SAN DIEGO, Nov. 10, 2011 /PRNewswire via COMTEX/ -- InfoSonics Corporation /quotes/zigman/92336/quotes/nls/ifon IFON +1.61% , a developer and manufacturer of wireless handset solutions serving Latin America, Europe and Asia Pacific, today announced results for its third quarter ended September 30, 2011.
"For the second consecutive quarter, our gross margin percentage hit another record high," said Joseph Ram, president and CEO of InfoSonics. "For the third quarter ended September 30, 2011, our gross margin was 17.0%, up from the previous record of 14.3% set in our second quarter ended June 30, 2011. This reflects the continuing progress we are making in our transformation from being primarily a distributor of wireless handsets to being a developer, manufacturer and seller of our own proprietary handsets. Sales of our own verykool® branded products grew 163% during the third quarter over the same quarter of the prior year and comprised 83% of our total revenue for the quarter compared to only 28% in the prior year. For the nine months year-to-date, our verykool® revenues are up 92% over the prior year."
Commenting further, Mr. Ram noted, "We are pleased with our performance this quarter as we shipped 142% more verykool® wireless handsets compared to the same quarter of the prior year. As a result of an improved product mix, our average selling price rose by 7%. On a sequential performance basis, in addition to the significant improvement this quarter in our gross margin, we held our operating expenses level and were able to reduce our quarterly loss by 50%. We introduced 2 new models during the third quarter, and have more planned for the fourth quarter. We remain focused in our efforts to return InfoSonics to profitability."
InfoSonics reported net sales for the third quarter of 2011 of $7.2 million, compared to $8.2 million for the third quarter of 2010. The decrease in net sales was due to a $4.7 million reduction in the company's distribution sales. This decrease was partially offset by a $3.7 million increase in net sales of the company's verykool branded products.
The company's gross profit margin in the third quarter of 2011 was 17.0% compared to 6.6% in the third quarter of 2010. The improvement in gross margin reflects a higher percentage of total sales derived from the company's verykool® product line which generate higher margins than the legacy distribution business.
Operating expenses in the third quarter of 2011 were $1.6 million compared to $2.5 million in the third quarter of 2010. Selling, general and administrative expenses in the third quarter of 2011 of $1.3 million declined by 40% from $2.1 million in the third quarter of 2010. The decline is attributable to reductions in variable expenses linked to the decline in the company's distribution sales, a $100,000 reversal of bad debt reserves and reduction of other fixed operational costs, including the closure earlier this year of the company's Miami distribution center. Research and development expenses of $384,000 were down slightly from $406,000 in the third quarter of the prior year.
The net loss for the third quarter of 2011 was $413,000, or $0.03 per share, compared to a net loss of $2.0 million, or $0.14 per share, in the third quarter of 2010.
The company ended the third quarter of 2011 with $13.5 million in cash and cash equivalents, a decrease of $0.9M from the second quarter of 2011. This amount, together with an additional $1.0M generated through reductions in accounts receivable, was invested in inventories and deposits in advance of fulfillment of existing and anticipated sales orders in the fourth quarter. At September 30, 2011, the company had $18.9 million of net working capital and no outstanding indebtedness.