DENVER, Aug. 16, 2005 (PRIMEZONE) -- VitaCube Systems Holdings, Inc. (AMEX:PRH), a Denver-based nutraceutical company, today reported second quarter operating results for the period ended June 30, 2005.
The second quarter results were principally influenced by the closing of a public offering of the Company's securities raising approximately $7.3 million after offering costs and expenses along with the continued growth of independent distributors that sell and market the Company's products.
Net losses for the quarter ended June 30, 2005 totaled $1,043,488 compared with net losses of $446,718 for the quarter ended June 30, 2004. Income per share was a net loss of $.11 as compared to a net loss of $.07 per share in the same period in 2004. Changes in net losses are attributed to an increase in both sales and marketing expenses and general and administrative expenses.
Revenues for the current quarter totaled $222,670, a 42% increase as compared with $156,483 for the corresponding quarter in 2004, and were also up for the six months ended June 30, 2005 at $459,726, or a 39% increase as compared with revenues of $331,017 for the six months ended June 30, 2004.
The Company's gross profit increased by 18% for both the quarter and six months ended 2005 over the same quarter and six months in 2004. The major contributing factor was due to the increase in net sales. Gross profit margin decreased to 52% for the current quarter from 63% for the comparable quarter in 2004 and from 59% for the six months ended June 30, 2005 from 69% for the six months ended June 30, 2004 due to sales of lower margin items.
Earnest Mathis, CEO of VitaCube Systems Holdings, Inc., stated, "The financial results this quarter reflect an improving base of operations - our customer count was up, our endorser ranks continued to increase and, for the first time, we were able to enroll a significant number of experienced network marketing sales leaders. We delivered these results with far lower expenditures than originally projected in our prospectus. The entire VitaCube organization remains focused on growing the top line, and ultimately, delivering a solid bottom line return."
Among the highlights completed or announced during the second quarter:
-- Gross Proceeds from Financing of $9 Million
-- Addition of Veteran Marketing Professionals
-- Strategic Technology Alliance for Improved Research and
Development
-- Addition of Doug Ridley as Company President
About VitaCube Systems Holdings, Inc.
VitaCube Systems Holdings, Inc. (V3S) is a provider of nutritional foods and beverages designed to help enhance physical health and overall performance. V3S has developed a comprehensive line of nutritional supplements and functional foods designed in systems that are easy to take, simple to understand, and conveniently fit within a lifestyle. V3S's commitment to quality, science, and research has earned them a loyal following of over 350 world-class athletes, such as PGA Tour Professional, Tom Pernice, Jr., 5-Time Cy Young Award Winner, Randy Johnson, Super Bowl Champions Mike Alstott and Lawyer Milloy, Olympic Medalists Briana Scurry and Caroline Lalive, and Stanley Cup Winner Blake Sloan. V3S products are only available through independent distributors located throughout the nation. For more information about VitaCube, please visit the following website www.v3s.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Statements in this press release regarding VitaCube Systems Holdings, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-KSB for the most recently ended fiscal year.
Certain statements in this release regarding the Company's agreements are in accordance with the guidelines established by the Federal Trade Commission for endorsements in advertising.
VITACUBE SYSTEMS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2005 2004
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 5,800,184 $ 114,794
Accounts receivable, net of allowance
for doubtful accounts of $2,343 and
$237, respectively 9,697 4,358
Inventory, net of allowance for
obsolescence of $81,500 and
43,300, respectively 372,719 478,300
Prepaid expenses and other
current assets 248,843 108,315
----------- -----------
Total current assets 6,431,443 705,767
Intangible assets, net 37,887 40,015
Property and equipment, net 98,603 109,275
Deferred offering costs -- 269,106
----------- -----------
Total assets $ 6,567,933 $ 1,124,163
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 390,273 $ 611,398
----------- -----------
Total current liabilities 390,273 611,398
----------- -----------
SHAREHOLDERS' EQUITY (Note 2):
Preferred stock, authorized 5,000,000
shares, $.001 par value, none issued
or outstanding -- --
Common stock, authorized 50,000,000
shares, $.001 par value, 9,588,900 and
6,534,043 issued and outstanding
respectively 9,589 6,534
Additional paid in capital 15,549,706 8,071,186
Accumulated (deficit) (9,381,635) (7,564,955)
----------- -----------
Total shareholders' equity 6,177,660 512,765
----------- -----------
Total liabilities and
shareholders' equity $ 6,567,933 $ 1,124,163
=========== ===========
VITACUBE SYSTEMS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three and Six Months Ended June 30, 2005 and 2004
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $ 222,670 $ 156,483 $ 459,726 $ 331,017
Cost of goods
sold 105,893 57,470 190,454 103,055
----------- ----------- ----------- -----------
Gross profit 116,777 99,013 269,272 227,962
----------- ----------- ----------- -----------
Operating expenses:
Selling and
marketing
expenses 477,920 251,158 904,767 414,288
General and
administrative
expenses 680,007 271,544 1,162,048 727,714
Research and
development
expenses 10,294 4,547 18,956 4,547
Depreciation and
amortization 6,188 20,625 12,800 41,251
----------- ----------- ----------- -----------
Total operating
expenses 1,174,409 547,874 2,098,571 1,187,800
----------- ----------- ----------- -----------
Net (loss) from
operations (1,057,632) (448,861) (1,829,299) (959,838)
----------- ----------- ----------- -----------
Other income
(expense)
Interest income 15,344 2,143 15,460 2,143
Interest (expense) (1,200) -- (2,841) (300,872)
----------- ----------- ----------- -----------
Total other
income
(expense) 14,144 2,143 12,619 (298,729)
----------- ----------- ----------- -----------
Net (loss) $(1,043,488) $ (446,718) $(1,816,680) $(1,258,567)
=========== =========== =========== ===========
Net (loss) per
common share
Basic and
diluted net
(loss) per
share $ (.11) $ (.07) $ (.23) $ (.26)
----------- ----------- ----------- -----------
Weighted average
common shares
outstanding,
basic and diluted 9,291,757 6,478,820 7,912,900 4,903,098
=========== =========== =========== ===========
VITACUBE SYSTEMS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, 2005 and 2004
For the Six Months Ended
June 30,
--------------------------
2005 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(1,816,680) $(1,258,567)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Depreciation and amortization expense 12,800 41,251
Beneficial conversion feature interest -- 255,000
Stock issued in payment of
accounts payable -- 100,000
Stock and stock options issued
for services 96,000 138,463
Change in allowance for inventory
obsolescence 38,200 (3,011)
Change in allowance for doubtful
accounts 2,106 16
Change in allowance for product
returns 11,639 (162)
(Increase) decrease in accounts
receivable (7,445) 4,725
Decreases in inventory 67,381 35,481
(Increases) in prepaids and other
current assets (228,529) (104,787)
(Decreases) in accounts payable and
accrued expenses (232,764) (334,062)
Increase in accrued interest -- 45,872
----------- -----------
Net cash (used in) operating
activities (2,057,292) (1,079,781)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- (4,006)
Net cash (used in) investing activities -- (4,006)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from shareholders 170,000 12,482
Proceeds from notes payable 195,000 205,000
Re-payments of shareholder advances (170,000) (132,173)
Re-payments of notes payable (195,000) (47,500)
Issuance of common stock,
net of offering costs 7,742,682 2,448,308
----------- -----------
Net cash provided by financing
activities 7,742,682 2,486,117
----------- -----------
NET INCREASE IN CASH 5,685,390 1,402,330
CASH, BEGINNING OF PERIOD 114,794 7,963
----------- -----------
CASH, END OF PERIOD $ 5,800,184 $ 1,410,293
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
NONCASH FINANCING ACTIVITIES:
Subordinated notes and interest
converted to common stock $ -- $ 1,861,643
=========== ===========
Bridge loans and interest converted
to common stock $ -- $ 224,986
=========== ===========
Interest and debt forgiveness $ -- $ 8,964
=========== ===========
Notes payable converted to common stock $ -- $ 305,000
=========== ===========
SUPPLEMENTAL CASH FLOW
Cash paid for interest $ 2,841 $ 45,872
=========== ===========