InfoSonics Reports Second Quarter 2017 Results
Source: PR Newswire (US)
SAN DIEGO, Aug. 10, 2017 /PRNewswire/ -- InfoSonics Corporation (NASDAQ: IFON), the provider of verykool® wireless handset solutions and tablets, today announced results for its second quarter ended June 30, 2017.
As previously disclosed, on July 25, 2017, we entered into an Agreement and Plan of Merger ("Merger Agreement") with Cooltech Holding Corp. ("Cooltech"), pursuant to which we will acquire Cooltech and Cooltech will become a wholly-owned subsidiary of InfoSonics. The Merger Agreement provides that we will issue an aggregate of 62.5 million shares of our common stock in exchange for all of the outstanding capital stock of Cooltech. Following the Merger, the former stockholders of Cooltech will hold approximately 84% of our common stock on a fully-diluted basis and we have agreed to cause three of our directors to resign and to appoint three Cooltech nominees to the Board of Directors, such that three of our four directors will be nominees of Cooltech. The Merger and the transactions contemplated thereby are subject to a number of customary closing conditions, including approval of the Merger Agreement and the Merger by our stockholders. Our stockholders will be asked to vote on the adoption and approval of the Merger Agreement and the Merger at a special meeting of stockholders to be called by us.
Net sales for the second quarter of 2017 amounted to $5.3 million, which represented a $6.8 million, or 56%, decrease from $12.1 million for the second quarter of 2016. The decrease reflects a lack of sales to carrier customers in Central America, a very soft quarter in Mexico and our exit late last year from the U.S. market.
Gross profit in the 2017 second quarter was $605,000, a 48% decrease compared to $1,157,000 for the second quarter of 2016. Our gross profit margin as a percent of sales in the 2017 second quarter was 11.4%, an increase from 9.6% for the 2016 second quarter. The reduction in gross profit in the current quarter is a result of the low level of sales, which also made it difficult to absorb fixed overhead costs. The reduced gross profit margin in the prior year quarter was the result of discounts given to liquidate aging inventory.
Operating expenses in the second quarter of 2017 were $1,373,000, a 30% decrease compared to $1,973,000 in the 2016 second quarter. The decrease reflects expense reduction actions we implemented during the second and third quarters of 2016. The most significant decreases were in wages and benefits, product certification and homologation, professional fees and marketing. We also implemented additional expense reduction actions during the current year quarter which we expect will benefit future quarters.
The net loss for the 2017 second quarter was $812,000, $0.06 per share, compared to net loss of $1,035,000, $0.07 per share, in the second quarter of 2016.
At June 30, 2017, we had $1.1 million in cash, $8.8 million of net working capital and no outstanding funded debt.
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