ICTV Brands Reports 3Q17 Financial Results
Conference Call Begins November 21, 2017 at 10:00am EDT
WAYNE, Pa., Nov. 20, 2017 (GLOBE NEWSWIRE) -- ICTV Brands, Inc. (OTCQX:ICTV), (CSE:ITV), a digitally focused direct response marketing and international branding company focused on the health, wellness and beauty sector, today reported financial results for the three months ended September 30, 2017.
Third Quarter 2017 Highlights:
- Delivered revenue of approximately $7.56 million, up 80% compared to the prior year quarter.
- Achieved positive Adjusted EBITDA of $256,000, up 299% compared to prior year quarter.
- Total assets increased to approximately $17.2 million from approximately $4.5 million at December 31, 2016, which includes approximately $7.5 million in inventory and approximately $960,000 in cash and equivalents.
Management Commentary:
Richard Ransom, President, stated, “During the third quarter ICTV’s two flagship brands were placed in several new brick and mortar retail stores, including Shopper’s Drug Mart and expansion to over 300 additional Bed Bath & Beyond locations. This positions ICTV to maximize our sales during the prime retail season between Thanksgiving and New Year’s Day. In addition to retail initiatives in North America, our team has been focused on expanding the international distribution platform in both South America and Asia. We believe that the work our team has done over the last several months positions ICTV well for substantial growth in 2018 and the year to come.”
Reported Financial Results:
Third Quarter 2017 Compared to Third Quarter 2016:
Revenues for the three months ended September 30, 2017 were approximately $7.56 million, compared to approximately $4.2 million for the three months ended September 30, 2016. For the three months ended September 30, 2017, we generated approximately $4.5 million in gross profit, compared to approximately $3.0 million during the three months ended September 30, 2016 as a result of the addition of the no!no!TM, KyrobakTM and Cleartouch TM products acquired in January 2017. Gross profit margin was 60% in the third quarter 2017 compared to 72% in the prior year quarter. Total operating expenses increased to approximately $6.6 million from approximately $3.3 million during the third quarter of 2016, primarily related to the acquisition of the no!no! brand and other assets from PhotoMedex. The largest factor is an increase in internet marketing expenditures. Internet marketing expenses increased to approximately $1.2 million for the three months ended September 30, 2017 from approximately $299,000 during the three months ended September 30, 2016. Media expenditures were approximately $1.3 million and $1.4 million for the three months ended September 30, 2017 and 2016, respectively. In addition, payroll expenses increased to $565,000 during the three months ended September 30, 2017 from $367,000 during the three months ended September 30, 2016, as a result of additional employees from the PhotoMedex acquisition.
Net loss for the third quarter was approximately $387,000, compared to a net loss of approximately $262,000 in the prior year quarter. The resulting EPS is ($0.01), as compared to ($0.01) in the comparable quarter a year earlier. Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) was approximately $256,000 as compared to approximately ($128,000).
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Revenues for the nine months ended September 30, 2017 were $23.2 million, increasing from $12.5 million in the prior year period as a result of the addition of the no!no!TM, KyrobakTM and Cleartouch TM products acquired in January 2017. For the nine months ended September 30, 2017, we generated $15.2 million in gross margin, compared to approximately $8.8 million during the nine months ended September 30, 2016 as a result of the addition of the no!no!TM, KyrobakTM and Cleartouch TM products acquired in January 2017. Gross margin percentage was approximately 65% and 70% for the nine months ended September 30, 2017 and 2016. Total operating expenses increased to approximately $19.0 million from approximately $9.7 million during the third quarter of 2016. This increase in operating expenses relates primarily to the PhotoMedex acquisition. The biggest increase was internet marketing expenditures. Internet marketing expenses increased to approximately $3.3 million for the nine months ended September 30, 2017 from approximately $899,000 during the nine months ended September 30, 2016. Media expenditures was approximately $4.2 million for the nine months ended September 30, 2017 compared to $4.0 million for the nine months ended September 30, 2016. In addition, payroll expenses increased to $2.0 million during the nine months ended September 30, 2017 from $1.1 million during the nine months ended September 30, 2016, as a result of additional employees from the PhotoMedex acquisition. Net loss was ($2.2 million), compared to ($951,000). EPS was ($0.04), as compared to ($0.03), and Adjusted EBITDA was approximately ($415,000) as compared to approximately ($458,000).
Balance Sheet as of September 30, 2017
As of September 30, 2017, the Company had approximately $.96 million in cash and cash equivalents and approximately $6.1 million in working capital compared to approximately $1.4 million and approximately $1.3 million as of December 31, 2016, respectively. The Company believes that our current cash will be sufficient to meet the anticipated cash needs for working capital for at least the next twelve months.
Conference Call
ICTV will hold a conference call to discuss the Company’s third quarter 2017 results and answer questions on November 21, 2017, beginning at 10:00am EDT. The call will be open to the public and will have a corporate update presented by ICTV’s Chairman and Chief Executive Officer, Kelvin Claney, President, Richard Ransom and Chief Financial Officer, Ernest P. Kollias, Jr., followed by a question and answer period. The live conference call can be accessed by dialing (866) 831-8713 or (203) 518-9713. Participants are recommended to dial-in approximately 10 minutes prior to the start of the event. A replay of the call will be available approximately two hours after completion through December 5, 2017. To listen to the replay, dial (800) 934-7776 (domestic) or (402) 220-6983 (international). The conference call transcript will be posted to the Company’s corporate website (http://www.ictvbrands.com) for those who are unable to attend the live call.
ICTV Brands, Inc.
ICTV Brands, Inc. sells primarily health, beauty and wellness products as well as various consumer products through a multi-channel distribution strategy. ICTV utilizes a distinctive marketing strategy and multi-channel distribution model to develop, market and sell products through, including direct response television, or DRTV, digital marketing campaigns, live home shopping, traditional retail and e-commerce market places, and our international third party distributor network. Its products are sold in the North America and are available in over 65 countries. Its products include DermaWand, a skin care device that reduces the appearance of fine lines and wrinkles, and helps improve skin tone and texture, DermaVital, a professional quality skin care line that effects superior hydration, the CoralActives brand of acne treatment and skin cleansing products, and Derma Brilliance, a sonic exfoliation skin care system which helps reduce visible signs of aging, Jidue, a facial massager device which helps alleviate stress, and Good Planet Super Solution, a multi-use cleaning agent. On January 23, 2017, we acquired several new brands, through the PhotoMedex and Ermis Labs acquisitions and have begun (or, will shortly begin) marketing and selling the following new products; no!no!® Hair, a home use hair removal device; no!no!® Skin, a home use device that uses light and heat to calm inflammation and kill bacteria in pores to treat acne; no!no!® Face Trainer, a home use mask that supports a series of facial exercises; no!no!® Glow, a home use device that uses light and heat energy to treat skin; Made Ya Look, a heated eyelash curler; no!no!® Smooth Skin Care, an array of skin care products developed to work with the devices to improve the treated skin; Kyrobak, a home use device for the treatment of non-specific lower back pain; ClearTouch ®, a home use device for the safe and efficient treatment of nail fungus; and Ermis Labs acne treatment cleansing bars. ICTV Brands, Inc. was founded in 1998 and is headquartered in Wayne, Pennsylvania. For more information on our current initiatives, please visit www.ictvbrands.com.
Non-GAAP Financial Information
Adjusted EBITDA is defined as income from continuing operations before depreciation, amortization, interest expense, interest income, and stock-based compensation. Adjusted EBITDA is not intended to replace operating income, net income, cash flow or other measures of financial performance reported in accordance with generally accepted accounting principles. Rather, Adjusted EBITDA is an important measure used by management to assess the operating performance of the Company. Adjusted EBITDA as defined here may not be comparable to similarly titled measures reported by other companies due to differences in accounting policies.
| (Unaudited) | (Unaudited) | |||||||||||
| For the three months ended |
For the nine months end |
|||||||||||
| September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||
| Net loss, as reported | $ | (386,858 | ) | $ | (261,597 | ) | $ | (2,195,156 | ) | $ | (951,448 | ) |
| Share based compensation expense | 64,287 | 55,242 | 223,345 | 259,328 | ||||||||
| Depreciation and amortization | 300,964 | 74,631 | 820,792 | 223,850 | ||||||||
| Interest Expense | 164,915 | 3,274 | 218,032 | 10,511 | ||||||||
| Issuance of stock for compensation | - | - | 336,000 | - | ||||||||
| Taxes | 112,277 | - | 182,277 | - | ||||||||
| Adjusted EBITDA | $ | 255,586 | $ | (128,450 | ) | $ | (414,710 | ) | $ | (457,759 | ) | |
Forward-Looking Statements
Forward-Looking Statements. This press release contains "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 (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2016, including but not limited to the discussion under "Risk Factors" therein, which the Company has filed with the SEC and which may be viewed at http://www.sec.gov.
-- Financial Statement Schedules follow --
| ICTV BRANDS INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| AS OF | ||||||||
| September 30, 2017 | December 31, 2016 | |||||||
| ASSETS | (Unaudited) | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 961,024 | $ | 1,390,641 | ||||
| Accounts receivable, net of $428,533 and $123,109, respectively | 3,753,803 | 506,337 | ||||||
| Inventories, net | 7,479,842 | 1,499,270 | ||||||
| Prepaid expenses and other current assets | 352,678 | 254,303 | ||||||
| Total current assets | 12,547,347 | 3,650,551 | ||||||
| Property and equipment | 1,111,900 | 74,098 | ||||||
| Less accumulated depreciation | (183,048 | ) | (58,099 | ) | ||||
| Property and equipment, net | 928,852 | 15,999 | ||||||
| Intangibles assets, net | 3,733,979 | 872,864 | ||||||
| Total assets | $ | 17,210,178 | $ | 4,539,414 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued liabilities | $ | 5,047,357 | $ | 1,644,899 | ||||
| Current portion of long-term debt to related party | 641,399 | -0- | ||||||
| Deferred revenue | 258,189 | 377,445 | ||||||
| Deferred consideration | 160,417 | - | ||||||
| Other liabilities | 369,563 | 288,525 | ||||||
| Total current liabilities | 6,476,925 | 2,310,869 | ||||||
| Deferred revenue – long-term | 215,077 | 274,374 | ||||||
| Deferred consideration – long-term | 1,026,097 | - | ||||||
| Other liabilities – long-term | 514,826 | 665,713 | ||||||
| Long term debt to related party, net of current portion | 1,298,863 | - | ||||||
| Total long-term liabilities | 2,983,193 | 940,087 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Preferred stock 20,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized, 52,324,032 and 28,343,007 shares issued and outstanding as of September 30, 2017 and December 31,2016, respectively |
42,113 | 18,132 | ||||||
| Additional paid-in-capital | 19,970,657 | 11,546,804 | ||||||
| Accumulated other comprehensive loss | 208,924 | - | ||||||
| Accumulated deficit | (12,471,634 | ) | (10,276,487 | ) | ||||
| Total shareholders’ equity | 7,750,060 | 1,288,458 | ||||||
| Total liabilities and shareholders’ equity | $ | 17,201,178 | $ | 4,539,414 | ||||
See accompanying notes to the condensed consolidated financial statements as filed on www.sec.gov.
| ICTV BRANDS INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||||||||
| September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||||||||||||
| NET SALES | $ | 7,559,754 | $ | 4,203,530 | $ | 23,156,949 | $ | 12,471,266 | ||||||||||||||||||
| COST OF SALES | 3,049,989 | 1,158,998 | 7,995,170 | 3,698,764 | ||||||||||||||||||||||
| GROSS PROFIT | 4,509,765 | 3,044,532 | 15,161,779 | 8,772,502 | ||||||||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||||||||||||
| General and administrative | 2,448,376 | 1,035,752 | 7,643,917 | 3,076,489 | ||||||||||||||||||||||
| Selling and marketing | 4,102,346 | 2,267,103 | 11,346,321 | 6,636,950 | ||||||||||||||||||||||
| Total operating expenses | 6,590,722 | 3,302,855 | 18,990,238 | 9,713,439 | ||||||||||||||||||||||
| OPERATING LOSS | (2,080,957 | ) | (258,323 | ) | (3,828,459 | ) | (940,937 | ) | ||||||||||||||||||
| INTEREST EXPENSE, NET | (164,377 | ) | (3,274 | ) | (215,147 | ) | (10,511 | ) | ||||||||||||||||||
| GAIN ON SETTLEMENT | 1,969,245 | - | 1,969,245 | - | ||||||||||||||||||||||
| MISCELLANEOUS INCOME (LOSS) | (130 | ) | - | 59,974 | - | |||||||||||||||||||||
| LOSS BEFORE PROVISION FOR INCOME TAX | (274,581 | ) | (261,597 | ) | (2,012,879 | ) | (951,448 | ) | ||||||||||||||||||
| PROVISION FOR INCOME TAXES | 112,277 | - | 182,277 | - | ||||||||||||||||||||||
| NET LOSS | $ | (386,858 | ) | $ | (261,597 |
) | $ | (2,195,156 | ) | $ | (951,448 | ) | ||||||||||||||
| OTHER COMPREHENSIVE INCOME: | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | 112,223 | - | 208,924 | - | ||||||||||||||||||||||
| COMPREHENSIVE LOSS | $ | (274,635 | ) | $ | (261,597 | ) | $ | (1,986,232 | ) | $ | (951,448 | ) | ||||||||||||||
| NET LOSS PER SHARE | ||||||||||||||||||||||||||
| BASIC | $ | (0.01 | ) | $ | (0.01 |
) | $ | (0.04 | ) | $ | (0.03 | ) | ||||||||||||||
| DILUTED | $ | (0.01 | ) | $ | (0.01 |
) | $ | (0.04 | ) | $ | (0.03 | ) | ||||||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||||||||||||||||||||||||
| BASIC AND DILUTED | 52,321,826 | 28,202,739 | 49,518,478 | 28,184,584 | ||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements as filed on www.sec.gov.
| ICTV BRANDS INC. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 | |||||||||||
| (Unaudited) | |||||||||||
|
2017 |
2016 |
||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (2,195,156 | ) | $ | (951,448 | ) | |||||
| Adjustments to reconcile net loss to net decrease in cash provided by (used in) operating activities: | |||||||||||
| Depreciation | 128,835 | 5,637 | |||||||||
| Amortization of intangible assets | 691,957 | 218,213 | |||||||||
| Bad debt expense | 903,710 | 693,607 | |||||||||
| Share based compensation | 223,345 | 259,328 | |||||||||
| Issuance of stock for compensation | 336,000 | - | |||||||||
| Change in fair value of contingent consideration | (48,035 | ) | - | ||||||||
| Loss on disposal of property and equipment | 6,197 | - | |||||||||
| Noncash interest | 105,459 | 11,933 | |||||||||
| Gain on settlement of contingent consideration | (1,969,245 | ) | - | ||||||||
| Change in assets and liabilities: | |||||||||||
| Accounts receivable | (4,113,466 | ) | (900,774 | ) | |||||||
| Other receivable | (577,533 | ) | - | ||||||||
| Inventories | 922,503 | 751,369 | |||||||||
| Prepaid expenses and other current assets | 114,171 | 52,158 | |||||||||
| Accounts payable and accrued liabilities | 3,603,242 | (72,073 | ) | ||||||||
| Severance payable | - | (45,995 | ) | ||||||||
| Deferred revenue | (178,553 | ) | 82,304 | ||||||||
| Net cash provided by (used in) operating activities | (2,046,569 | ) | 104,259 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Acquisition of property and equipment | (171,196 | ) | (1,290 | ) | |||||||
| Cash paid for acquisition of PhotoMedex, Inc. | (5,000,000 | ) | - | ||||||||
| Net cash used in investing activities | (5,171,196 | ) | (1,290 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from issuance of common stock, net of costs | 6,982,930 | - | |||||||||
| Proceeds from exercise of options | 55,559 | - | |||||||||
| Payments of deferred consideration for acquisition | ( 14,583 | ) | - | ||||||||
| Payments of DermaWand asset purchase agreement | (150,000 | (225,000 | ) | ||||||||
| Repayments of long-term debt to related party | (87,441 | ) | - | ||||||||
| Net cash provided by (used in) financing activities | 6,786,465 | (225,000 | ) | ||||||||
| Effect of exchange rates on cash and cash equivalents | 1,683 | - | |||||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (429,617 | ) | (122,031 | ) | |||||||
| CASH AND CASH EQUIVALENTS, beginning of the period | 1,390,641 | 1,334,302 | |||||||||
| CASH AND CASH EQUIVALENTS, end of the period | $ | 961,024 | $ | 1,212,271 | |||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY: | |||||||||||
| Cashless exercise of options | $ | 43 | $ | - | |||||||
| Payments of DermaWand asset purchase agreement | $ | - | $ | 1,200,000 | |||||||
| Acquisition of PhotoMedex on January 23, 2017 | |||||||||||
| Fair value of assets acquired | $ | 9,198,043 | $ | - | |||||||
| Fair value of deferred consideration | (4,198,043 | ) | - | ||||||||
| Cash paid for acquisition | $ | 5,000,000 | $ | - | |||||||
| Asset Acquisition of Ermis Labs on January 23, 2017 | |||||||||||
| Cost of assets acquired | $ | 1,981,822 | $ | - | |||||||
| Present value of deferred consideration | (1,131,822 | ) | - | ||||||||
| Issuance of common stock for asset purchase | (850,000 | ) | - | ||||||||
| Cash paid for acquisition | $ | - | $ | - | |||||||
| Settlement of contingent consideration to PhotoMedex on July 12, 2017 | |||||||||||
| Contingent consideration owed to PhotoMedex | $ | 3,579,760 | $ | - | |||||||
| Other receivables amount forgiven | (837,708 | ) | |||||||||
| Payables extinguished | 1,017,193 | ||||||||||
| Settlement amount in proceeds from long-term debt | (2,000,000 | ) | - | ||||||||
| Assignment of deposit amount | 210,000 | - | |||||||||
| Gain on settlement of contingent consideration | $ | 1,969,245 | $ | - | |||||||
See accompanying notes to the condensed consolidated financial statements as filed on www.sec.gov.
Contact Information:
Rich Ransom
ransom@ictvbrands.com
484-598-2313
Ernest P. Kollias, Jr.
kollias@ictvbrands.com
484-598-2300
