Prolong Reports Third Quarter 2004 Results
IRVINE, Calif.--Nov. 1, 20045, 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 third quarter ended September 30, 2004.The Company reported a net loss of $1,005,000 or $(0.03) per diluted share on net sales of $1.95 million compared to a net loss of $402,000 or $(0.01) per diluted share, on net sales of $2.22 million in the same period a year ago. The net loss for the third quarter included a $316,000 non-cash expense related to increasing the reserve against the Company's deferred tax asset. The net loss for the third quarter ended September 30, 2003 included a $490,000 non-cash expense related to increasing the reserve against the Company's deferred tax asset.
Gross profit was $1.22 million, or 62.7% of net sales, compared to $1.45 million, or 65.4% of net sales in the third quarter of 2003. The decrease in gross margins was attributable mainly to a shift in product mix. Selling and marketing expenses for the quarter were $1,168,000, or 59.8% of net sales, compared to $825,000, or 37.1% of net sales, for the comparable period a year ago. General and administrative expenses were $683,000, or 35.0% of net sales, compared to 632,000 or 28.4% of net sales, for the comparable period a year ago.
For the nine months ended September 30, 2004, the Company reported a net loss of $2,123,000, including a $429,000 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 $(0.07) per diluted share, on sales of $6.55 million, compared to a net loss of $1,168,000, or $(0.04) per diluted share, on sales of $6.45 million for the same period in 2003. The net loss for the period ended September 30, 2003 included a $790,000 non-cash expense related to increasing the reserve against the Company's deferred tax asset. Net revenues increased by $110,000 in the first nine months of 2004 as compared to the same period in 2003.
Elton Alderman, the Company's President and CEO said, "The Company's hard work this year to expand available markets for the Prolong product line is beginning to payoff. Commercial and industrial customers that require time to test and verify lubricant results are starting to show good evidence of product use and acceptance. For example, a number of the Prolong products have recently received approval for use in a major automotive manufacturer's parts supplier's plants, which also qualifies them for safe use in the automobile manufacturer's plants throughout the country. In the area of international distribution, we continue to add new countries to our portfolio, which creates additional revenue opportunities."
Mr. Alderman continued by saying, "We are striving to capitalize on our technology. The diversification of our product line into products that deliver the Prolong package of benefits is the key to the future growth of the Company. The big story at the Company at the moment is the introduction of Prolong Motor Oil with its new catchphrase 'The World's Most Powerful Motor Oil(TM)'. The Company's exciting new motor oil line contains the patented AFMT+ concentrate that provides it with its exceptional performance qualities. The new motor oil line is also supported by another excellent product named 'Prolong Super Heavy Duty Oil Stabilizer'. These new products are expected to begin shipping to customers in early 2005. We are working very hard to sign new customers that will place orders and hopefully increase revenue in 2005. We are also working very hard to sign new national accounts so that we can increase our retail distribution to consumers throughout the country. The fourth quarter, which is historically the slowest revenue period of the year, will have the additional expense of developing and rolling out new products, as well as attending major trade shows. We will also continue to support the Prolong brand name with our new half-hour, direct response television show, 'The Prolong Xtreme Machine Challenge'."
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.
PROLONG INTERNATIONAL CORPORATION
Consolidated Condensed Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(As (As
Restated) Restated)
(unaudited) (unaudited) (unaudited) (unaudited)
------------ ----------- ------------ ------------
Net sales $1,951,585 $2,223,794 $6,555,228 $6,445,707
Cost of sales 728,689 769,836 2,313,282 2,247,007
------------ ----------- ------------ ------------
Gross profit 1,222,896 1,453,958 4,241,946 4,198,700
Selling and
marketing expenses 1,168,086 824,717 3,290,090 2,639,377
General and
administrative
expenses 683,340 632,431 2,272,996 2,003,016
Impairment charge - - 200,000 -
Other (expenses)
income, net (60,478) 91,414 (172,865) 64,994
------------ ----------- ------------ ------------
(Loss) income before
provision for
income taxes (689,008) 88,224 (1,694,005) (378,699)
Provision for income
taxes 316,000 490,000 429,000 790,000
------------ ----------- ------------ ------------
Net (loss) $(1,005,008) $(401,776) $(2,123,005) $(1,168,699)
============ =========== ============ ============
Net (loss) per
common share:
Basic ($0.03) ($0.01) ($0.07) ($0.04)
============ =========== ============ ============
Diluted ($0.03) ($0.01) ($0.07) ($0.04)
============ =========== ============ ============
Weighted average
common shares:
Basic shares
outstanding 29,900,848 29,789,598 29,875,597 29,789,598
============ =========== ============ ============
Diluted shares
outstanding 29,900,848 29,789,598 29,875,597 29,789,598
============ =========== ============ ============
Consolidated Condensed Balance Sheets
September December
30, 2004 31, 2003
(unaudited) audited
----------- ------------
Assets:
Cash and cash equivalents $81,478 $1,700,666
Accounts receivable, net 1,280,683 1,019,052
Inventories, net 690,013 604,498
Other current assets 995,013 855,148
----------- ------------
Total current assets 3,047,187 4,179,364
Property and equipment , net 165,267 234,768
Trademarks and intangible assets 2,800,000 3,000,000
Goodwill 2,523,302 2,523,302
Other assets 1,116,769 1,649,884
----------- ------------
Total assets $9,652,525 $11,587,318
=========== ============
Liabilities and stockholders' equity:
Accounts payable $1,203,446 $826,475
Accrued expenses and other current
liabilities 1,547,776 1,911,017
Line of credit 814,290 737,564
----------- ------------
Total current liabilities 3,565,512 3,475,056
Deferred gain, noncurrent 273,167 437,066
Notes payable, noncurrent 1,911,828 1,756,998
Total stockholders' equity 3,902,018 5,918,198
----------- ------------
Total liabilities and stockholders'
equity $9,652,525 $11,587,318
=========== ============