


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, COLORADO (MarketWire – November 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 operations 3

($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.


Contacts:

iSatori, Inc.

R.J. Falkner & Company, Inc.

 

Stephen Adele, CEO

R. Jerry Falkner, CFA

 

(303) 215-9174

(800) 377-9893

 

PR@isatoritech.com

www.rjfalkner.com

 






###




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 liabilities

 

 

 

 

 

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 





iSatori, Inc., iSatori Technologies, Inc. and iSatori Technologies, LLC

Condensed Consolidated Balance Sheets

(Continued)


 

September 30,

 

December 31,

 

2012

 

2011

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