Zurvita Holdings, Inc. (OTCBB: ZRVT) ("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 first
quarter of the 2011 fiscal year, ended October 31, 2010.
First Quarter 2011 Highlights
-- Revenues increased 5% quarter-over-quarter to $1.3 million.
-- Gross profit rose 624% quarter-over-quarter to $431 thousand.
-- Gross profit increased to 33% versus 5% one year ago.
-- Loss from operations before other income and expenses decreased to $1.2
million from $1.4 million one year ago.
-- Net income was $1.8 million, versus a net loss of $5.6 million one year
ago.
-- Held "Decisive Moments National Leadership Conference" in California,
Texas and New Jersey.
-- Strengthened executive team with appointment of a Vice President of
Marketing.
"As demonstrated by our first quarter performance, Zurvita
continues to make excellent progress in revenue and margin
enhancement, further positioning Zurvita to deliver on its goals
for growth," stated Jay Shafer, Zurvita Co-Chief Executive Officer.
"Our increase in revenue was driven by further growth in
administrative website, advertising and energy commission revenue
from commercial energy sales; one of our innovative service
offerings where we see excellent traction and long-term potential.
Zurvita also experienced a sharp increase in gross profit,
resulting from lower cost of goods as a result of cost of
acquisition savings in our recruitment efforts as well as sales of
our higher margin products. To support our growth, we continued to
recruit the best talent and strengthened our leadership team during
the quarter to take advantage of the tremendous opportunities we
see ahead." Added Mr. Shafer, "We see a strong upside to our
business for 2011 as we bring to market unique products in steady
industries such as financial services, online advertising, and
energy markets, and by providing our consultants the best tools and
the expertise needed to create financial freedom."
First Quarter 2011 Results
Revenue for the fiscal 2011 first quarter ended October 31,
2010, increased 5% or approximately $64 thousand to $1.3 million
from $1.2 million in the first quarter of fiscal 2010. The increase
in total revenue was primarily a result of continued growth in
administrative website, advertising and energy commission
revenue.
Administrative websites sales and marketing fees were
approximately $462 thousand and $349 thousand for the three months
ended October 31, 2010, respectively, as compared to approximately
$484 thousand and $396 thousand, respectively, for the three months
ended October 31, 2009. The aggregate decrease in administrative
website sales and marketing fees was approximately $23 thousand and
$47 thousand, respectively. The decrease was a result of less
recruiting during the three months ended October 31, 2010 as
compared to 2009.
Gross profit for the fiscal first quarter ended October 31,
2010, increased 624% to $431 thousand compared to gross profit of
approximately $59 thousand in the same period a year ago. The
increase in gross profit was due to the decrease in the company's
cost of sales, which fell by approximately $307 thousand to $882
thousand from $1.2 million for the same period a year ago.
The decrease in cost of sales was mainly a result of less
non-traditional sales incentives used to attract and retain
consultants and because the Company's had a greater product
offering with increased margins. Gross margin for the fiscal first
quarter ended October 31, 2010, increased to 33% versus 5% for the
three months ended October 31, 2010.
Operating expenses for the fiscal first quarter were
approximately $1.6 million, compared to $1.4 million one year
earlier. Loss from operations before other income and expenses for
the fiscal first quarter improved to $1.2 million versus $1.4
million for the three months ended October 31, 2009.
For the first quarter of fiscal 2011, the company recorded a net
income of $1.8 million, or $0.02 per diluted share, versus a loss
of $5.6 million, or $0.10 per diluted share for the same period
last year. Diluted earnings per share were calculated using a
weighted average share count of 109.1 million in the first fiscal
quarter of 2011, compared to 56.4 million one year ago. Although
the Company experienced an increase in revenues and improvement in
gross margin, the increase in net income is attributable to
non-cash unrealized gains, including a $3.1 million gain resulting
from fair valuing the Company's outstanding liability warrants.
Financial Condition
As of October 31, 2010, the Company had cash and cash
equivalents of $621 thousand. Net cash used in operating activities
for the first three months of fiscal 2011 was approximately $1.3
million, up from $1.2 million for the same period last year. Total
liabilities, redeemable preferred stock and stockholders' deficit
was $1.5 million as of October 31, 2010 versus total liabilities,
redeemable preferred stock and stockholders' deficit of $3.4
million for the year ended July 31, 2010.
Fiscal 2011 Outlook
"We are extremely confident about Zurvita's prospects in 2011,
as we look at the introduction of dynamic new products and
divisions based on the essential services that businesses and
individuals use every day," commented Mark Jarvis, Zurvita Co-Chief
Executive Officer. "With the recent completion of our technology
transfer agreement with OmniReliant, we have now fully secured the
technology to power 'ZLinked,' Zurvita's proprietary local search
advertising and search engine directory. This technology has
launched us into the trillion dollar online advertising and search
directory services market. It is an exciting time for us as we look
to fine-tune ZLinked, a platform which allows small- and
medium-sized businesses to effectively connect with consumers on
the internet by combining a suite of effective turn-key advertising
solutions, including geo-targeted advertising placements. We
believe providing our consultants with innovative and essential
products such as these will allow us to continue our momentum of
growth."
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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
October 31,
--------------------------
2010 2009
------------ ------------
REVENUES
Administrative websites $ 461,728 $ 484,365
Advertising sales 241,273 3,772
Commissions 111,091 61,321
Marketing fees and materials 349,227 396,122
Membership fees 149,466 303,055
------------ ------------
Total revenues 1,312,785 1,248,635
COST OF SALES
Benefit and service cost 312,924 277,294
Sales commissions 569,357 911,848
------------ ------------
Total cost of sales 882,281 1,189,142
GROSS PROFIT 430,504 59,493
OPERATING EXPENSES
Depreciation 9,787 8,452
Office related expenses 126,699 83,313
Payroll and employee benefits 606,852 320,580
Professional fees 292,886 306,174
Selling and marketing 523,488 652,114
Travel 79,751 53,748
------------ ------------
Total operating expenses 1,639,463 1,424,381
------------ ------------
Loss from operations before other income
(expense) (1,208,959) (1,364,888)
OTHER INCOME (EXPENSE)
Gain on change in fair value of share
conversion feature 323,249 4,192
Gain (loss) on change in fair value of
warrants 3,124,000 (4,041,827)
Interest expense (83,629) (28,429)
Interest income 4,756 -
Loss on change in fair value of marketable
securities (320,000) (130,000)
------------ ------------
Total other income (expense) 3,048,376 (4,196,064)
------------ ------------
Income (loss) before income taxes 1,839,417 (5,560,952)
Income taxes 1,302 9,785
------------ ------------
Net income (loss) $ 1,838,115 $ (5,570,737)
============ ============
Basic earnings (loss) per share $ 0.03 $ ( 0.10 )
============ ============
Diluted earnings (loss) per share $ 0.02 $ ( 0.10 )
============ ============
Basic weighted average number of common shares
outstanding 61,498,713 56,440,000
============ ============
Diluted weighted average number of common
shares outstanding 109,098,713 56,440,000
============ ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
ZURVITA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
October 31, July 31,
2010 2010
----------- -----------
ASSETS
Current assets
Cash $ 621,478 $ 289,442
Marketable securities (at fair value) 160,000 480,000
Note recievable - related party - 1,702,000
Accounts receivable 183,766 137,123
Agent advanced compensation 174,743 448,553
Deferred expenses 78,068 127,351
Other assets 108,986 41,173
----------- -----------
Total current assets 1,327,041 3,225,642
Property, plant and equipment (net) 89,986 94,965
Merchant account deposit 115,333 115,333
----------- -----------
Total assets $ 1,532,360 $ 3,435,940
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 90,526 $ 249,762
Accounts payable - related party 39,711 127,733
Notes payable - current 229,018 284,967
Accrued expenses 307,383 332,217
Deferred revenue 620,046 808,957
Deferred compensation - related party 97,546 110,238
Income tax payable 3,930 2,628
----------- -----------
Total current liabilities 1,388,160 1,916,502
Notes payable - long term 1,717,352 1,639,268
Fair value of share conversion feature 138,764 462,013
Fair value of warrants 3,246,000 6,370,000
----------- -----------
Total liabilities 6,490,276 10,387,783
----------- -----------
Redeemable preferred stock 4,550,747 4,550,747
Stockholders' deficit
Common stock ($.0001 par value, 300,000,000
shares authorized; 69,498,713 and 69,497,713
shares issued and 61,498,713 and 61,497,713
shares outstanding as of October 31, 2010
and July 31, 2010, respectively) 6,950 6,950
Treasury stock (210,000) (210,000)
Additional paid-in capital 10,134,550 9,978,738
Accumulated deficit (19,440,163) (21,278,278)
----------- -----------
Total stockholders' deficit (9,508,663) (11,502,590)
----------- -----------
Total liabilities, redeemable preferred
stock and stockholders' deficit $ 1,532,360 $ 3,435,940
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
ZURVITA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
October 31, October 31,
2010 2009
------------ ------------
Cash flows from operating activities
Net income (loss) $ 1,838,115 $ (5,570,737)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of note payable discount 46,000 10,125
Amortization of deferred marketing costs - 164,350
Depreciation 9,787 8,452
Share-based compensation 155,312 57,402
Gain on change in fair value of share
conversion feature (323,249) (4,192)
(Gain) loss on change in fair value of
warrants (3,124,000) 4,041,827
Loss on change in fair value of
marketable securities 320,000 130,000
Changes in operating assets and liabilities
Increase (decrease) in accounts
receivable (46,643) 10,749
Decrease in agent advanced compensation 273,810 98,360
Decrease in deferred expenses 49,283 -
Increase in other assets (48,186) (8,241)
Decrease in accounts payable and accrued
expenses (238,535) (297,223)
(Decrease) increase in deferred revenue (188,911) 183,501
Decrease in deferred compensation related
party (12,692) -
------------ ------------
Net cash (used in) operating activities (1,289,909) (1,175,627)
------------ ------------
Cash flows from investing activities
Net proceeds from promissory note
recievable 1,702,000 -
Purchase of property and equipment ( 4,979 ) -
Purchase of marketable securities - (770,000)
------------ ------------
Net cash provided by (used in) investing
activities 1,697,021 (770,000)
------------ ------------
Cash flows from financing activities
Proceeds from exercise of warrants 500 -
Proceeds from sale of preferred stock - 2,000,000
Principal payments made on notes payable (75,576) (593,218)
------------ ------------
Net cash (used in) provided by financing
activities (75,076) 1,406,782
------------ ------------
Net change in cash balance 332,036 (538,845)
Beginning cash 289,442 1,390,953
------------ ------------
Ending cash $ 621,478 $ 852,108
============ ============
Supplemental disclosure of cash flow
information
Cash paid for interest $ 5,423 $ 7,476
============ ============
Cash paid for taxes $ - $ -
============ ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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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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