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8-K - 8-K - iSatori, Inc.ifit8k111014.htm

Exhibit 99.1


[exhibit991001.jpg]



FOR IMMEDIATE RELEASE


iSatori Reports 19% Increase in Gross Product Sales for Nine Months Ended, as a Result of Third Quarter 2014 Financial Results


Gross revenue for the nine months ended September 30, 2014, are up 19% over the same period 2013. However, as a result of non-recurring items, total revenue net of returns, discounts, and advertising promotions decreased 25% for the third quarter year over year. The decline was caused by one-time events, along with a temporary slowdown in the weight-loss sector, partially offset by 305% growth in the Company’s Bio-Gro™ product over the same period in the prior year.


GOLDEN, CO--(MarketWired – November 10, 2014) - iSatori, Inc. (OTCQB: IFIT), an emerging leader in the development and marketing of scientifically engineered nutritional supplements for healthier lifestyles under the iSatori (www.isatori.com), BioGenetic Laboratories (www.BioGeneticLabs.com), Eat-Smart® (www.eatsmatmrp.com), and Energize (www.TryEnergize.com) brands, today announced its third quarter results. A complete report of the Company's (GAAP) financial results for the third quarter ended September 30, 2014, will be available today via its quarterly report filed with the Securities and Exchange Commission on Form 10-Q.


Highlights from the third quarter of 2014 were:


·

The number of independent retail outlets for the iSatori brand increased from 448 to 628, a 40% increase in only three months. Note that these numbers do not include national corporate accounts. Including national accounts, the Company’s products are sold in nearly 4,000 specialty retail outlets.


·

Energize, the sustained release energy pill, has grown its retail presence by being added to distribution in all Meijer mass market stores. In addition, the product had been in a limited number of Rite-Aid stores, but Rite-Aid recently committed to expanding its distribution of Energize to a full-store nationwide rollout. This new distribution will bring the total distribution for the Energize product up to 11,910 mass market retail outlets.


·

The intellectual property related to Bio-Gro™ “bioactive peptides,” the Company’s top selling, muscle-building supplement, has been secured. Thus, the Company is now in a position to unlock the full value of this proprietary product. Bio-Gro™ continues to experience rapid growth with a 305% increase in third quarter over the same period in the prior year.


·

The Company renewed and expanded its line of credit with Colorado Business Bank, West of Denver, Colorado, from the prior amount of $1.500 million to $2.000 million. Other terms of the former credit agreement were the same as those of the renewed and expanded agreement described above.


Third Quarter 2014 Comparative Results


Gross product revenues, prior to returns, discounts, and trade promotions, decreased $326 thousand or 10% to $2.883 million for the three months ended September 30, 2014, compared to $3.209 million for the same period in the prior year. Consolidated product revenues (net of returns, discounts, and trade promotions) decreased $682 thousand or 25% to $2.043 million for the three months ended September 30, 2014, compared to $2.725 million for the same period in 2013.







Operating expenses (including general selling, marketing, salaries, administration, and depreciation) decreased $726 thousand or 32% to $1.541 million for the three months ended September 30, 2014, compared to $2.267 million for the same period in the prior year. As a result of the foregoing, net loss was improved by 7% to $609 thousand for the three months ended September 30, 2014, compared to net loss of $655 thousand for the same period in 2013.


The decline in third quarter net revenue was due to three non-recurring issues. First, the Company experienced nearly $300,000 of product returns related to the less-than-expected impact of the product promotional book, Diets Suck! The revenue related to that product may have been lost in the third quarter, but it is not expected to be lost permanently, and the Company expects to profitably sell off the inventory over time with a plan in place to sell that product through other channels. Second, the Company brought on six new outside sales representatives to build up its sales force. The cost related to those new additional sales representatives was borne in the third quarter, but the benefit will be seen in the fourth quarter of 2014 and into 2015. The progress being made by the new sales reps is already evident in the fact that they have increased substantially the number of retail outlets where iSatori’s products will be sold as well as increased the velocity of the products in current retail outlets within their territories. Lastly, Dr. Oz testified before Congress in July, and the negative feedback from his testimony slowed down third quarter sales of dietary supplements for the entire industry, but especially those centered on weight loss. Subsequently, heavier than normal promotional trade allowances were used to stabilize sales during the quarter, and as of the first part of October, the Company's retail data indicates sales of weight-loss dietary supplements are beginning to grow again.


Nine Months ended September 30, 2014 Comparative Results


Gross product revenues, prior to returns, discounts, and trade promotions, increased $1.678 million or 19% to $10.340 million for the nine months ended September 30, 2014, compared to $8.662 million for the same period in the prior year. Consolidated product revenues (net of returns, discounts, and advertising trade promotions) increased $970 thousand or 14% to $8.139 million for the nine months ended September 30, 2014, compared to $7.169 million for the same period in 2013.


Operating expenses (including general selling, marketing, salaries, administration, and depreciation) decreased $242 thousand or 5% to $4.603 million for the three months ended September 30, 2014, compared to $4.845 million for the same period in the prior year. As a result of the foregoing, income before income taxes was an improvement of 118% to $161 thousand for the nine months ended September 30, 2014, compared to a loss of $896 thousand for the same period in 2013.


The Company balance sheet remains strong, as cash and cash equivalents, consisting primarily of deposits with financial institutions, was $1.154 million at September 30, 2014, compared with $823 thousand at December 31, 2013.


Commentary


“We believe that while our third quarter was challenging, it still reflects that our company is becoming operationally stronger and underpins the command of our business and execution of our strategic growth strategies,” commented Stephen Adele, Founder and Chief Executive Officer of IFIT. "We are confident that the issues we encountered were one-time occurrences and not systemic to our business. We remain very excited about our opportunities for the remainder of the year and beyond. We are on track to launch our new products during the fourth quarter this year and into first quarter of 2015, which will help to maximize the IP surrounding our category-defining, Bio-Gro ‘bio-active peptides’ and represents a compelling growth opportunity for us to expand into the largest supplement sectors in our industry. We are also encouraged by the early success of our new outside sales representatives, put into place in the third quarter, and look forward to reaping the benefits of their continued good work as we expand their presence throughout the U.S. Additionally, we look to capitalize on additional distribution opportunities for our products in the coming quarters as we expand our store footprint even further. Thus, even though the third quarter was disappointing, we remain on track to achieve our long-term goals.”







About iSatori, Inc.


iSatori is a consumer products firm that develops and sells scientifically engineered nutritional products through online marketing, Fortune 500 retailers, and thousands of retail stores around the world. The Company is headquartered in Golden, Colorado, and its common stock trades on the OTCQB under the symbol "IFIT." More information about the Company is available at http://www.isatori.com.


Forward-Looking Statements


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. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "potential," and similar terms and phrases to identify forward-looking statements in this press release. 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 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. Please see our Risk Factor disclosures included in our Registration Statement on Form S-1, as amended, initially filed with the Securities and Exchange Commission on April 30, 2013, and in subsequent filings with the Securities and Exchange Commission. All future written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. The forward-looking statements herein speak as of the date of this press release. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this press release.


Contacts

iSatori, Inc.

Michael Wileman

CFO

(303) 215-9174

pr@isatori.com







iSatori, Inc

Condensed Balance Sheets

(Unaudited)


 

September 30,

 

December 31,

 

2014

 

2013

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

1,153,865 

 

$

822,876 

Accounts receivable

 

 

 

 

 

Trade, net of allowance for doubtful accounts

 

1,893,580 

 

 

2,398,178 

Inventories

 

2,646,307 

 

 

1,985,764 

Income tax receivable

 

 

 

102,452 

Note receivables - current portion

 

3,814 

 

 

11,013 

Assets held for sale

 

42,311 

 

 

108,228 

Deferred tax asset, net

 

9,156 

 

 

53,081 

Prepaid expenses

 

245,265 

 

 

222,466 

Total current assets

 

5,994,298 

 

 

5,704,058 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation

 

147,781 

 

 

173,636 

 

 

 

 

 

 

Note receivable – net of current portion

 

81,714 

 

 

81,714 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Deferred tax asset, net

 

170,912 

 

 

147,941 

Deposits and other assets

 

43,120 

 

 

61,167 

Total other assets

 

214,032 

 

 

209,108 

 

 

 

 

 

 

Total assets

$

6,437,825 

 

$

6,168,516 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Trade accounts payable

$

1,288,277 

 

$

1,248,490 

Accrued expenses

 

237,608 

 

 

187,608 

Deferred revenues

 

210,002 

 

 

292,215 

Line of credit

 

1,620,519 

 

 

1,220,655 

Notes payable

 

16,925 

 

 

20,464 

Total current liabilities

 

3,373,331 

 

 

2,969,432 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

   Derivative liability

 

226,445 

 

 

471,015 

 

 

 

 

 

 

Commitments and contingencies (Notes 1, 2, 5 and 6)

 

 

 

 

 

 

 

 

 

 

 

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 

 

 

225 

Common stock, $0.01 par value, 56,250,000 shares authorized; 12,896,852 shares issued and outstanding

 

128,969 

 

 

128,797 

Additional paid-in capital

 

4,778,079 

 

 

4,731,535 

Accumulated deficit

 

(2,069,224)

 

 

(2,132,488)

Total stockholders’ equity

 

2,838,049 

 

 

2,728,069 

 

 

 

 

 

 

Total liabilities and stockholders' equity

$

6,437,825 

 

$

6,168,516 







iSatori, Inc.

Condensed Statements of Operations

(Unaudited)


 

Quarter Ended

 

Nine Month Period Ended

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

2014

 

2013

 

2014

 

2013

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Product revenue (Net of returns and discounts)

$

2,042,642 

 

$

2,724,711 

 

$

8,139,382 

 

$

7,169,142 

Royalty revenue

 

22,778 

 

 

25,237 

 

 

85,905 

 

 

91,761 

Other revenue

 

10,366 

 

 

9,391 

 

 

30,133 

 

 

34,732 

Total revenue

 

2,075,786 

 

 

2,759,339 

 

 

8,255,420 

 

 

7,295,635 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

1,157,590 

 

 

1,136,350 

 

 

3,707,632 

 

 

3,138,916 

Gross profit

 

918,196 

 

 

1,622,989 

 

 

4,547,788 

 

 

4,156,719 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

606,464 

 

 

1,244,907 

 

 

1,866,566 

 

 

1,856,106 

Salaries and labor related expenses

 

629,661 

 

 

577,302 

 

 

1,878,042 

 

 

1,622,635 

Administration

 

285,787 

 

 

425,683 

 

 

799,540 

 

 

1,294,841 

Depreciation and amortization

 

19,583 

 

 

18,916 

 

 

58,727 

 

 

71,271 

Total operating expenses

 

1,541,495 

 

 

2,266,808 

 

 

4,602,875 

 

 

4,844,853 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

(623,299)

 

 

(643,819)

 

 

(55,087)

 

 

(688,134)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

59,694 

 

 

80,724 

 

 

294,536 

 

 

(121,153)

Financing expense

 

(14,671)

 

 

(7,889)

 

 

(45,498)

 

 

(63,223)

Interest expense

 

(12,653)

 

 

(10,615)

 

 

(33,338)

 

 

(23,200)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(590,929)

 

 

(581,599)

 

 

160,613 

 

 

(895,710)

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

(18,144)

 

 

(73,608)

 

 

(97,349)

 

 

110,606 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(609,073)

 

$

(655,207)

 

$

63,264 

 

$

(785,104)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share  

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.05)

 

$

(0.05)

 

$

 

$

(0.06)

Diluted

$

(0.05)

 

$

(0.05)

 

$

 

$

(0.06)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

12,892,515 

 

 

12,878,216 

 

 

12,886,216 

 

 

12,730,371 

Diluted

 

12,892,515 

 

 

12,878,216 

 

 

13,703,364 

 

 

12,730,371