SPY Announces Q4 and Year End 2012 Results

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CARLSBAD, Calif.— SPY Inc. [OTCBB: XSPY] has announced their financial results for the three months and year ended Dec. 31, 2012.

Fourth quarter sales of Spy branded products were $8.1 million in 2012, an increase of 1.0 percent or $0.1 million over the same quarter in 2011. Total company net sales decreased by 4.0 percent or $0.4 million, to $8.1 million in the fourth quarter of 2012, compared to $8.5 million in the fourth quarter of 2011, as a result of lower sales of the discontinued licensed brands in 2012 versus 2011, and higher sales of Spy brand close outs in late 2011 in connection with inventory reduction efforts. Net loss for the quarter was $1.2 million, compared to a net loss of $3.4 million in the fourth quarter of 2011.

Annual sales of Spy brand products were $35.1 million in 2012, an increase of 13 percent or $4.0 million, compared to $31.1 million in 2011. Spy brand annual sales included lower closeout sales of $2.6 million in 2012, compared to $3.0 million in 2011. Sales from the company’s discontinued licensed brand products (under the O'Neill, Melodies by MJB and Margaritaville brand names), which are no longer a focus of the company, were $0.5 million in 2012, compared with licensed brand product sales of $2.2 million in 2011. Total company net sales increased by 7 percent or $2.2 million, to $35.6 million for the year ended Dec. 31, 2012, compared to $33.4 million for the year ended Dec. 31, 2011. The company incurred an annual net loss of $7.2 million in 2012 compared to a net loss of $10.9 million in 2011.

"With continued strong Spy brand sales, and an annual growth of 13 percent for 2012 over 2011, we are happy to have achieved our 7th consecutive quarter of year-over-year growth of Spy brand products," said Michael Marckx, president and CEO of SPY. “This is very encouraging for our efforts in 2013, as we have major initiatives lined up, the most important of which is our Spy Happy Lens—the most innovative product Spy has ever launched. We are also pleased that our efforts have really paid off with improved gross margins compared to the fourth quarter and annual results of last year. These factors together with our strong annual growth, nicely improved margins, and substantially lower spending, are the hallmarks of a strengthening brand."

In December 2012, the company borrowed an additional $0.5 million of convertible debt from Harlingwood (Alpha), LLC, a significant shareholder of the company's common stock.