BLUE SKY BREAKOUT

[~ Blue ~]

Financials out and IFON posted NET PROFIT

InfoSonics Reports Fourth Quarter 2016 Results

SAN DIEGO, March 9, 2017 – InfoSonics Corporation (NASDAQ: IFON), the provider of verykool® wireless handset solutions and tablets, today announced results for its fourth quarter ended December 31, 2016.

“We are pleased to report a positive quarter,” said Joseph Ram, President and CEO of InfoSonics. We were successful in our efforts this quarter to manage industry-wide component cost increases and increase prices in certain of our markets. In addition, we reduced our quarterly operating expenses to the lowest point in twelve years. As a result, our gross profit margin rose to 15.9% and we had a small profit at the bottom line. Our challenge in 2017 is to find new sources of profitable revenue on a consistent basis as part of our focus on higher margin channels. In addition, we are finalizing the development of our software platform, suite of services and cloud-based solutions that we plan to launch in the second quarter of 2017.”

We had net sales for the 2016 fourth quarter of $8.6 million, which represented a $1.6 million, or 15%, decrease from $10.2 million for the fourth quarter of 2015. The decrease reflects our exit from the U.S. market, as well as a lower level of sales to certain carrier customers and to U.S. based distributors selling to Latin America. These declines were partially offset by increased sales to big box retailers. For the year ended December 31, 2016, our net sales were $39.1 million, which represented an $8.7 million, or 18%, decrease from $47.8 million for the year ended December 31, 2015.

Gross profit in the 2016 fourth quarter was $1,374,000, a 9% increase compared to $1,256,000 for the fourth quarter of 2015. Our gross profit margin as a percent of sales in the 2016 fourth quarter increased to 15.9% compared to 12.3% for the 2015 fourth quarter. The margin improvement reflects a higher mix of sales to non-carrier open market customers, as well as increased selling prices to compensate for higher product costs resulting from supply constraints. For the year ended December 31, 2016, gross profit was $4.6 million, a 38% decrease from $7.4 million in the prior year.

Operating expenses in the fourth quarter of 2016 were $1,338,000, a 38% decrease compared to $2,154,000 in the 2015 fourth quarter. The decrease reflects expense reduction actions we took over the course of 2016, as well as the resolution of all outstanding patent litigation. The largest decreases were in wages and benefits, marketing and legal fees. For the year ended December 31, 2016, operating expenses were $6.9 million, a 17% reduction from $8.3 million in the prior year.

After a $96,000 tax benefit from the closure of two inactive foreign subsidiaries, we reported net income of $48,000 for the fourth quarter of 2016 compared to a net loss of $959,000, $0.07 per share, in the fourth quarter of 2015. For the year ended December 31, 2016, the net loss was $2,835,000, $0.20 per share, compared to a net loss of $1,243,000, $0.09 per share, in 2015.

At December 31, 2016, we had $2.2 million in cash, $10.1 million of net working capital and no outstanding funded debt.

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