UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2014
InfoSonics Corporation
(Exact name of registrant as specified in its charter)
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| Maryland |
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001-32217 |
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33-0599368 |
| (State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
3636 Nobel Drive, Suite #325
San Diego, CA 92122
(Address of principal executive offices)
Registrant’s telephone number, including area code: (858) 373-1600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
| ¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. |
Results of Operations and Financial Condition. |
On May 13, 2014, InfoSonics
Corporation (the “Company”) issued an earnings release announcing its financial results for the three months ended March 31, 2014 in the press release attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Item 2.02 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant
to the Securities Act of 1933, as amended.
| Item 9.01. |
Financial Statements and Exhibits. |
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| Exhibit
No. |
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Description |
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| 99.1 |
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Press Release of InfoSonics Corporation dated May 13, 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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InfoSonics Corporation |
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/s/ Vernon A. LoForti |
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Vernon A. LoForti |
| Date: May 13, 2014 |
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Vice President, Chief Financial Officer and Secretary |
Exhibit 99.1
PRESS RELEASE
InfoSonics
Reports First Quarter 2014 Results
SAN DIEGO, May 13, 2014 – InfoSonics Corporation (NASDAQ: IFON), the provider of verykool® wireless handset solutions and tablets, today announced results for its first quarter ended March 31, 2014.
“We are pleased to report a third consecutive quarter of profitability,” said Joseph Ram, president and CEO of InfoSonics. “Sales in the first
quarter grew 49% over the same quarter last year, gross profit grew 50% and operating expenses declined by 6%. Unit shipments during the quarter rose 51% compared to the prior year. Most importantly, we reported a large swing in profitability by
turning a $709,000 loss in the first quarter of 2013 into a $55,000 profit in the first quarter of 2014. Also significant, in late March we secured a $2 million bank line of credit that will provide future liquidity, together with the
arrangement of $4 million of credit insurance that will enable our manufacturing vendors to extend credit to us that was not previously available.”
InfoSonics reported net sales for the 2014 first quarter of $11.6 million, which represented a $3.8 million, or 49%, increase from $7.8 million for the
first quarter of 2013. The Company reported sales growth in a number of geographical areas, primarily in South America and increased private label sales to customers in Europe. These increases were partially offset by a decline in sales to customers
in Central America.
Gross profit in the first quarter of 2014 was $2.1 million, a 50% increase over $1.4 million in the 2013 first quarter. The
gross profit margin as a percent of sales in the first quarter of 2014 rose to 17.8% compared to 17.7% in the 2013 first quarter.
Operating expenses in
the first quarter of 2014 were $2.0 million, a decrease of $129,000, or 6%, compared to $2.1 million in the 2013 first quarter. This reflects a $42,000, or 2%, increase in SG&A expenses and a $171,000, or 43%, decrease in R&D expenses.
These changes reflect increased legal fees during the quarter and substantially reduced R&D expenses incident to the Company’s restructurings during 2013 of its China-based development team.
Net income for the first quarter of 2014 was $55,000, a significant improvement over the net loss of $709,000 in the first quarter of 2013.
At March 31, 2014, the Company had $1.1 million in cash, $16.3 million of net working capital and no outstanding indebtedness.
About InfoSonics Corporation
InfoSonics is a San
Diego-based designer, manufacturer and provider of wireless handsets and related products to OEMs, carriers, distributors and consumers in the United States, Latin America, Europe, Africa and Asia Pacific. The company is committed to delivering
quality products with innovative industrial designs that appeal to consumers and offer exceptional value. InfoSonics sells and supports its own line of products under the verykool® and
other private label brands. Additional information can be found on our corporate website at www.infosonics.com and www.verykool.net.
Except
for the factual statements made herein, the information contained in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and
assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “hopes,” “intends,”
“estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is
not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Factors that could cause or contribute to such differences include,
without limitation: (1) intense competition internationally, including competition from alternative business models, such as manufacturer-to-carrier sales, which may lead to reduced prices, lower sales, lower gross margins, extended payment
terms with customers, increased capital investment and interest costs, bad debt
risks and product supply shortages; (2) our ability to develop new verykool® handsets and successfully introduce them into new
emerging markets; (3) extended general economic downturn in world markets; (4) inability to secure adequate supply of competitive products on a timely basis and on commercially reasonable terms; (5) the ability of the Company to
maintain and improve its gross margins despite intense competition; (6) foreign exchange rate fluctuations, devaluation of a foreign currency, adverse governmental controls or actions, political or economic instability, or disruption of a
foreign market, including, without limitation, the imposition, creation, increase or modification of tariffs, taxes, duties, levies and other charges and other related risks of our international operations which could significantly increase selling
prices of our products to our customers and end-users; (7) the ability to attract new sources of profitable business from expansion of products or services or risks associated with entry into new markets, including geographies, products and
services; (8) an interruption or failure of our information systems or subversion of access or other system controls may result in a significant loss of business, assets, or competitive information; (9) significant changes in supplier
terms and relationships, disruptions in production at contract manufacturers or shortages in product supply; (10) loss of business from one or more significant customers; (11) customer and geographical accounts receivable concentration
risk and other related risks; (12) rapid product improvement and technological change resulting in inventory obsolescence; (13) uncertain political and economic conditions internationally, including terrorist or military actions;
(14) the loss of a key executive officer or other key employees and the integration of new employees; (15) changes in consumer demand for multimedia wireless handset products and features; (16) our failure to adequately adapt to
industry changes and to manage potential growth and/or contractions; (17) seasonal buying patterns; (18) the resolution of any litigation for or against the Company, including claims for infringement of intellectual property; (19) the
ability of the Company to have access to adequate capital to fund its operations, including the availability of vendor credit and availability under the Company’s bank line of credit; and (20) the ability of the Company to generate taxable
income in future periods. Reference is also made to other factors detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release
and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release.
Contact:
Vernon A. LoForti
Chief Financial Officer
vern.loforti@infosonics.com
858-373-1675
###
InfoSonics Corporation
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
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Three months ended |
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March 31, |
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2014 |
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2013 |
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| Net sales |
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$ |
11,624 |
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$ |
7,821 |
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| Cost of sales |
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9,551 |
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6,439 |
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| Gross profit |
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2,073 |
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1,382 |
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| Operating expenses: |
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| Selling, general and administrative |
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1,785 |
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1,743 |
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| Research and development |
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227 |
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398 |
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2,012 |
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2,141 |
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| Operating income (loss) |
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61 |
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(759 |
) |
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| Other income (expense): |
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| Other income (expense), net |
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(3 |
) |
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51 |
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| Interest |
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— |
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6 |
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| Income (loss) before provision for income taxes |
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58 |
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(702 |
) |
| Provision for income taxes |
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(3 |
) |
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(7 |
) |
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| Net income (loss) |
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$ |
55 |
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$ |
(709 |
) |
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| Net income (loss) per share: |
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| Basic |
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$ |
0.00 |
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$ |
(0.05 |
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| Diluted |
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$ |
0.00 |
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$ |
(0.05 |
) |
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| Weighted-average number of common shares outstanding: |
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| Basic |
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14,218 |
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14,184 |
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| Diluted |
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14,810 |
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14,184 |
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InfoSonics Corporation
Consolidated Balance Sheets
(Amounts in thousands, except per share data)
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March 31, |
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December 31, |
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2014 |
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2013 |
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(unaudited) |
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(audited) |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
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$ |
1,145 |
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$ |
2,369 |
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| Trade accounts receivable, net of allowance for doubtful accounts of $373 and $373, respectively |
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13,555 |
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11,856 |
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| Other accounts receivable |
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83 |
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163 |
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| Inventory |
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2,991 |
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2,467 |
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| Prepaid assets |
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3,130 |
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3,435 |
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| Total current assets |
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20,904 |
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20,290 |
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| Property and equipment, net |
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165 |
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200 |
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| Other assets |
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41 |
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179 |
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| Total assets |
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$ |
21,110 |
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$ |
20,669 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
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$ |
1,526 |
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$ |
1,161 |
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| Accrued expenses |
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3,058 |
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3,180 |
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| Total current liabilities |
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4,584 |
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4,341 |
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| Stockholders’ equity: |
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| Preferred stock, $0.001 par value, 10,000 shares authorized (no shares issued and outstanding) |
|
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— |
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— |
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| Common stock, $0.001 par value, 40,000 shares authorized, 14,356 and 14,184 shares issued and outstanding as of March 31, 2014 and
December 31, 2013, respectively |
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14 |
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14 |
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| Additional paid-in capital |
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32,547 |
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32,391 |
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| Accumulated other comprehensive loss |
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(31 |
) |
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(18 |
) |
| Accumulated deficit |
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(16,004 |
) |
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(16,059 |
) |
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| Total stockholders’ equity |
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16,526 |
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16,328 |
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| Total liabilities and stockholders’ equity |
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$ |
21,110 |
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$ |
20,669 |
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InfoSonics Corporation
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
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Three Months Ended |
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December 31, |
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2014 |
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2013 |
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| Cash flows from operating activities: |
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| Net income (loss) |
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$ |
55 |
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$ |
(709 |
) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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| Depreciation |
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48 |
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56 |
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| Loss on disposal of fixed assets |
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1 |
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12 |
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| Provision for bad debts |
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— |
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23 |
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| Provision for obsolete inventory |
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43 |
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4 |
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| Stock-based compensation expense |
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21 |
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57 |
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| (Increase) decrease in: |
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| Trade accounts receivable |
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(1,699 |
) |
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243 |
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| Other accounts receivable |
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80 |
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(174 |
) |
| Inventory |
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(567 |
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177 |
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| Prepaids |
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305 |
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(819 |
) |
| Other assets |
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138 |
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25 |
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| (Increase) decrease in: |
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| Accounts payable |
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365 |
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(376 |
) |
| Accrued expenses |
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(122 |
) |
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(94 |
) |
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| Net cash used in operating activities |
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(1,332 |
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(1,575 |
) |
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| Cash flows from investing activities: |
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| Purchase of property and equipment |
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(14 |
) |
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(10 |
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| Decrease in restricted cash |
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— |
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1,003 |
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| Net cash provided by (used in) investing activities |
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(14 |
) |
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993 |
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| Cash flows from financing activities: |
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| Cash received from exercise of stock options |
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135 |
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— |
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| Net cash provided by financing activities |
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135 |
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— |
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| Effect of exchange rate changes on cash |
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(13 |
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33 |
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| Net decrease in cash and cash equivalents |
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(1,224 |
) |
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(549 |
) |
| Cash and cash equivalents, beginning of period |
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2,369 |
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5,230 |
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| Cash and cash equivalents, end of period |
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$ |
1,145 |
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$ |
4,681 |
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| Cash paid for interest |
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$ |
— |
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$ |
— |
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| Cash paid for taxes |
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— |
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— |
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