SPY Inc. Reports Financial Results for the Nine Months and Third Quarter 2015
SPY Inc. Total Company First Nine Months Net Sales Reported as $26.6 Million
/EINPresswire.com/ -- CARLSBAD, CA--(Marketwired - November 04, 2015) - SPY Inc. (OTCBB: XSPY) today announced financial results for the three and nine months ended September 30, 2015.
First nine month sales were $26.6 million in 2015, a decrease of 6.1% or $1.8 million less than in the first nine months of 2014. Sales included higher closeout sales of $2.3 million in 2015, compared to $1.2 million in 2014. Gross profit as a percentage of net sales was 49.3% for the nine months ended September 30, 2015, compared to 51.9% for the nine months ended September 30, 2014.
Third quarter sales were $9.4 million in 2015, a decrease of 14.6% or $1.6 million less than in the same period in 2014. Gross profit as a percentage of net sales was 43.7% for the quarter ended September 30, 2015, compared to 49.2% for the same period in 2014.
"We are clearly disappointed by the quarter. SPY continued to experience a challenging consumer environment," said Seth Hamot, Interim CEO and Chairman. "Key accounts and e-commerce business were able to generate modest top-line growth, while our smaller, independent retail account activities were challenged."
Mr. Hamot continued, "The higher mix of lower margin goggle business relative to higher margin sun and Rx as well the higher level of closeout sales combined to contract margins. Going forward, our focus is on expanding our base of customers, growing our e-commerce business, reducing inventory levels and a laser focus on controlling costs. Our Happy Lens™ Collection positions us well for the future, and we are leveraging this opportunity wherever possible."
Income from operations decreased by approximately $0.8 million to $28,000 in the nine months of 2015, compared to $0.8 million in the nine months of 2014. Total operating expenses in the nine months of 2015 were lower by $0.8 million, compared to the same period in 2014. Cash flow generated by operating activities was $0.5 million in the first nine months of 2015.
In the third quarter of 2015 we had loss from operations of $0.1 million, a $0.7 million reduction from approximately $0.6 million of operating income in the same period in 2014. Additionally, total operating expenses in the third quarter of 2015 were lower by $0.6 million, compared to the same period in 2014.
The Company incurred a net loss of $1.7 million and $1.5 million during the nine months of 2015 and 2014, respectively.
The Company incurred a net loss of $0.8 million and less than $0.1 million during the third quarter of 2015 and 2014, respectively.
The results of our operations for the three months ended September 30, 2015 and 2014 are more fully discussed in our Form 10-Q for the three months ended September 30, 2015, filed with the Securities and Exchange Commission on November 3, 2015.
SPY Inc.:
We have a happy disrespect for the usual way of looking (at life) and the need to SEE HAPPY. It is this mindset that drives us to design, market, and distribute premium products for people who "live" to be outdoors, pushing the boundaries in action sports, motorsports, snow sports, cycling and multi-sports. We actively support the lifestyle subcultures that surround these pursuits, and as a result our products serve the broader fashion, music and entertainment markets of the youth culture. Our reason for being is to create the unusual and this is what helps us deliver distinctive products to people who are active, fun and a bit irreverent, like us. Our principal products -- sunglasses, goggles and prescription frames -- are marketed with fun and creativity under the SPY® brand. More information about SPY may be obtained from: www.spyoptic.com, www.facebook.com/spyoptic, Twitter @spyoptic and Instagram @spyoptic.
Safe Harbor Statement:
This press release contains forward-looking statements. These statements relate to future events or future financial performance and are subject to risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "feel," "estimate," "predict," "hope," the negative of such terms, expressions of optimism or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that could cause actual results to differ from those contained in our forward-looking statements include, but are not limited to lack of continuity and effectiveness of our management team, our ability to generate sufficient incremental sales of our core SPY
SPY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands, except number of shares and per share amounts)
September December
30, 31,
2015 2014
----------- -----------
(Unaudited)
Assets
Current assets
Cash $ 241 $ 351
Accounts receivable, net 5,571 7,171
Inventories, net 8,386 7,697
Prepaid expenses and other current assets 1,003 796
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Total current assets 15,201 16,015
Property and equipment, net 629 509
Intangible assets, net of accumulated amortization
of $830 and $818 at September 30, 2015 and
December 31, 2014, respectively 24 37
Other long-term assets 6 44
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Total assets $ 15,860 $ 16,605
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Liabilities and Stockholders' Deficit
Current liabilities
Lines of credit $ 6,463 $ 6,775
Current portion of capital leases 16 73
Current portion of notes payable 24 16
Accounts payable 2,397 1,216
Accrued expenses and other liabilities 3,812 3,910
----------- -----------
Total current liabilities 12,712 11,990
Capital leases, less current portion - 22
Notes payable, less current portion 55 -
Notes payable to stockholders 21,524 21,568
----------- -----------
Total liabilities 34,291 33,580
Stockholders' deficit
Preferred stock: par value $0.0001; 5,000,000
authorized; none issued - -
Common stock: par value $0.0001; 100,000,000
shares authorized; 13,466,339 and 13,392,293
shares issued and outstanding at September 30,
2015 and December 31, 2014, respectively 1 1
Additional paid-in capital 46,339 46,043
Accumulated other comprehensive income 413 450
Accumulated deficit (65,184) (63,469)
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Total stockholders' deficit (18,431) (16,975)
----------- -----------
Total liabilities and stockholders' deficit $ 15,860 $ 16,605
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SPY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Thousands, except per share amounts)
Three Months Nine Months
Ended September Ended September
30, 30,
---------------- ----------------
2015 2014 2015 2014
------- ------- ------- -------
(Unaudited) (Unaudited)
Net sales $ 9,370 $10,977 $26,622 $28,353
Cost of sales 5,273 5,579 13,500 13,632
------- ------- ------- -------
Gross profit 4,097 5,398 13,122 14,721
Operating expenses:
Sales and marketing 2,515 3,071 8,343 8,717
General and administrative 1,424 1,417 3,903 4,287
Shipping and warehousing 141 145 384 418
Research and development 139 172 464 521
------- ------- ------- -------
Total operating expenses 4,219 4,805 13,094 13,943
------- ------- ------- -------
Income (Loss) from operations (122) 593 28 778
Other income (expense):
Interest expense (501) (494) (1,479) (2,004)
Foreign currency transaction loss (165) (108) (264) (106)
Other (expense) - (10) 2 (169)
------- ------- ------- -------
Total other expense (666) (612) (1,741) (2,279)
------- ------- ------- -------
Loss before provision for income taxes (788) (19) (1,713) (1,501)
Income tax provision - - 2 3
------- ------- ------- -------
Net loss $ (788) $ (19) $(1,715) $(1,504)
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Net loss per share of Common Stock -
basic and diluted $ (0.06) $ (0.00) $ (0.13) $ (0.11)
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Shares used in computing basic and
diluted net loss per share 13,466 13,373 13,436 13,312
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Other comprehensive income (loss)
Foreign currency translation
adjustment $ (67) $ (51) $ 400 $ (238)
Unrealized gain (loss) on foreign
currency exposure of net investment
in foreign operations 71 9 (437) 190
------- ------- ------- -------
Total other comprehensive income
(loss) 4 (42) (37) (48)
------- ------- ------- -------
Comprehensive loss $ (784) $ (61) $(1,752) $(1,552)
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