Zurvita Holdings, Inc. (OTCBB: ZRVT) (OTCBB: ZRVTE) ("Zurvita" or
the "Company"), a dynamic direct-to-consumer network marketing
company offering turn-key solutions for high-quality consumer and
business products and services, today announced its financial
results for the 2010 fiscal year ended July 31, 2010.
Fiscal 2010 Highlights
-- Full year fiscal 2010 revenues reached $6.3 million.
-- Full year fiscal 2010 gross profit rose to $1.7 million.
-- Gross margin for full year fiscal 2010 was 26.7%.
-- Net loss for full year fiscal 2010 was $11.5 million, or
$0.20 per diluted share.
-- Held "Champions Weekend" and "Freedom Crusade" national
conferences, drawing over 1000 in combined attendance.
-- Launched national online business advertising campaign and
introduced enhancements to proprietary local search advertising and
search engine directory, "ZLinked."
-- Introduced a series of enhanced business tools to capitalize
on major market growth opportunities.
-- Increased total number of sales representatives by
approximately 100%.
"We are excited by the results we achieved in fiscal 2010 as we
continued to increase our revenue by introducing compelling new
products that no one else has, such as commercial energy sales,
which represents a multi-billion dollar market and is a true
innovation in our industry," said Zurvita Co-Chief Executive
Officer Jay Shafer. "Our 100% increase in sales representatives is
clear indication that our product mix and sales focus are well on
track. Sales in fiscal 2010 were driven by new revenue streams from
advertising sales and commissions relating to energy sales as well
as increases in marketing fees and administrative website sales. As
we head into our next National Conference in February, 2011, we
continue to refine our proven strategies to capitalize on growth in
trillion dollar industries such as internet services and commercial
energy deregulation with cutting edge tools. We continue to see
strong upside for our business going into 2011 and beyond as we
provide our consultants leading products and services as well as
revolutionary new tools needed to create financial freedom."
Fiscal Year 2010 Results
Revenue for the twelve months ended July 31, 2010, was
approximately $6.3 million, an increase of $3.5 million compared to
revenue of $2.8 million for the seven months ended July 31, 2009,
which represents a short fiscal year period due to a change in the
Company's fiscal year end from December 31st to July 31st. The
increase in total revenue is primarily a result of new advertising
and energy revenue streams.
Administrative websites sales and marketing fees were
approximately $2.1 million and $1.9 million for the year ended July
31, 2010, respectively, as compared to approximately $514 thousand
and $1.3 million, respectively, for the seven months ended July 31,
2009. The increase in administrative website sales and marketing
fees was approximately $1.5 million and $642 thousand,
respectively. The increase was a direct result of the growth in the
total sales representatives to approximately 5,100 as of July 31,
2010, from approximately 2,600 as of July 31, 2009. The Company was
able to attract and retain more representatives as a result of
greater product offerings in fiscal year 2010 than in the
comparable short fiscal year ending July 31, 2009. Advertising
sales related to the Company's Local Search Engine directory and
commissions related to energy sales were new revenue streams
between the periods that both contributed to an aggregate increase
of $1.4 million of new revenue for the fiscal year ended July 31,
2010 as compared to the seven months ended July 31, 2009.
Gross profit for the fiscal year ended July 31, 2010, was
approximately $1.7 million as compared to gross profit of
approximately $697 thousand for the short fiscal year ended July
31, 2009. The Company realized an increase in gross profit due to
less non-traditional compensation measures used to compensate
consultants. This was achieved by having a greater product offering
with improved margins.
Operating expenses for the twelve months ended July 31, 2010,
were approximately $8.8 million, compared to $4.3 million for the
seven months ended July 31, 2009. Operating expense to revenue
ratio decreased to 1.36% for the fiscal year ended July 31, 2010
from 1.51% for the short seven month fiscal period ended July 31,
2009. Operating loss increased to approximately $7.1 million for
the fiscal year ended July 31, 2010, from approximately $3.6
million for the short fiscal year ended July 31, 2009.
The Company reported a net loss of approximately $11.5 million,
or $0.20 per diluted share, for the fiscal year ended July 31,
2010, compared to a net loss of approximately $3.5 million, or
$0.07 per diluted share for the seven months ended July 31, 2009.
The increase in net loss was attributable to non-cash amortization
and impairment of the Company's advertising and marketing
agreements in the amounts of approximately $657 thousand and $2
million, respectively, as well as non-cash unrealized losses
recognized on the Company's marketable securities and outstanding
liability warrants in the amounts of $290 thousand and
approximately $4.0 million, respectively. Diluted earnings per
share were calculated using a weighted average share count of 56.7
million for the fiscal year ended July 31, 2010, compared to 49.3
million for the short fiscal year period ended July 31, 2009.
Financial Condition
As of July 31, 2010, the Company had cash and cash equivalents
of $289 thousand and working capital of approximately $1.3 million.
Net cash used in operating activities for the twelve months ended
July 31, 2010, was approximately $3.1 million, down from $3.2
million for the seven months ended July 31, 2009. Total liabilities
and stockholders' deficit was $3.4 million as of July 31, 2010
versus total liabilities and stockholders' deficit of $3.5 million
for the period ended July 31, 2009.
Business Outlook
"We are excited going into 2011 as we continue to bring together
the brightest professionals and the best performing products to
help Zurvita independent representatives take their businesses to
the next level," said Mark Jarvis, Zurvita Co-Chief Executive
Officer. "Zurvita is committed to the growth and success of our
consultants and we are focusing our resources on bringing bold, new
products to market as we prepare for our next National Conference,
the 2011 'Freedom Crusade,' being held February 18th to February
21st in Houston, Texas at the Westin™ Galleria. Going forward, we
are confident that we have the right team in place to position
Zurvita for significant increases in sales and profits."
About Zurvita Holdings, Inc.
Zurvita is a dynamic direct-to-consumer marketing company
offering high-quality products and services targeting individuals,
families and small businesses. The company's highly differentiated
services feature best in class consumer products and small business
solutions through a growing network of independent sales
consultants. Zurvita has rapid growth potential due to its
experienced sales management team and its unique
business-to-business strategy offering turnkey solutions for
commercial and residential energy, advertising, telecommunications
and financial services. For more information, please visit
http://www.zurvita.com.
Follow Zurvita on Twitter at: http://twitter.com/Zurvita and on
Zurvita's Facebook Fan Page at: www.facebook.com/Zurvita
Safe Harbor Statement
Matters discussed in this press release contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. When used in this press release, the words
"anticipate," "believe," "estimate," "may," "intend," "expect" and
similar expressions identify such forward-looking statements.
Actual results, performance or achievements could differ materially
from those contemplated, expressed or implied by the
forward-looking statements contained herein. These forward-looking
statements are based largely on the expectations of the Company and
are subject to a number of risks and uncertainties. These include,
but are not limited to, risks and uncertainties associated with:
the impact of economic, competitive and other factors affecting the
Company and its operations, markets, product, and distributor
performance, the impact on the national and local economies
resulting from terrorist actions, and U.S. actions subsequently;
and other factors detailed in reports filed by the Company.
- FINANCIAL TABLES FOLLOW -
ZURVITA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the For the Seven
Year Ended Months Ended
July 31, July 31,
2010 2009
----------- -----------
REVENUES
Administrative websites $ 2,055,060 $ 513,908
Advertising sales 936,230 -
Commissions 479,225 65,876
Marketing fees and materials 1,911,851 1,269,768
Membership fees 923,654 964,897
----------- -----------
Total revenues 6,306,020 2,814,449
COST OF SALES
Benefit and service cost 1,577,858 412,676
Sales commissions 3,042,922 1,704,331
----------- -----------
Total cost of sales 4,620,780 2,117,007
GROSS PROFIT 1,685,240 697,442
OPERATING EXPENSES
Depreciation 35,555 19,722
Impairment loss on marketing agreement 2,000,000 -
Office related expenses 412,587 124,239
Payroll and employee benefits 1,887,185 758,164
Professional fees 1,276,437 1,409,565
Selling and marketing 2,949,708 1,878,349
Travel 206,967 66,285
----------- -----------
Total operating expenses 8,768,439 4,256,324
----------- -----------
Loss from operations before other income
(expense) (7,083,199) (3,558,882)
OTHER (EXPENSE) INCOME
Gain on change in fair value of share conversion
feature 131,413 -
Gain on settlement of liability - 38,700
Interest expense (270,919) (3,014)
Interest income 11,741 -
Loss on change in fair value of marketable
securities (290,000) -
Loss on change in fair value of warrants (3,980,580) -
Loss on debt restructure (50,000) -
----------- -----------
Total other (expense) income (4,448,345) 35,686
----------- -----------
Loss before income taxes (11,531,544) (3,523,196)
Income taxes (19,629) 19,144
----------- -----------
Net loss (11,511,915) (3,542,340)
=========== ===========
Basic and diluted loss per share $ (0.20) $ (0.07)
=========== ===========
Basic and diluted weighted average number of
common shares outstanding 56,711,644 49,307,924
=========== ===========
ZURVITA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
July 31, July 31,
2010 2009
----------- -----------
ASSETS
Current assets
Cash $ 289,442 $ 1,390,953
Marketable securities (at fair value) 480,000 -
Note receivable - related party 1,702,000 -
Accounts receivable 137,123 47,732
Agent advanced compensation 448,553 927,002
Deferred expenses 127,351 -
Deferred marketing costs - 657,400
Other assets 41,173
----------- -----------
Total current assets 3,225,642 3,023,087
Property, plant and equipment (net) 94,965 112,036
Agent advanced compensation - 271,344
Merchant account deposit 115,333 115,333
Other assets - 24,126
----------- -----------
Total assets $ 3,435,940 $ 3,545,926
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 249,762 $ 471,081
Accounts payable - related party 127,733 -
Notes payable - current 284,967 787,237
Accrued expenses 332,217 148,001
Deferred revenue 808,957 934,321
Deferred compensation - related party 110,238 -
Income tax payable 2,628 35,276
----------- -----------
Total current liabilities 1,916,502 2,375,916
Notes payable - long term 1,639,268 284,967
Fair value of share conversion feature 462,013 -
Fair value of warrants 6,370,000 549,780
----------- -----------
Total liabilities 10,387,783 3,210,663
----------- -----------
Redeemable preferred stock 4,550,747 1,211,000
Stockholders' deficit
Common stock ($.0001 par value, 300,000,000
shares authorized; 69,497,713 and 64,440,000
shares issued and 61,497,713 and 56,440,000
shares outstanding as of July 31, 2010 and
July 31, 2009, respectively) 6,950 6,444
Treasury stock (210,000) (210,000)
Additional paid-in capital 9,978,738 9,094,182
Accumulated deficit (21,278,278) (9,766,363)
----------- -----------
Total stockholders' deficit (11,502,590) (875,737)
----------- -----------
Total liabilities and stockholders' deficit $ 3,435,940 $ 3,545,926
=========== ===========
ZURVITA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the For the Seven
Year Ended Months Ended
July 31, 2010 July 31, 2009
------------- -------------
Cash flows from operating activities
Net loss $ (11,511,915) $ (3,542,340)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of note payable discount 140,307 -
Amortization of deferred marketing costs 657,400 -
Depreciation 35,555 19,722
Share-based compensation 682,138 190,537
Gain on change in fair value of share
conversion feature (131,413) -
Gain on extinguishment of liabilities - 38,700
Loss on change in fair value of
marketable securities 290,000 -
Loss on change in fair value of warrants 3,980,580 -
Loss on debt restructure 50,000 -
Loss on impairment on marketing
agreement 2,000,000
Loss on legal settlement - 600,000
Changes in operating assets and
liabilities
Increase in accounts receivable (89,391) (36,771)
Decrease (increase) in agent advanced
compensation 749,793 (68,841)
Increase in legal retainer - 50,000
Increase in deferred expenses (127,351) -
Increase in other assets (17,047) (15,909)
Increase (decrease) in accounts payable
and accrued expenses 174,429 (269,558)
Decrease in deferred revenue (125,364) (151,355)
Increase in deferred compensation
related party 110,238 -
------------- -------------
Net cash used in operating activities (3,132,041) (3,185,815)
------------- -------------
Cash flows from investing activities
Purchase of promissory note (1,702,000) -
Purchase of property and equipment (18,484) -
Purchase of marketable securities (770,000) -
Funds obtained from reverse merger - 182
------------- -------------
Net cash provided by (used in) investing
activities (2,490,484) 182
------------- -------------
Cash flows from financing activities
Contributions of capital from The
Amacore Group, Inc. - 2,564,382
Net proceeds from borrowings - 523,190
Proceeds from exercise of warrants 30,282 -
Proceeds from sale of preferred stock 5,300,000 1,750,000
Proceeds from repurchase of common stock - (210,000)
Principal payments made on notes payable (809,268) (50,986)
------------- -------------
Net cash provided by financing activities 4,521,014 4,576,586
------------- -------------
Net change in cash balance (1,101,511) 1,390,953
Beginning cash 1,390,953 -
------------- -------------
Ending cash $ 289,442 $ 1,390,953
============= =============
Supplemental disclosure of cash flow
information
Cash paid for interest $ 33,435 $ 3,014
============= =============
Cash paid for taxes $ - $ -
============= =============
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Company Contact: Zurvita Holdings, Inc. Jason Post Chief
Financial Officer Phone: 407.805.8900 jason.post@amacoregroup.com
Investor Relations Contact: Hampton Growth Resources, LLC Andrew W.
Haag Managing Partner Phone: 877 368 3566
zrvt@hamptongrowth.com
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