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InfoSonics Reports Second Quarter 2017 ResultsSAN DIEGO, Aug. 10, 2017 /PRNewswire/ -- InfoSonics Corporation (NASDAQ: IFON), the provider of verykool® wireless handset solutions and tablets, today announced results for its second quarter ended June 30, 2017. As previously disclosed, on July 25, 2017, we entered into an Agreement and Plan of Merger ("Merger Agreement") with Cooltech Holding Corp. ("Cooltech"), pursuant to which we will acquire Cooltech and Cooltech will become a wholly-owned subsidiary of InfoSonics. The Merger Agreement provides that we will issue an aggregate of 62.5 million shares of our common stock in exchange for all of the outstanding capital stock of Cooltech. Following the Merger, the former stockholders of Cooltech will hold approximately 84% of our common stock on a fully-diluted basis and we have agreed to cause three of our directors to resign and to appoint three Cooltech nominees to the Board of Directors, such that three of our four directors will be nominees of Cooltech. The Merger and the transactions contemplated thereby are subject to a number of customary closing conditions, including approval of the Merger Agreement and the Merger by our stockholders. Our stockholders will be asked to vote on the adoption and approval of the Merger Agreement and the Merger at a special meeting of stockholders to be called by us. Net sales for the second quarter of 2017 amounted to $5.3 million, which represented a $6.8 million, or 56%, decrease from $12.1 million for the second quarter of 2016. The decrease reflects a lack of sales to carrier customers in Central America, a very soft quarter in Mexico and our exit late last year from the U.S. market. Gross profit in the 2017 second quarter was $605,000, a 48% decrease compared to $1,157,000 for the second quarter of 2016. Our gross profit margin as a percent of sales in the 2017 second quarter was 11.4%, an increase from 9.6% for the 2016 second quarter. The reduction in gross profit in the current quarter is a result of the low level of sales, which also made it difficult to absorb fixed overhead costs. The reduced gross profit margin in the prior year quarter was the result of discounts given to liquidate aging inventory. Operating expenses in the second quarter of 2017 were $1,373,000, a 30% decrease compared to $1,973,000 in the 2016 second quarter. The decrease reflects expense reduction actions we implemented during the second and third quarters of 2016. The most significant decreases were in wages and benefits, product certification and homologation, professional fees and marketing. We also implemented additional expense reduction actions during the current year quarter which we expect will benefit future quarters. The net loss for the 2017 second quarter was $812,000, $0.06 per share, compared to net loss of $1,035,000, $0.07 per share, in the second quarter of 2016. At June 30, 2017, we had $1.1 million in cash, $8.8 million of net working capital and no outstanding funded debt. About InfoSonics Corporation Past performance in any period may not be indicative of future results in the next period or the same period in a subsequent year. We also experience seasonal revenue fluctuations that can be significant from one quarter to another. Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as "believes," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates" and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Factors that could cause or contribute to such differences include, without limitation: (1) the pending Merger transaction and related PIPE stock sale may not close and could expose us to significant expenses in connection with the Merger; if the Merger does close, we will be subject to substantially all the liabilities of Cooltech and will be faced with the integration process, which could have a materially adverse effect on our business; (2) the ability of the Company to restore and maintain profitability; (3) our ability to have access to adequate capital to fund operations, including the availability of vendor credit and availability under the Company's bank line of credit; (4) intense competition internationally, including competition from alternative business models, such as manufacturer-to-carrier sales, which may lead to reduced prices, lower sales, lower gross margins, extended payment terms with customers, increased capital investment and interest costs, bad debt risks and product supply shortages; (5) our ability to secure adequate supply of competitive products on a timely basis and on commercially reasonable terms; (6) our ability to successfully introduce new products into target markets, increase sales and improve our gross margins despite intense competition; (7) foreign exchange rate fluctuations, devaluation of a foreign currency, adverse governmental controls or actions including a possible protective import tariff on Chinese products or weakening of U.S. trade relations with Mexico, political or economic instability, or disruption of a foreign market, including, without limitation, the imposition, creation, increase or modification of tariffs, taxes, duties, levies and other charges and other related risks of our international operations which could significantly increase selling prices of our products to our customers and end-users and decrease profitability; (8) the ability to attract new sources of profitable business from expansion of products or services including iOT devices, applications and cloud-based solutions, or risks associated with entry into new markets, including geographies, products and services; (9) an interruption or failure of our information systems or subversion of access or other system controls may result in a significant loss of business, assets, or competitive information; (10) significant changes in supplier terms and relationships or shortages in product supply, including, but not limited to, those caused by recent and continuing industry consolidation of component suppliers; (11) loss of business from one or more significant customers; (12) customer and geographical accounts receivable concentration risk and other related risks; (13) rapid product improvement and technological change resulting in inventory obsolescence; (14) uncertain political and economic conditions internationally, including terrorist or military actions; (15) the loss of a key executive officer or other key employees and the integration of new employees; (16) changes in consumer demand for multimedia wireless handset products and features; (17) our failure to adequately adapt to industry changes and to manage potential growth and/or contractions; (18) seasonal customer buying patterns; and (19) the impact of any litigation for or against the Company, including claims for infringement of intellectual property. Reference is also made to other factors detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release. No Offer or Solicitation Additional Information and Where To Find It Participants in the Solicitation
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