Spy Inc. reported total net sales increased by $500,000, or 5 percent, to $9.5 million for the quarter ended June 30, 2012, compared with total net sales of $9.0 million for the quarter ended June 30, 2011.
The designer, marketer and distributor of googles, sunglasses and prescription frames for participants in action sports, motorsports, snow sports, cycling and multi-sports markets, incurred a net loss of $1.6 million during the quarter, compared to a net loss of $3.0 million during the quarter ended June 30, 2011. The reduced loss was primarily due to lower general and administrative expenses, offset by increased sales and marketing expenses related to Spy brand products. In addition, 2011 included other operating expense of $2.0 million substantially all related to the decision to not make any more purchases of licensed products.
Sales of core Spy brand products increased by $1.1 million, or 13 percent, to $9.3 million for the quarter, compared with core Spy brand sales of $8.2 million during the quarter ended June 30, 2011. Other sales were $200,000 during the quarter ended June 30, 2012, consisting of licensed brand products which are no longer a focus of the company, compared with licensed product sales of $800,000 during the quarter ended June 30, 2011.
“We are once again pleased to have achieved another quarter with nice growth, making it the fifth consecutive quarter of year-over-year growth of core Spy brand products, which we believe demonstrates the strength of Spy brand,” said Michael Marckx, President and CEO.
For the six months ended June 30, 2012, Spy’s total net sales increased by $1.9 million, or 13 percent, to $17.6 million, compared with total net sales of $15.7 million for the six months ended June 30, 2011. Sales of core Spy brand products increased by $2.5 million, or 17 percent, to $17.2 million for the six months ended June 30, 2012, compared with core Spy brand sales of $14.7 million during the six months ended June 30, 2011. Other sales were $400,000 during the six months ended June 30, 2012, consisting of licensed brand products which are no longer a focus of the company, compared with licensed product sales of $1.0 million during the six months ended June 30, 2011.
In August 2012, Spy increased borrowing capacity by increasing the maximum principal amount available to us under a credit facility with Costa Brava by $3.0 million (from $7.0 million to $10.0 million), thereby increasing the aggregate maximum principal amount under all credit facilities from Costa Brava from $14.0 million to $17.0 million (excluding deferred interest). Spy also extended the due dates of both of credit facilities with Costa Brava to become April 1, 2014.
SPY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
—————— ——————
2012 2011 2012 2011
——– ——– ——– ——–
(Unaudited) (Unaudited)
Net sales $ 9,466 $ 8,986 $ 17,611 $ 15,689
Cost of sales 4,707 4,104 9,061 7,394
——– ——– ——– ——–
Gross profit 4,759 4,882 8,550 8,295
Operating expenses:
Sales and marketing 3,794 2,647 7,423 5,442
General and administrative 1,728 2,609 3,724 4,275
Shipping and warehousing 196 151 384 290
Research and development 115 161 252 315
Other operating expense – 1,952 – 1,952
——– ——– ——– ——–
Total operating expenses 5,833 7,520 11,783 12,274
——– ——– ——– ——–
Loss from operations (1,074) (2,638) (3,233) (3,979)
Other income (expense):
Interest expense (534) (295) (1,039) (551)
Foreign currency transaction gain
(loss) (21) (15) 37 13
Other (expense) income (1) – (4) 1
——– ——– ——– ——–
Total other expense (556) (310) (1,006) (537)
——– ——– ——– ——–
Loss before provision for income
taxes (1,630) (2,948) (4,239) (4,516)
Income tax provision – 3 – 6
——– ——– ——– ——–
Net loss $ (1,630) $ (2,951) $ (4,239) $ (4,522)
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Net loss per share of Common Stock
Basic $ (0.13) $ (0.23) $ (0.33) $ (0.36)
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Diluted $ (0.13) $ (0.23) $ (0.33) $ (0.36)
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Shares used in computing net loss
per share of Common Stock
Basic 13,037 12,841 13,022 12,567
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Diluted 13,037 12,841 13,022 12,567
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Other comprehensive income (loss)
Foreign currency translation
adjustment $ (1) $ (124) $ (165) $ (426)
Unrealized gain on foreign
currency exposure of net
investment in foreign operations (56) (146) 138 496
——– ——– ——– ——–
Total other comprenhensive
income (57) (270) (27) 70
——– ——– ——– ——–
Comprehensive loss $ (1,687) $ (3,221) $ (4,266) $ (4,452)
