SPY Inc. Reports Financial Results for the Three Months Ended March 31, 2014

SPY(R) Inc. Achieved Quarterly Sales Growth of 2% in 2014 Over 2013; 12th Consecutive Quarter of Year Over Year Growth of SPY(R) Brand Products; Total Company Net Sales Reported as $9.2 Million


CARLSBAD, CA--(Marketwired - May 6, 2014) -  SPY Inc. (OTCBB: XSPY) today announced financial results for the three months ended March 31, 2014.

Consolidated Spy sales increased by 2% or $0.2 million, to $9.2 million for the three months ended March 31, 2014, compared to $9.0 million during the same period in 2013. Sales included slightly lower closeout sales of $0.4 million in 2014, compared to $0.6 million in 2013. The increase in our net sales was primarily driven by our prescription frame product line.

"We are once again happy to report top line growth along with achieving our 12th quarter in a row of year over year growth of our SPY® brand products," said Michael Marckx, President and CEO. "We also increased our margin to 52% in 2014 from 51% in 2013, which continues to be a focal point for us. This directly reflects the strong demand for our product offering as well as the operational and manufacturing synergies that we created over the past year. The solid sales growth and margin expansion are direct results of our strong sales and marketing teams as well as a concerted effort across the organization to reduce operating costs. Achieving operating profit along with our expanding portfolio of products, including our successful Happy Lens™ Collection, positions us well for the balance of 2014 as we continue to focus on disruptive strategies, driving sales, improving our product margins and managing our operating costs."

During 2014, the Company had income from operations of $84 thousand during the three months ended March 31, 2014 compared to $29 thousand during the same period in 2013. 

The Company incurred a net loss of $0.7 million during the three months ended March 31, 2014 and 2013. 


The results of our operations for the quarters ended March 31, 2014 and 2013 are more fully discussed in our Form 10-Q for the quarter ended March 31, 2014, filed with the Securities and Exchange Commission on May 6, 2014.

SPY Inc.:

Safe Harbor Statement:

(Thousands, except number of shares and per share amounts)  
    March 31, 2014     December 31, 2013  
Current assets                
  Cash   $ 688     $ 686  
  Accounts receivable, net     5,622       6,543  
  Inventories, net     4,344       5,872  
  Prepaid expenses and other current assets     691       680  
  Income taxes receivable     --       3  
    Total current assets     11,345       13,784  
Property and equipment, net     394       438  
Intangible assets, net of accumulated amortization of $792 and $782 at March 31, 2014 and December 31, 2013, respectively     63       72  
Other long-term assets     44       63  
    Total assets   $ 11,846     $ 14,357  
Liabilities and Stockholders' Deficit                
Current liabilities                
  Lines of credit   $ 1,686     $ 4,024  
  Current portion of capital leases     71       77  
  Current portion of notes payable     16       16  
  Accounts payable     1,047       1,302  
  Accrued expenses and other liabilities     3,655       3,069  
    Total current liabilities     6,475       8,488  
Capital leases, less current portion     75       92  
Notes payable, less current portion     12       16  
Notes payable to stockholders     21,452       21,452  
    Total liabilities     28,014       30,048  
Stockholders' deficit                
  Preferred stock: par value $0.0001; 5,000,000 authorized; none issued     --       --  
  Common stock: par value $0.0001; 100,000,000 shares authorized; 13,324,037 and 13,184,876 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively     1       1  
  Additional paid-in capital     45,597       45,331  
  Accumulated other comprehensive income     519       520  
  Accumulated deficit     (62,285 )     (61,543 )
    Total stockholders' deficit     (16,168 )     (15,691 )
    Total liabilities and stockholders' deficit   $ 11,846     $ 14,357  
(Thousands, except per share amounts)  
    Three Months Ended March 31,  
    2014     2013  
Net sales   $ 9,192     $ 9,008  
Cost of sales     4,412       4,407  
  Gross profit     4,780       4,601  
Operating expenses:                
  Sales and marketing     2,920       2,854  
  General and administrative     1,483       1,447  
  Shipping and warehousing     140       169  
  Research and development     153       102  
    Total operating expenses     4,696       4,572  
  Income from operations     84       29  
Other income (expense):                
  Interest expense     (757 )     (732 )
  Foreign currency transaction loss     (67 )     (18 )
  Other income     1       --  
    Total other expense     (823 )     (750 )
  Loss before provision for income taxes     (739 )     (721 )
Income tax provision     3       --  
Net loss   $ (742 )   $ (721 )
Net loss per share of Common Stock                
    Basic   $ (0.06 )   $ (0.05 )
    Diluted   $ (0.06 )   $ (0.05 )
Shares used in computing net loss per share of Common Stock                
    Basic     13,222       13,115  
    Diluted     13,222       13,115  
Other comprehensive income (loss)                
  Foreign currency translation adjustment (loss) gain     (94 )     177  
  Unrealized gain (loss) on foreign currency exposure of net investment in foreign operations     93       (194 )
    Total other comprehensive loss     (1 )     (17 )
Comprehensive loss   $ (743 )   $ (738 )
Maddy Isbell
PR Manager
Fax: 760-804-8442
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