Guitammer First Quarter Revenue Increases 4% to a Record $729,000

Rising Product Demand and Improved Working Capital Position Support Expectations for Significant Full Year Revenue Growth


WESTERVILLE, OH--(Marketwire -05/15/12)- The Guitammer Company (OTC.BB: GTMM), a leader in low frequency sound and creator of the award-winning line of ButtKicker®-brand low frequency audio transducers that provide an immersive entertainment experience for audiences, today announced record revenue for the first quarter ended March 31, 2012. First quarter 2012 revenue rose 4% to approximately $729,000 and the higher revenue combined with a 110 basis point improvement in gross margin to 42.1% drove a 7% year-over-year increase in gross profit, which totaled approximately $307,000 in the three months ended March 31, 2012.

The Company's recent financings have strengthened the balance sheet including reductions in overall debt levels. Guitammer's lower outstanding debt is expected to drive ongoing declines in interest expense and Guitammer now has working capital capacity to meet growing product demand that is expected to lead to significant revenue growth in 2012, over fiscal 2011 total revenue of $1.3 million. The Company expects second quarter revenues to be in line with the year-ago period and that year-over-year revenue growth will be achieved in the second half of fiscal 2012 compared to the comparable prior year period.

2012 First Quarter Financial Highlights and Recent Developments

  • Revenues rose 4% year-over-year to approximately $729,000 and gross profit increased 7% to approximately $307,000 reflecting a 110 basis point gross margin improvement to 42%. Approximately 45% of first quarter sales were derived from international markets.
  • Adjusted EBITDA loss (see reconciliation below) decreased 66%, or approximately $45,000, to $23,000.
  • Extinguished $404,000 in debt (inclusive of accrued interest) and reflecting this reduction and prior debt extinguishment, interest expense declined 38% or approximately $35,000 for the quarter.
  • Raised $375,000 in private placements and reflecting additional proceeds secured subsequent to the end of the 2012 first quarter, year to date Guitammer has raised $930,000 in growth capital.
  • ButtKicker® brand products shipping to distributors, dealers and customers in countries worldwide, including: the US, Canada, Spain, Belgium, France, S. Korea, Brazil, The Netherlands, Germany, the United Kingdom, Singapore, Japan, Denmark, Switzerland, Portugal, Kuwait and China.
  • Palliser, a leading Canadian furniture manufacturer, is now shipping its home theater seats factory-equipped with the ButtKicker Individual Seat Control System and optional wireless system to furniture stores in the US and Canada.
  • Secured two new theater installations with Sichuan Lumiere Cinema Co. Ltd. (Lumière Pavilions) of Beijing, China. The new installations are in Shenyang, North China (approximately 144 seats at a new theater), and in Beijing (all 100 seats and a special VIP seating area in one of five auditoriums at Lumière Pavilions' five screen multiplex).
  • Back orders as of March 31, 2012 totaled approximately $200,000.

In addition, Guitammer recently retained the New York City-based communications and investor relations firm, J C I R, to manage the Company's investor relations efforts and assist with strategic relationships. Interested parties can reach J C I R at 212/835-8500 or via email at

Mark Luden, CEO of Guitammer, stated, "Our record first quarter results are indicative of the growing demand for the Company's products as well as significant improvements we have made in our balance sheet and financial flexibility. The Company's momentum in the second half of fiscal 2011 has continued into the early part of this year as we achieved a quarterly record for revenue, improved our gross margin and reduced our Adjusted EBITDA loss by healthy percentages. With strong and growing level of back orders, growing penetration of international markets, and recent successful capital raises, we are very confident that Guitammer has the necessary financial foundation and is on track to achieve significant full year revenue growth in fiscal 2012, compared to fiscal 2011.

"In addition, following receipt last year of our broadcast patent, we are making consistent progress towards the commercialization of ButtKicker LIVE!, a revolutionary step forward in the broadcast of sports and certain entertainment events. Commercializing 'ButtKicker LIVE!' will open up a new, high-margin, recurring revenue and technology licensing channel that will be incremental to the solid growth we are achieving in our core product sales channels. We look forward to reviewing developments with the ButtKicker Live! technology throughout the balance of 2012."

About The Guitammer Company
The Guitammer Company is a leader in low frequency sound products and technology. Its innovative and award winning line of patented ButtKicker-brand low frequency audio transducers let users feel low-frequency sound (bass). ButtKicker brand products are used around the world by leading entertainment and theater companies such as AMC, IMAX and Disney in movie theaters and attractions; by world-famous musicians; in home theaters, simulators and for car audio. ButtKicker brand products are distributed by Pearl Drums for musicians under the trade name, "Pearl's Throne Thumper by ButtKicker," and factory installed in home theater seating by Palliser Furniture. ButtKicker brand products' patented design makes them musically accurate, powerful and virtually indestructible. The Company is headquartered in Westerville, OH.

The Guitammer Company's newly patented broadcast technology, ButtKicker LIVE!, enables the excitement, impact and feeling of sporting events to be broadcast along with the sound and video. ButtKicker LIVE! puts you into the action, whether you're at home or at the event. ButtKicker Live! technology is available for cable, satellite, fiber optic, IPTV and over-the-air broadcast and has been successfully tested with several major content (sports) providers. ButtKicker® and ButtKicker Live!® are registered trademarks of The Guitammer Company. For additional information, visit and

Safe Harbor:
This letter contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability of the Company to successfully implement its turnaround strategy, changes in costs of raw materials, labor, and employee benefits, as well as general market conditions, competition and pricing. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this letter will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as representation by the Company or any other person that the objectives and plans of the Company will be achieved. In assessing forward-looking statements included herein, readers are urged to carefully read those statements. When used in the Annual Report on Form 10-K, the words "estimate," "anticipate," "expect," "believe," and similar expressions are intended to be forward-looking statements.



March 31, December 31,
------------ ------------
2012 2011
------------ ------------
Current assets
Cash and cash equivalents $ 116,642 $ 55,132
Accounts receivable, net 144,992 1,119
Inventory 163,667 56,227
Prepaid expenses and other current assets 2,073 66,832
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Total current assets 427,374 179,310

Property and equipment, net 14,379 14,015
Deferred financing costs, net 39,182 44,525
Other assets 34,261 36,088
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$ 515,196 $ 273,938
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Current liabilities
Line of credit $ 39,523 $ 39,523
Accounts payable 852,941 837,742
Accrued expenses 392,511 423,947
Deferred revenue 132,915 199,239
Current portion of long-term debt - related
parties 409,480 569,929
Current portion of long-term debt - non-
related parties 1,260,795 1,435,894
------------ ------------
Total current liabilities 3,088,165 3,506,274

Long-term debt - related parties, net of current
portion 424,871 462,534
------------ ------------
3,513,036 3,968,808
------------ ------------

------------ ------------
Commitments - -
------------ ------------

Stockholders' deficit
Common stock, par value of $.001, 150,000,000
shares authorized; 62,053,611 and 56,428,039
shares issued and outstanding at March 31,
2012 and December 31, 2011, respectively 62,054 56,428
Additional paid-in capital 4,061,810 3,076,666
Accumulated deficit (7,121,704) (6,827,964)
------------ ------------
(2,997,840) (3,694,870)
------------ ------------
$ 515,196 $ 273,938
------------ ------------



For the Three Months Ended
March 31,
2012 2011
------------ ------------

Total revenue $ 729,137 $ 699,266

Cost of goods sold 422,441 412,779
------------ ------------
Gross profit 306,696 286,487
------------ ------------

Operating expenses
General and administrative 491,352 340,532
Research and development 51,348 18,221
------------ ------------
542,700 358,753
------------ ------------

Loss from operations (236,004) (72,266)
------------ ------------

Other income (expense)
Interest expense (57,736) (92,588)
Interest income - 47
------------ ------------
(57,736) (92,541)
------------ ------------

Loss before provision for income taxes (293,740) (164,807)

Provision for income taxes - -
------------ ------------
Net loss $ (293,740) $ (164,807)
------------ ------------

Basic and diluted loss per share $ (0.005) $ (0.003)

Basic and diluted weighted average common shares
outstanding 60,058,179 50,001,374

Reconciliation of U.S. GAAP Net loss to EBITDA and Adjusted EBITDA:

EBITDA is defined as earnings (loss) before net interest expense, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization, stock warrant expense, payment of stock and warrants to consultants and employee stock-based compensation. Although EBITDA and Adjusted EBITDA are measures of performance calculated in accordance with generally accepted accounting principles ("GAAP"), Guitammer believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate meaningful comparison of the results in the current period to those in prior periods and future periods. However, investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining Guitammer's operating performance that is calculated in accordance with GAAP. A reconciliation of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, net loss, follows:


Reconciliation of U.S. GAAP Net loss
to EBITDA and Adjusted EBITDA:

For the Three Months Ended
March 31,
2012 2011
------------ ------------

Net loss $ (293,740) $ (164,807)
Interest expense 57,736 92,588
Depreciation and Amortization 3,194 4,056
Taxes - -
------------ ------------
EBITDA (232,810) (68,163)
------------ ------------
Less non-cash expenses from:
Stock Warrant expense 134,711 -
Payment of stock and warrants to consultants 70,000 -
Employee stock option expense 4,784 -
------------ ------------
Adjusted EBITDA $ (23,315) $ (68,163)
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For More Information
The Guitammer Company
Joseph Jaffoni
Robert Rinderman

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