InfoSonics Corporation (NASDAQ:IFON), the provider of verykool® wireless handset solutions and tablets, today announced results for its third quarter ended September 30, 2016.

“During the quarter we saw the supply pendulum swing from over-supply to under-supply as we experienced LCD panel shortages and delivery constraints of memory and CPUs,” said Joseph Ram, President and CEO of InfoSonics.  “These supply issues are resulting in significant manufacturing cost increases, and when combined with a soft market environment, have put significant pressure on both our top and bottom lines.  Our focus going forward is to work aggressively to increase sales, and to improve our gross margins by centering our efforts on more profitable accounts.  In addition, we are working to drive down operating expenses by 20% in the fourth quarter compared to the third quarter to reduce our breakeven point, a task that was aided by the resolution in September of all our outstanding patent litigation.  Regarding our product offerings, over the last year we have been in development of a software platform that will support a suite of services and cloud-based solutions that we hope to launch in the second quarter of 2017.”

We had net sales for the 2016 third quarter of $9.0 million, which represented a $3.2 million, or 26%, decrease from $12.2 million for the third quarter of 2015.  The decrease reflects our exit from the U.S. market, as well as a lower level of sales to customers in South America and to U.S. based distributors selling to Latin America.  These declines were partially offset by increased sales to big box retailers in Mexico.  For the nine months ended September 30, 2016, our net sales were $30.5 million, which represented a $7.1 million, or 19%, decrease from $37.6 million for the comparable nine month period of 2015.

Gross profit in the 2016 third quarter was $884,000, a 56% decrease compared to $2.0 million for the comparable period in 2015.  Our gross profit margin as a percent of sales in the 2016 third quarter declined to 9.8% compared to 16.4% for the comparable period in 2015.  The margin erosion reflects continued price pressure in a competitive market environment, combined with rising costs from our manufacturing vendors.  For the nine months ended September 30, 2016, gross profit was $3.2 million, a 48% decrease from $6.2 million for the comparable period in 2015.

Operating expenses in the third quarter of 2016 were $1.8 million, a 15% decrease compared to $2.1 million in the 2015 third quarter.  The decrease reflects expense reduction actions we implemented during the 2016 second quarter.  The largest decreases were in wages and benefits, marketing, travel and reduced sales commissions on the lower level of sales.  We took additional expense reduction actions at the end of the third quarter of 2016 which we believe will further decrease operating expenses in the fourth quarter of 2016.  For the nine months ended September 30, 2016, operating expenses were $5.6 million, a 9% reduction from $6.2 million in the comparable period of 2015.

The net loss for the third quarter of 2016 was $945,000, $0.07 per share, compared to a net loss of $138,000, $0.01 per share, in the third quarter of 2015.  For the nine months ended September 30, 2016, the net loss was $2,883,000, $0.20 per share, compared to a net loss of $284,000, $0.02 per share, in the comparable period of 2015.

At September 30, 2016, we had $1.7 million in cash, $10.3 million of net working capital and $640,000 of outstanding funded debt.

About InfoSonics Corporation

InfoSonics is a San Diego-based manufacturer and provider of wireless handsets, tablets and related products to carriers, distributors and consumers throughout Latin America under the verykool® brand.  The company is committed to delivering quality products with innovative designs that appeal to consumers and offer exceptional value.  Additional information can be found on our corporate website at www.infosonics.com and www.verykool.net.