Prolong International Corporation Reports Second Quarter 2004 Results
IRVINE, Calif.--Aug. 1, 20043, 2004--Prolong International Corporation (AMEX:PRL), (http://www.prolong.com), a technology driven consumer products holding company and parent of Prolong Super Lubricants, Inc., manufacturer and marketer of patented consumer automotive, commercial/industrial and household products, announced today financial results for the second quarter ended June 30, 2004.The Company reported a net loss of $513,000 or $(0.02) per diluted share on net sales of $2.3 million compared to a net loss of $579,000 or $(0.02) per diluted share, on net sales of $2.0 million in the same period a year ago. The net loss for the second quarter included a $200,000 non-cash expense related to an impairment charge against intangible assets. The net loss for the second quarter ended June 30, 2003 included a $300,000 non-cash expense related to increasing the reserve against the Company's deferred tax asset.
Gross profit was $1.5 million, or 66.2% of net sales, compared to $1.3 million, or 64.3% of net sales in the second quarter of 2003. The increase in gross margins was attributable mainly to a shift in product mix. Selling and marketing expenses for the quarter were $1,058,000, or 45.9% of net sales, compared to $958,000, or 47.1% of net sales, for the comparable period a year ago. General and administrative expenses were $832,000, or 36.1% of net sales, compared to $629,000, or 30.9% of net sales, for the comparable period a year ago.
For the six months ended June 30, 2004, the Company reported a net loss of $1,022,000, including a $113,000 non-cash expense related to increasing the tax asset reserve account and a $200,000 non-cash expense related to an impairment charge against intangible assets, or $(0.03) per diluted share, on sales of $4.6 million, compared to a net loss of $767,000, or $(0.03) per diluted share, on sales of $4.2 million for the same period in 2003. Net revenues increased by $381,000 in the first six months of 2004 as compared to the same period in 2003.
Elton Alderman, the Company's President and CEO said, "I am pleased to see that net revenue for the second quarter of 2004 exceeded net revenue for the second quarter of 2003 by $271,000 and I am also pleased by the fact that gross profit margins improved to over 66% of sales. These are key financial drivers for the Company and a positive sign. The Company has been spending marketing funds producing and test airing a new infomercial, developing international distribution channels, improving product formulas and running TV spot ads. In addition, the Company's general and administrative expenses over the past six months have been higher than anticipated due to professional fees incurred in connection with a registration statement filed with the Securities and Exchange Commission in the first quarter of 2004." Mr. Alderman further stated that "We are moving in the right direction. We have a committed team of professional business people who believe in the Prolong brand and come to work every day committed to helping the Company grow and prosper."
Prolong International Corporation, a consumer products holding company headquartered in Irvine, California, through its operating subsidiaries, manufactures, markets and distributes a complete line of patented lubricant and proprietary automotive, commercial/industrial and household products. The Company's products are marketed and sold under the brand name Prolong Super Lubricants(R) and are used in consumer, automotive and industrial applications. Prolong products are sold throughout the United States at major chain stores and auto retailers and in international markets. More information about Prolong International Corporation and its products can be obtained at http://www.prolong.com.
Forward-Looking Statements
Certain statements in this news release that relate to financial results, projections, future plans, events, or performance, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended and involve significant risks and uncertainties, including, but not limited to, the following: competition, cost of components, product concentration and risk of declining selling prices. The words "estimate," "project," "potential," "intended," "expect," "anticipate," "believe" and similar expressions or words are intended to identify forward-looking statements. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors and conditions. These risks and uncertainties, and certain other related factors, are discussed in the Company's Form 10-K, Form 10-Q and Form 10-QSB and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release and the Company assumes no obligation to update such forward-looking statements.
PROLONG INTERNATIONAL CORPORATION
Consolidated Condensed Statements of Operations
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(As Restated) (As Restated)
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $2,304,421 $2,033,852 $4,603,643 $4,221,913
Cost of sales 778,932 725,304 1,584,593 1,477,171
Gross profit 1,525,489 1,308,548 3,019,050 2,744,742
Selling and
marketing expenses 1,057,573 958,057 2,122,004 1,814,660
General and
administrative
expenses 832,462 629,276 1,589,656 1,370,585
Impairment charge 200,000 - 200,000 -
Other (expenses)
income, net 51,860 (413) (16,687) (26,420)
(Loss) before
provision for
income taxes (512,686) (279,198) (909,297) (466,923)
Provision for
income taxes - 300,000 113,000 300,000
Net (loss) $(512,686) $(579,198) $(1,022,297) $(766,923)
Net (loss) per
common share:
Basic ($0.02) ($0.02) ($0.03) ($0.03)
Diluted ($0.02) ($0.02) ($0.03) ($0.03)
Weighted average
common shares:
Basic shares
outstanding 29,897,304 29,789,598 29,862,833 29,789,598
Diluted shares
outstanding 29,897,304 29,789,598 29,862,833 29,789,598
Consolidated Condensed Balance Sheets
June 30, December 31,
2004 2003
(unaudited) audited
Assets:
Cash and cash
equivalents $250,854 $1,700,666
Accounts
receivable, net 1,587,687 1,019,052
Inventories, net 844,296 604,498
Other current
assets 927,374 855,148
Total current
assets 3,610,211 4,179,364
Property and
equipment, net 191,413 234,768
Trademarks and
intangible assets 2,800,000 3,000,000
Goodwill 2,523,302 2,523,302
Other assets 1,455,149 1,649,884
Total assets $10,580,075 $11,587,318
Liabilities and
stockholders'
equity:
Accounts payable $1,081,918 $826,475
Accrued expenses
and other current
liabilities 1,584,751 1,911,017
Line of credit 1,037,632 737,564
Total current
liabilities 3,704,301 3,475,056
Deferred gain,
noncurrent 327,800 437,066
Notes payable,
noncurrent 1,640,948 1,756,998
Total stockholders'
equity 4,907,026 5,918,198
Total liabilities
and
stockholders'
equity $10,580,075 $11,587,318