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Spiral Toys Reports Third Quarter 2015 Results -2-
Nov 12, 2015 16:00:00 (ET)
Spiral Toys Reports Third Quarter 2015 Results
LOS ANGELES, CA--(Marketwired - Nov 12, 2015) - Spiral Toys (OTCQB: STOY), a leading provider of mobile-connected, wireless entertainment technology, reported results for the third quarter ended September 30, 2015.
Q3 2015 Highlights
-- Revenue totaled $4.3 million compared to $1.5 million for the previous
quarter and $98,000 for the same quarter of 2014.
-- Shipped 950,000 CloudPet components to third-party contractors, compared
to 339,000 during the previous quarter, bringing the total to
approximately 1.3 million.
-- Generated $160,000 of royalty fees compared to $13,000 during the
previous quarter based on shipments of 540,000 CloudPets from Spiral
Toy's distributors to retailers.
-- Spiral and its partners developed a new marketing campaign to drive
mobile app usage and holiday sales at retailers selling CloudPets
including Walmart, Target, Toys"R"Us and Kmart.
Management Commentary
"Our performance during the third quarter reflected the completed transition from the development stage of our company as we generated increased revenue related to our flagship connected plush toy, CloudPets, " commented Spiral Toys' CEO Mark Meyers.
"While we are pleased with the successful retail launch of CloudPets, we believe the technology platform and business model has proven successful and, more importantly, something we can apply to other products both within the toy industry, and beyond."
"Our focus is on creating a unique digital experience around everyday items, that leverages our proprietary connected platform. As we look forward, we plan to release three new products in 2016 in an effort to market and further build our digital ecosystem of connected users."
Financial Overview
Revenue for the third quarter of 2015 totaled $4.3 million, which is up from $1.5 million during the previous quarter and $98,000 for the same quarter in 2014. The increases were driven by the production launch of our CloudPets line during the second quarter of 2015 and continued shipments throughout the third quarter of 2015.
Gross margin was 16.0% for the three months ended September 30, 2015, generating gross profit of $690,000, which compares with gross margins of 11.9% for the three months ended June 30, 2015, generating gross profit of $180,000. The improvements were driven by the increased production and shipments of CloudPet components.
Total operating expenses during the third quarter of 2015 totaled $941,000, which compares to $941,000 for the second quarter of 2015, and $294,000 for the third quarter of 2014. The increase reflects a $327,000 investment into product development offset by the sequential decrease in legal and professional fees.
Net loss from continuing operations for the quarter ended September 30, 2015 totaled $187,000, or $(0.00) per basic and diluted share, which compares to a loss of $831,000 or $(0.02) per basic and diluted share for quarter ended June 30, 2015, and a loss of $219,000 or $(0.01) per basic and diluted for the same period in 2014.
As of September 30, 2015, working capital totaled $913,000, which compared to $183,000 at June 30, 2015. This change was resulted from the completion of a private placement for aggregate gross proceeds of $865,000 during the three months ended September 30, 2015.
Earnings Call Details
Management plans to hold a conference call later today, November 12 at 4:30 p.m. Eastern time to discuss results for the quarter. Spiral Toys' CEO Mark Meyers and CFO Akio Ariura will host the presentation, followed by a question and answer period.
Date: Today, November 12, 2015
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Domestic dial-in number: 877-407-9039
International dial-in: 201-689-8470
Conference ID: 13624081
Webcast link: http://public.viavid.com/index.php?id=117028
The conference call will be broadcasted live via webcast in the Investor Relations section of Spiral Toys' website at www.spiraltoys.com.
Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Michael Koehler at 949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through December 12, 2015.
Domestic replay number: 877-870-5176
International replay number: 858-384-5517
Conference ID: 13624081
About Spiral Toys
Spiral Toys (OTCQB: STOY) is a California-based company with a business, founded by a former senior executive of Disney and Sony, focused on developing and marketing products and mobile applications in the mobile-connected space. Spiral's mobile-connected entertainment platform connects physical items to today's top mobile devices through wireless technologies, creating a new kind of interactive user experience.
Spiral sells its products worldwide, and is developing additional applications based on its platform technology for several different verticals within the entertainment industry. Spiral collects revenue on both the physical purchase of goods and the sale of digital content through Apple's App Store and the Google Marketplace. The company also acts as co-developer with major entertainment studios. For more information, visit www.spiraltoys.com.
Forward-Looking Statements
All statements in this press release that are not based on historical fact are "forward-looking statements." The terms "expects", "would", "will", "believes", and similar terms are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by Spiral Toys in light of its experience and its perception of current conditions and expected future developments, as well as other factors that Spiral Toys believes are appropriate in the circumstances. Many factors could cause Spiral Toys' actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. These risk factors and others relating to Spiral Toys that may cause actual results to differ are set forth in Spiral Toys' periodic filings with the U.S. Securities and Exchange Commission (copies of which filings may be obtained at www.sec.gov). These factors should be considered carefully, and readers should not place undue reliance on Spiral Toys' forward-looking statements. Spiral Toys has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
SPIRAL TOYS, INC.
Consolidated Balance Sheets
September 30. December 31,
2015 2014
--------------- --------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 769,654 $ 245,091
Accounts receivable 1,712,556 -
Deposit receivable 34,749 -
Prepaid expenses 1,479 -
----------- ----------
Total Current Assets 2,518,438 245,091
----------- ----------
OTHER ASSETS
Goodwill (Note 7) - -
----------- ----------
Total Other Assets - -
----------- ----------
TOTAL ASSETS $ 2,518,438 $ 245,091
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 1,605,047 $ 115,049
Convertible short term notes - 42,000
Current maturities of notes
payable - related parties - 115,738
Interest payable - 21,079
----------- ----------
Total Current Liabilities 1,605,047 293,866
----------- ----------
TOTAL LIABILITIES 1,605,047 293,866
----------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: par value
$0.001, 1,000,000 shares
authorized; zero shares
issued and outstanding - -
Common stock: par value
$0.001, 74,000,000 shares
authorized; 48,690,531 and
41,336,667 shares issued and
outstanding, respectively 48,689 41,337
Additional paid-in capital 6,784,441 4,208,516
Accumulated deficit (5,919,739) (4,298,628)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY
(DEFICIT) 913,391 (48,775)
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $ 2,518,438 $ 245,091
=========== ==========
SPIRAL TOYS, INC.
Consolidated Statements of Operations
(Unaudited)
For the Three Months
Ended For the Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
2015 2014 2015 2014
----------- ----------- ------------- -----------
SALES
Product sales,
net $ 4,143,888 $ 63,602 $ 5,644,254 $ 63,602
Royalty income 160,000 - 172,806 -
Consulting-
product
development - 35,000 10,000 35,000
---------- ---------- ------------ ----------
Total Sales 4,303,888 98,602 5,827,060 98,602
COST OF GOODS SOLD 3,613,423 - 4,946,397 -
---------- ---------- ------------ ----------
GROSS MARGIN 690,465 98,602 880,663 98,602
---------- ---------- ------------ ----------
OPERATING EXPENSES
Media costs - 27,812 - 27,812
Product
development
costs 326,919 37,101 783,077 37,101
Legal and
professional
expenses 215,207 76,119 781,699 132,755
Salaries and
wages and
consulting 339,725 125,823 699,735 158,323
General and
administrative 59,224 27,016 206,722 29,474
---------- ---------- ------------ ----------
Total Operating
Expenses 941,075 293,871 2,471,233 385,465
---------- ---------- ------------ ----------
LOSS FROM
OPERATIONS (250,610) (195,269) (1,590,570) (286,863)
---------- ---------- ------------ ----------
OTHER EXPENSE
Interest expense (3,153) (23,760) (52,173) (29,250)
Loss on
conversion - - (45,360) -
Gain on
forgiveness of
debt 21,000 - 21,000 -
Gain on
settlement of
notes payable 45,992 - 45,992 -
---------- ---------- ------------ ----------
Total Other
Expense 63,839 (23,760) (30,541) (29,250)
---------- ---------- ------------ ----------
LOSS BEFORE INCOME
TAX PROVISION AND
NON-CONTROLLING ) ) ) )
INTEREST (186,771 (219,029 (1,621,111 (316,113
Income tax
provision - - - -
---------- ---------- ------------ ----------
NET LOSS FROM
CONTINUING
OPERATIONS (186,771) (219,029) (1,621,111) (316,113)
Net loss
attributable to
Discontinued ) )
operations - (23,752 - (23,752
---------- ---------- ------------ ----------
NET INCOME (LOSS)
ATTRIBUTABLE TO
COMMON $) $) $) $)
STOCKHOLDERS (186,771 (242,781 (1,621,111 (339,865
========== ========== ============ ==========
NET INCOME (LOSS)
PER COMMON SHARE
BASIC AND DILUTED
Continuing
operations $ (0.00) $ (0.01) $ (0.04) $ (0.01)
Discontinued
operations $ 0.00 $ (0.00) $ 0.00 $ (0.00)
---------- ---------- ------------ ----------
Total $ (0.00) $ (0.01) $ (0.04) $ (0.01)
========== ========== ============ ==========
Weighted average
common shares
outstanding
BASIC AND DILUTED 47,837,058 37,117,169 44,860,785 26,146,534
========== ========== ============ ==========
SPIRAL TOYS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
-----------------------------
2015 2014
--------------- -----------
OPERATING ACTIVITIES:
Net income/(loss) $ (1,621,111) $ (339,865)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Contributed capital
(salary) - 9,750
Beneficial conversion 21,000 -
Shares-based compensation
related to common stock 387,682 -
Loss on debt
extinguishment 45,360 -
Gain on note settlement (21,000) -
Gain on forgiveness of
debt-related party (45,992) -
Notes for services 63,000 21,000
Changes in operating
assets and liabilities:
Accounts receivable (1,712,556) -
Prepaid expenses (1,479) -
Deposits receivable (34,749) -
Accounts payable 1,489,998 51,739
Accrued salaries - 22,750
Accrued interest 9,175 29,250
----------- ----------
Cash Used in Operating
Activities - Continuing
Operations (1,420,672) (205,376)
----------- ----------
Cash Used in Operating
Activities -
Discontinued
Operations - (907)
----------- ----------
Net Cash Used in
Operating Activities (1,420,672) (206,283)
----------- ----------
INVESTING ACTIVITIES:
Cash received from
purchase of subsidiary - 8
----------- ----------
Cash Provided from
Investing Activities - 8
----------- ----------
FINANCING ACTIVITIES:
Payments on notes payable
- related parties (100,000) -
Proceeds from notes
payable - related
parties - 10,000
Proceeds from notes
payable - 5,000
Proceeds from sale of
common stock for cash 2,045,235 219,600
----------- ----------
Cash Provided by
Financing Activities -
Continuing Operations 1,945,235 234,600
----------- ----------
Cash Provided by
Financing Activities -
Discontinued
Operations - 24,659
----------- ----------
Net Cash Provided by
Financing Activities 1,945,235 259,259
----------- ----------
NET CHANGE IN CASH 524,563 52,984
CASH AT BEGINNING OF YEAR 245,091 16,746
----------- ----------
CASH AT END OF PERIOD $ 769,654 $ 69,730
=========== ==========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid $ - $ -
=========== ==========
Income tax paid $ - $ -
=========== ==========
Non-Cash Investing and
Financing Activities:
Common stock issued for
notes payable $ 84,000 $ -
=========== ==========
Acquisition of Spiral
Toys LLC $ - $ 3,626,178
=========== ==========
Contribution of accrued
salary payable to
capital $ - $ 289,992
=========== ==========
Company Contact:
Mark Meyers, CEO
Spiral Toys
Tel (844) 681-7627
Email Contact
Investor Relations:
Michael Koehler
Liolios
Tel (949) 574-3860
Email Contact
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