News Column

International Commercial Television, Inc. Reports Second Quarter 2014 Financial Results

August 12, 2014

WAYNE, PA -- (Marketwired) -- 08/12/14 -- International Commercial Television, Inc. (OTCQB: ICTL) (CNSX: ITV) (or "ICTV" or the "Company"), a direct response marketing and branding company focused on the health, wellness and beauty sector, today reported financial results for the three months ended June 30, 2014. Also, of note, the corporate name change to ICTV Brands, Inc. is expected to become effective August 20, 2014.

Second Quarter 2014 Highlights:

•Adjusted EBITDA of $552,000, excluding non-cash stock-based compensation•Operating income of $160,000•Operating income included $155,000 of product development and production expenditures associated with new product expansion•Positive cash flow from operating activities of $477,000•Current working capital ratio improves to 2.5X•Increased cash balance to $1.9 million, from $1.7 million at the end of the first quarter•Closed on a one year $500,000 credit facility with JPMorgan Chase BankAttained Canadian Stock Exchange listing in April•Continued to expand DermaWand's multi-channel distribution, including international and retail•DermaWand next-generation device on track to be ready by end of 2014•Added Doug Crouthers as Director of International Sales•Increased international distribution, including France, Hungary, Croatia and Bosnia-Herzegovina•Coral Actives nearing re-launch and marketing campaign•Derma Brilliance positive data from completed clinical study and new marketing efforts

Kelvin Claney, Chairman and Chief Executive Officer, stated, "We are pleased with our second quarter results and the Company's continued growth. Our new corporate identity of 'ICTV Brands' is at a major inflection point, having progressed from a one product DermaWand company to a family of branded products in the health, wellness and beauty sector. I am confident that we have the right team and infrastructure in place to continue to build a diversified product portfolio which will position the Company for even greater success in the coming years." 

Financial Results:

Revenues for the three and six months ended June 30, 2014 decreased due to management's calculated decision to lower its DermaWand media marketing spend during a slower response period. One of the driving factors was a decrease in the airings of the Spanish language version of the DermaWand infomercial. ICTV is in the process of creating a new version of the Spanish language show, which is expected to air in the fourth quarter of 2014. In addition, the Company did not air on live televised home shopping in the first six months of 2014, but expects to resume airings in the third quarter of 2014.

The Company continues to invest in production and research and development related expenditures. In January 2014, ICTV launched a clinical trial for Derma Brilliance, a new cosmetic skincare resurfacing device system, which is expected to launch in September 2014. In May 2014, ICTV launched a clinical trial for Coral Actives, an acne-care product line. In addition, ICTV began a double blind placebo test in Europe on the DermaWand, with the goal of opening new markets around the world in the fourth quarter of 2014. Elastin-rp, one of the Company's skin-care lines, launched its media campaign in January 2014, resulting in all related production expenditures being incurred in the first half of 2014. Other production expenses included a new short-form spot for the DermaWand campaign and high-definition enhancements to the long-form infomercial.

Second Quarter 2014 Compared to Second Quarter 2013:

Revenues for the second quarter ended June 30, 2014 were $7.8 million, compared to $10.5 million for the second quarter of 2013. International revenue to third-party distributors grew by 58% to $2.0 million. Gross profit margin of 68.6% was realized in the second quarter 2014, slightly down from 71.8% a year earlier. Operating income for the second quarter was $160,000 compared to $367,000 in the second quarter of 2013. Of note, operating income for the second quarter 2014 included non-cash expenses and investment (research and development and new production) of approximately $546,000, which represents a $109,000 increase from the second quarter of 2013. These second quarter 2014 expenses were comprised of stock based compensation expense of approximately $391,000, product development and clinical testing expenditures of approximately $81,000, and new production expenses of approximately $74,000.

Net income for the second quarter was $159,000, compared to net income of $649,000 in the second quarter of 2013. The resulting EPS is $0.01, as compared to $0.03 in the comparable quarter a year earlier. Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) was $552,000

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013:

Revenues for the six months ended June 30, 2014 were $17.6 million, compared to $22.9 million for the six months ended June 30, 2013. International revenue to third-party distributors grew by 31% to $2.9 million. Gross profit margin of 71.5 percent was realized in the first half of 2014, as compared to 71.8 percent a year earlier. Operating loss for the six months ended June 30, 2014 was $312,000, compared to an operating profit of $1.9 million in the six months ended June 30, 2013. Of note, the operating income for the first half of 2014 included non-cash expenses and investment (research and development and new production) of approximately $981,000, which represents a $520,000 increase from the first half of 2013. These first half 2014 expenses were comprised of stock based compensation expense of approximately $590,000, product development and clinical testing expenditures of approximately $225,000, and new production expenses of approximately $166,000

Net loss for the six months ended June 30, 2014 was $356,000, compared to net income of $1.8 million in the six months ended June 30, 2013. The resulting EPS is ($0.02), as compared to $0.08 in the comparable quarter a year earlier. Adjusted EBITDA was $248,000

Balance Sheet as of June 30, 2014:

As of June 30, 2014, the Company had $1.9 million in cash, compared to $1.3 million at December 31, 2013, and reflects continued investment in expenditures on new product acquisition and development. The Company had working capital of $3,200,000 at June 30, 2014, compared to $2,900,000 at December 31, 2013, which demonstrates our strong short-term liquidity. We have also reached a positive shareholders' equity of approximately $2.6 million, up from $2.1 million at the end of the first quarter 2014. The note payable to shareholder was reduced by $40,000 in the second quarter to a balance of $154,000. In addition, we generated positive cash flows from operations of approximately $477,000 in the six months ended June 30, 2014. Subsequent to the end of the quarter, on July 2, we closed on a one year $500,000 Credit Facility with JPMorgan Chase Bank. While there are no current plans to utilize the Credit Facility, we have access to it for working capital and other general corporate purposes as needed. 

Richard Ransom, President, stated, "I am encouraged about our return to profitability in the second quarter, while continuing to invest in our growth for the future. In addition to advancing our new brands to market, as a company we have made great strides this quarter in developing new distribution channels for our products in the areas of social media marketing, live television shopping and retail. We are targeting continued growth in 2014 and a goal of becoming a $100mm+ revenue company in the next 2-3 years."

Conference Call

ICTV will hold a conference call to discuss the Company's second quarter 2014 results and answer questions today, August 12, 2014, beginning at 4:30pm EDT. The call will be open to the public and will have a corporate update presented by ICTV's Chairman and Chief Executive Officer, Kelvin Claney, President, Richard Ransom and Chief Financial Officer, Ryan LeBon, followed by a question and answer period.

The live conference call can be accessed by dialing (866) 952-1906 or (785) 424-1825. Participants should ask for the International Commercial Television Earnings Conference Call. Participants are recommended to dial-in approximately 10 minutes prior to the start of the event. A replay of the call will be available approximately two hours after completion through August 26, 2014. To listen to the replay, dial (800) 695-0715 (domestic) or (402) 220-1423 (international). The conference call transcript will be posted to the Company's corporate website (http://www.ictvonline.com) for those who are unable to attend the live call.

About International Commercial Television, Inc.

International Commercial Television, Inc. sells various health, wellness and beauty products through infomercials and other channels primarily in the United States. ICTV utilizes a distinctive marketing strategy and multi-channel distribution model to develop, market and sell products through infomercials, live home shopping television, specialty outlets and online shopping. It offers health and beauty products, including DermaWand, a skin care device that reduces the appearance of fine lines and wrinkles, and helps improves skin tone and texture; and DermaVitÁl, a professional quality skin care range that effects superior hydration. International Commercial Television Inc. was founded in 1993 and headquartered in Wayne, Pennsylvania.

Non-GAAP Financial Information

Adjusted EBITDA is defined as income from continuing operations before depreciation, amortization, interest expense, interest income, and stock-based compensation. Adjusted EBITDA is not intended to replace operating income, net income, cash flow or other measures of financial performance reported in accordance with generally accepted accounting principles. Rather, Adjusted EBITDA is an important measure used by management to assess the operating performance of the Company. Adjusted EBITDA as defined here may not be comparable to similarly titled measures reported by other companies due to differences in accounting policies. 

Forward-Looking Statements

The matters discussed in this press release may contain "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995). The Company intends that the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by ICTV. Undue reliance should not be placed on forward-looking statements as they may involve risks and uncertainties. The actual results that ICTV achieves may differ materially from any forward-looking statements due to such risks and uncertainties.

-- Financial Statements follow --

INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF

June 30, December 31, 2014 2013 ----------- ---------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,923,158$ 1,370,178 Cash held in escrow 36,321 62,924 Accounts receivable, net of allowances for returns and doubtful accounts of $220,000 and $446,307, respectively 682,127 791,292 Inventories, net 2,111,067 1,778,073 Prepaid expenses and other current assets 655,754 733,427 ----------- ---------------- Total current assets 5,408,427 4,735,894 ----------- ---------------- Furniture and equipment 61,573 81,507 Less accumulated depreciation (38,548) (66,712) ----------- ---------------- Furniture and equipment, net 23,025 14,795 ----------- ---------------- Other assets 2,969 21,297 ----------- ---------------- Total assets $ 5,434,421$ 4,771,986 =========== ================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 1,442,431$ 1,391,342 Severance payable - short-term 40,800 40,800 Deferred revenue - short-term 709,170 242,827 Tax penalties payable - 190,000 ----------- ---------------- Total current liabilities 2,192,401 1,864,969 ----------- ---------------- Severance payable - long-term 26,600 47,000 Deferred revenue - long-term 477,895 386,821 Convertible note payable to shareholder - long-term 153,723 393,723 ----------- ---------------- Total long-term liabilities 658,218 827,544 ----------- ---------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock 20,000,000 shares authorized, no shares issued and outstanding - - Common stock, $0.001 par value, 100,000,000 shares authorized, 23,163,316 and 21,826,650 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively 12,952 11,616 Additional paid-in-capital 8,535,495 7,676,177 Accumulated deficit (5,964,645) (5,608,320) ----------- ---------------- Total shareholders' equity 2,583,802 2,079,473 ----------- ---------------- Total liabilities and shareholders' equity $ 5,434,421$ 4,771,986 =========== ================

INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (Unaudited) For the three For the six months ended months ended ---------------------- ---------------------- June 30, June 30, June 30, June 30, 2014 2013 2014 2013 ---------- ---------- ---------- ---------- NET SALES $ 7,817,060$10,455,115$17,639,560$22,855,348 COST OF SALES 2,454,307 2,943,979 5,033,939 6,450,836 ---------- ---------- ---------- ---------- GROSS PROFIT 5,362,753 7,511,136 12,605,621 16,404,512 ---------- ---------- ---------- ---------- OPERATING EXPENSES: General and administrative 1,874,491 2,020,865 3,822,797 3,955,458 Selling and marketing 3,327,820 5,123,128 9,127,668 10,550,867 ---------- ---------- ---------- ---------- Total operating expenses 5,202,311 7,143,993 12,950,465 14,506,325 ---------- ---------- ---------- ---------- OPERATING INCOME (LOSS) 160,442 367,143 (344,844) 1,898,187 INTEREST EXPENSE, NET (1,526) (5,970) (4,896) (12,675) ---------- ---------- ---------- ---------- INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAX 158,916 361,173 (349,740) 1,885,512 PROVISION (BENEFIT) FOR INCOME TAXES - (287,736) (6,585) 68,044 ---------- ---------- ---------- ---------- NET INCOME (LOSS) $ 158,916$ 648,909$ (356,325)$ 1,817,468 ========== ========== ========== ========== NET INCOME (LOSS) PER SHARE BASIC $ 0.01$ 0.03$ (0.02)$ 0.09 ---------- ---------- ---------- ---------- DILUTED $ 0.01$ 0.03$ (0.02)$ 0.08 ---------- ---------- ---------- ---------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES BASIC 23,163,316 21,706,087 22,860,959 21,360,600 ---------- ---------- ---------- ---------- DILUTED 25,995,925 24,533,069 22,860,959 24,018,364 ---------- ---------- ---------- ----------

INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(Unaudited)

2014 2013 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (356,325)$ 1,817,468 Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used in) operating activities: Depreciation 2,764 7,599 Bad debt expense 1,015,856 1,754,814 Share based compensation 590,295 306,082 Reduction in tax penalties payable (85,933) (80,000) Change in assets and liabilities Accounts receivable (906,691) (1,992,796) Inventories (332,994) (719,022) Prepaid expenses and other assets 65,498 (164,410) Accounts payable and accrued liabilities 51,089 (1,216,313) Severance payable (20,400) (20,400) Tax provision payable - (128,299) Tax penalties payable (104,067) - Deferred revenue 557,417 74,211 ---------- ---------- Net cash provided by (used in) operating activities 476,509 (361,066) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (10,995) (10,250) ---------- ---------- Net cash used in investing activities (10,995) (10,250) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of options 46,280 96,200 Proceeds from exercise of warrants 129,583 - Payments on note payable - (30,169) Payments on convertible note payable to shareholder (115,000) (85,000) ---------- ---------- Net cash provided by (used in) financing activities 60,863 (18,969) ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 526,377 (390,285) CASH AND CASH EQUIVALENTS, beginning of the period 1,433,102 908,366 ---------- ---------- CASH AND CASH EQUIVALENTS, end of the period $ 1,959,479$ 518,081 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Taxes paid $ 6,585$ 145,530 ========== ========== Tax penalties and interest paid $ 104,067 $ - ========== ========== Interest paid $ 5,819$ 12,924 ========== ========== Write off of fully depreciated assets $ 30,928 $ - ========== ========== Conversion of shareholder note payable $ 125,000 $ - ========== ==========

Contact Information International Commercial Television, Inc.Rich Ransom Email contact 484-598-2313Hayden IR Email contact 917-658-7878Kirk GamleyContact Financial Corp. Phone: 604-689-7422E-mail: Email contact



Source: International Commercial Television, Inc.


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