Bitzio Reports Third Quarter 2012 Results

Marketwired

SAN FRANCISCO, CALIFORNIA--(Marketwire - Nov. 14, 2012) - Bitzio, Inc. (BTZO), a leading mobile media and app company, reported results for the third quarter ended September 30, 2012.

Q3 2012 Operational Highlights

  • Partnered with ROAR, a leading talent management company, to develop mobile apps for the world's most popular entertainment properties and talent, including actors, celebrities, musicians and athletes.
  • Secured a licensing partnership with The NFL Players, a subsidiary of the National Football League Players Association (NFLPA), to jointly develop and market a football trivia app for the more than 180 million fans of the NFL.
  • Bitzio's in-house software and animation studio advanced the development of "Pigskins Football Player Trivia Game," the first app to be produced from the new NFL Players partnership. The highly engaging app features the NFL's Top 50 players, along with in-app purchase options and social media features that enhance and expand game-play. The app is now set for release in December 2012, downloadable for free from Apple's App Store and the Android Marketplace.
  • Strengthened the executive management team with the addition of Peter Henricsson as the company's new president and CEO. Prior to Bitzio, Henricsson was the founder, chairman and CEO of CellPoint, a European leader in location-based technologies for mobile operators. Under Henricsson's leadership, CellPoint listed on the NASDAQ Stock Market and achieved a market cap of $1 billion.
  • Completed $598,000 convertible note financing to support the company's growth initiatives. An entity controlled by Henricsson contributed $300,000 to the raise.
  • Divested the company's non-core Info-Products division, including the app developer training series, and thereby eliminating $667,000 in liabilities. The divestiture has allowed Bitzio to focus on developing and monetizing mobile apps for the sports and entertainment marketplace.

Management Commentary

"During the third quarter of 2012, we greatly improved our operational platform and set course on our new business model designed to tap the tremendous opportunities for mobile apps in the sports and entertainment markets," said Peter Henricsson, president and CEO of Bitzio. "In fact, we achieved several milestones in the quarter, including divesting non-core assets, strengthening our balance sheet and executive team, and forming major strategic partnerships.

"Our new license agreement with The NFL Players demonstrated our ability to secure the media rights of large, existing fan bases, as well as establish a co-marketing and revenue-sharing partnership that requires no up-front fees. We have been working closely with The NFL Players to develop the first app, which is now set to launch next month. Given their marketing support, we are confident the trivia app will be well received and widely downloaded by the millions of NFL fans across the country.

"Our partnership with The NFL Players also serves an ideal showcase of Bitzio's capabilities, and represents a springboard toward greater opportunities across a number of verticals, including other sports communities, entertainment properties and major consumer brands. We are now well positioned to capitalize on the tremendous opportunities in delivering apps to the fan-based communities of some of world's largest sports clubs and entertainment brands. We plan to leverage our deep industry relationships and marketing partnerships to secure new licensing agreements during the coming months, and roll out a number of new and highly-engaging mobile apps."

Q3 2012 Financial Summary

During the third quarter, Bitzio divested non-core assets and operations to focus on developing and monetizing fan-based apps in the sports and entertainment markets. The company generated nominal revenues from it legacy software and mobile applications in the third quarter, totaling $154,000 compared to marginal revenues in the same year-ago quarter.

Operating expenses in the third quarter of 2012 were $1.4 million, a significant improvement from $8.1 million in the same year-ago quarter. The year-over-year improvement was primarily due to a significant decrease in stock-based compensation, as well as a $2.3 million goodwill impairment charge recognized in Q3 2011.

Net loss from continuing operations in the third quarter of 2012 totaled $1.1 million or $(0.02) per share, as compared to a net loss of $8.1 million or $(0.22) per share in the same year-ago quarter.

Q3 2012 net loss included $1.6 million in non-cash items, comprised of $61,000 of amortization and depreciation, $558,000 related to losses on assets, $185,000 of derivative liability gain, $56,000 of amortization of debt discounts and $1.1 million of stock-based compensation. This compares to $2,000 of non-cash items in Q3 2011, which were comprised of $300 of amortization and depreciation and $1,500 of stock-based compensation.

Excluding these non-cash items, net loss before discontinued operations in Q3 2012 was $102,000 compared to $257,000 in the same year-ago period.

About Bitzio, Inc.

Founded in 2011, Bitzio is a leading mobile media and app development company focused on connecting fans of large entertainment and sports properties with the players, celebrities and teams they love. Powering these apps is the Bitzio Engine, which captures valuable user data and drives increased user monetization. What makes Bitzio really different is its approach to capturing users. Most app companies build first and hope the audience will come. Bitzio licenses media rights of sports and entertainment properties with millions of existing fans. Bitzio uses these rights to create mobile apps and web experiences for these existing fan bases. For more information, visit www.bitzio.com. To learn more about Bitzio, connect on Twitter (http://twitter.com/bitzio) and Facebook (https://www.facebook.com/bitzioinc).

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws, including statements relating to expectations the 2012 fiscal year; The terms and phrases "goal," "commitment," "guidance," "expects," "would," "will," "continuing," "drive," "believes," "indicate," "look forward," "grow," "outlook," "forecasts," and similar terms and phrases are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by Bitzio in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that Bitzio believes are appropriate in the circumstances, including but not limited to general economic conditions, Bitzio's expectations regarding its business, strategy and prospects, and Bitzio's confidence in the cash flow generation of its business. Many factors could cause Bitzio's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: risks related to competition; Bitzio's reliance on key personnel; Bitzio's ability to maintain and enhance its brand; and difficulties in forecasting Bitzio's financial results, particularly over longer periods given the rapid technological changes, competition and short product life cycles that characterize the mobile application industry. These risk factors and others relating to Bitzio that may cause actual results to differ are set forth Bitzio's periodic filings with the U.S. Securities and Exchange Commission (copies of which filings may be obtained at www.sedar.com or www.sec.gov). These factors should be considered carefully, and readers should not place undue reliance on Bitzio's forward-looking statements. Bitzio 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.

BITZIO, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
    September 30,     December 31,  
    2012       2011  
    (Unaudited)          
ASSETS   
   
CURRENT ASSETS              
  Cash $ 199,759   $ 181,725  
  Accounts receivable, net   138,397       92,232  
  Prepaid expenses and other current assets   138,677       337,508  
  Due from related parties   -       228,980  
  Prepaid acquisition costs   -       713,150  
   
    Total current assets   476,833       1,553,595  
   
OTHER ASSETS              
  Property and equipment, net   63,693       -  
  Intangible assets, net   614,050       582,424  
  Goodwill   774,047       627,134  
   
    Total other assets   1,451,790       1,209,558  
   
    TOTAL ASSETS $ 1,928,623     $ 2,763,153  
   
LIABILITIES AND STOCKHOLDERS' EQUITY  
   
CURRENT LIABILITIES              
  Accounts payable and accrued expenses $ 432,953   $ 253,976  
  Deferred revenue   -       77,433  
  Notes payable, related parties   351,870       426,870  
  Convertible notes, net of discount   283,642       70,745  
  Derivative liability   277,460       -  
   
    TOTAL CURRENT LIABILITIES   1,345,925       829,024  
   
STOCKHOLDERS' EQUITY              
  Preferred stock, $0.001 par value; 25,000,000 shares              
    authorized; 5,343,120 and 0 shares issued and outstanding, respectively   5,343       -  
  Common stock, $0.001 par value; 250,000,000 shares              
    authorized; 66,538,869 and 50,018,625 shares issued and outstanding, respectively   66,539       50,019  
  Stock subscriptions payable   -       186,000  
  Additional paid-in capital   19,143,494       11,800,050  
  Accumulated other comprehensive income   (1,998 )     -  
  Accumulated deficit   (18,630,680 )     (10,101,940 )
   
    Total stockholders' equity   582,698       1,934,129  
                   
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $  1,928,623      $  2,763,153  
   
BITZIO, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
    For the
Three Months Ended
      For the
Nine Months Ended
 
    September 30,       September 30,  
    2012       2011       2012       2011  
   
REVENUES $ 154,384   $ 3,104   $ 519,591   $ 3,104  
   
OPERATING EXPENSES                              
   
    Professional fees   1,296,105       43,294       3,329,505       62,422  
    Executive compensation   -       1,141,576       127,500       1,141,576  
    General and administrative   120,593       4,568,268       418,151       4,591,474  
    Impairment of goodwill   -       2,350,800       3,981,508       2,350,800  
      Total Operating Expenses   1,416,698       8,103,938       7,856,664       8,146,272  
   
LOSS FROM OPERATIONS   (1,262,314 )     (8,100,834 )     (7,337,073 )     (8,143,168 )
   
OTHER EXPENSES                              
    Interest expense   (69,408 )     (500 )     (227,262 )     (746 )
    Gain on derivative liability   185,118       -       185,118       -  
   
      Total Other Expenses   115,710       (500 )     (42,144 )     (746 )
   
LOSS BEFORE INCOME TAXES   (1,146,604 )     (8,101,334 )     (7,379,217 )     (8,143,914 )
PROVISION FOR INCOME TAXES   -       -       -       -  
   
NET LOSS FROM CONTINUING OPERATIONS $ (1,146,604 ) $ (8,101,334 ) $ (7,379,217 ) $ (8,143,914 )
   
    Loss from discontinued operations   (150,681 )     -       (591,236 )     -  
    Loss on disposal of subsidiary   (558,287 )     -       (558,287 )     -  
   
    Loss from Discontinued Operations, net of income taxes   (708,968 )     -       (1,149,523 )     -  
   
NET LOSS $ (1,855,572 )   $ (8,101,334 )   $ (8,528,740 )   $ (8,143,914 )
   
BASIC AND DILUTED LOSS PER SHARE                              
    FROM CONTINUING OPERATIONS $ (0.02 )   $ (0.22 )   $ (0.13 )   $ (0.24 )
   
BASIC AND DILUTED LOSS PER SHARE                              
    FROM DISCONTINUED OPERATIONS $ (0.01 )   $ -     $ (0.02 )   $ -  
   
BASIC AND DILUTED WEIGHTED AVERAGE                              
  NUMBER OF SHARES OUTSTANDING   62,441,151       37,557,473       57,152,841       34,566,071  
Contact:
Liolios Group, Inc.
Matt Glover or Michael Koehler
Investor Relations
(949) 574-3860
BTZO@liolios.com

Innova Communications
Amy Chilla
Media Relations
(949) 573-7830
achilla@teaminnova.com

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