SPY Inc. Reports High Sales, Reduced Losses in First Half

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CARLSBAD, Calif.— SPY Inc. (OTCBB: XSPY) reported financial results for the quarter ended June 30, 2012. The company’s total net sales increased by $0.5 million, or 5 percent, to $9.5 million for the quarter, compared with total net sales of $9.0 million for the quarter in the prior year. Total net sales increased by $1.9 million, or 13 percent, to $17.6 million for the six months ended June 30, 2012, compared with total net sales of $15.7 million for the six months of the previous year.

Sales of the company’s core SPY brand products increased by 13 percent to reach $9.3 million for the quarter ended June 30, 2012, compared with core SPY brand sales of $8.2 million prior year. Other sales were $0.2 million during the quarter, consisting of licensed brand products which are no longer a focus of the company, a statement said. For the six months, sales of core SPY brand products increased by 17 percent to $17.2 million.

The company reported a net loss of $1.6 million during the quarter ended June 30, 2012, compared to a net loss of $3.0 million during the quarter ended June 30, 2011. The reduced loss during the quarter ended June 30, 2012 was primarily due to lower general and administrative expenses, offset by increased sales and marketing expenses related to the SPY brand products, the company said.

"We are once again pleased to have achieved another quarter with nice growth, making it our 5th consecutive quarter of year over year growth of our core products which we believe demonstrates the strength of our SPY brand," said Michael Marckx, president and CEO.

In August 2012, SPY Inc. increased its borrowing capacity by increasing the maximum principal amount available to us under one of its credit facilities with Costa Brava by $3.0 million (from $7.0 million to $10.0 million), thereby increasing the aggregate maximum principal amount under all credit facilities from Costa Brava from $14.0 million to $17.0 million (excluding deferred interest). The company extended the due dates of both of its credit facilities with Costa Brava to become April 1, 2014.

SPY designs sunglasses, goggles and prescription frames under the SPY brand for the action sports, motorsports, snow sports, cycling and multi-sports markets. In 2011, the company decided to cease any new purchase orders of additional inventory for licensed brands including O’Neill, Melodies by MJB and Margaritaville brands and does not expect any significant sales from these brands in the future.

SPY Inc. will host an investor conference call on Aug. 16 at 1:30 p.m. PDT. The dial-in number for the call in North America is 1-800-901-5217 and 1-617-786-2964 for international callers. The participant pass code is 73916416. The call will also be webcast live on the Internet and can be accessed by logging on at investor.spyoptic.com.