Knockout Holdings, Inc., Marketer of George Foreman's Knock-Out(TM) Cleaners, Announces 2005 Third Quarter Results; Undertaking Major Market Product Rollout
NORTHLAKE, Ill.--Nov. 2, 20052, 2005--Knockout Holdings, Inc., (OTCBB:KNOH), exclusive marketer of George Foreman's Knock-Out(TM) line of household and automotive cleaning products, today announced financial results for the 2005 third quarter and nine months ended Sept. 30, 2005.Knockout also announced that it has successfully completed a six-week momentum market blitz in San Diego, resulting in significant sales enhancements in that market and the retail model for product rollouts that are planned beginning in the first quarter of 2006.
For the 2005 third quarter, total revenue was $292,000, compared with $299,000 for the 2004 third quarter. The company reported a net loss of $4.8 million, or $(0.49) per share, including a non-recurring loss of $2.6 million for the 2005 third quarter. That compared with a net loss of $1.5 million for the third quarter of 2004.
For the nine months of 2005, total revenues were $1.7 million, compared with $294,000 for the nine months of 2004. Knockout reported a net loss of $12.6 million, or $(1.33) per share, including the $2.6 million non-recurring charge for debt extinguishment, for the nine months of 2005. The company reported a net loss of $4.5 million for the nine months of 2004.
"The company's financial results for this past quarter and the first nine months reflect the impact of the anticipated low initial sales levels we have experienced during the past year as we have prepared to introduce the re-branding of George Foreman's Knock-Out(TM) product line," said John Bellamy, chairman and chief executive officer.
"We have experienced significant development and marketing costs resulting from the continued expansion of our marketing initiatives for our patented line of George Foreman's Knock-Out(TM) household and automotive cleaners," Bellamy added.
"We have been encouraged by the public's strong recognition and acceptance of our initial product offering featuring George Foreman," Bellamy pointed out. "We believe that the high quality and safety of our products, developed through our patented process, will contribute to growing demand for our line of products and significant improvement in Knockout's financial results going forward."
Bellamy pointed out that the company has enjoyed some very significant positives so far this year that reflect on the substantial marketing power of George Foreman, coupled with the quality and safety of the company's product line, including:
-- George Foreman's ability to gain national recognition for the company and its Knock-Out product line has been proven. Already, he has talked about our products on 'The Tonight Show with Jay Leno', 'Late Night With Conan O'Brien' and the 'Martha' Stewart show. We plan to have him participate in numerous other marketing efforts going forward. (The clips can be viewed by going to http://www.theknockoutgroup.com/news_36.html.
-- The unique Encapsulation(TM) technology used in George Foreman's Knock-Out products has gained strong validation with the approval by the United States Patent and Trademark Office of the first of three patents that have been pending.
-- The total re-branding of our George Foreman Knock-Out product line has been well-accepted by customers, especially in the San Diego market. We recently completed a highly successful six-week promotional program where the company achieved measurable sales results and was also able to better define its national roll-out strategies.
-- Knock-Out has gained an important marketing ally by signing a 10-year cross licensing agreement with Salton, Inc., the exclusive distributor of George Foreman(R) grills. We anticipate engaging in a number of major promotional activities with Salton, which has already sold more than 70 million George Foreman(R) grills.
About Knockout Holdings, Inc.
Knockout Holdings, Inc., develops and markets celebrity-branded products that are intended to be safe for human use and environmentally friendly, including the George Foreman's Knock-Out(TM) line. For more information, please visit www.theknockoutgroup.com.
Legal notice to investors: Certain matters discussed in this news release are "forward-looking statements." These forward-looking statements, which apply only on the date of this release, generally can be identified by the use of forward-looking terminology such as "may," "will," "expects," "intends," "estimates," "anticipates," "believes," "continues" or words of similar import. Similarly, statements that describe the company's future plans, objectives or goals are also forward-looking statements, which generally involve known and unknown risks, uncertainties and other facts that may cause the actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward-looking statements. Such factors may include the following: competitive responses to the company's products; an inability to satisfy market demand; regulatory matters, insufficient product volumes and quality provided by suppliers; continued effectiveness of celebrity-based advertising and marketing; availability of capital to fund expansion; ability to maintain intellectual property; general economic, business and market conditions; continued retention of key personnel and their success in executing the business plan; maintenance of key trademarks, patents and licenses, and success of the company's exclusive endorsement and licensing arrangement with George Foreman. For a listing of risks applicable to the future prospects of the company, please refer to the company's reports to be filed with the SEC.
"Knock-Out" is a federally registered trademark of Knockout Holdings, Inc.
P&L
Knockout Holding, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
---------------------------------------------------
Revenue $292,446 $298,940 $1,703,851 $298,940
Cost of Sales 548,848 253,248 1,846,664 253,248
----------------------------------------------------------------------
Gross Margin (256,402) 45,692 (142,813) 45,692
Selling, General and
Administrative Expenses
(inclusive of $66,304
and $894,120 of charges
incurred from related
party, in 2005 and
2004 respectively) 1,640,074 1,512,778 9,410,892 4,589,800
----------------------------------------------------------------------
Operating Loss (1,896,476) (1,467,086) (9,553,705) (4,544,108)
Loss on
extinguishment of
debt 2,622,101 2,622,101
Interest expense,
net 287,527 - 464,394 -
----------------------------------------------------------------------
Net Loss (4,806,104) (1,467,086) (12,640,200) (4,544,108)
Preferred Stock
Dividend (1,094,250) - (1,470,250) -
Net Loss Available
to Common
Shareholders (5,900,354) (1,467,086) (14,110,450) (4,544,108)
----------------------------------------------------------------------
Basic and diluted
loss per common
shares $(0.49) None $(1.33) None
----------------------------------------------------------------------
Weighted average
common shares
outstanding 12,015,136 None 10,583,845 None
----------------------------------------------------------------------
Balance Sheet
Knockout Holding, Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2005 2004
----------------------------------------------------------------------
Assets
Current Assets
Cash $2,260,418 $19,837
Accounts Receivable, net 86,217 133,030
Inventories 819,132 1,802,060
Prepaid Expenses & other current assets 114,100 63,684
-
----------------------------------------------------------------------
Total Current Assets 3,279,867 2,018,611
----------------------------------------------------------------------
Fixed Assets, Net 234,408 280,077
Patents & Trademarks, net of amortization
of $283,771 and $36,757 at September 30,
2005 and December 31 2004, respectively
(including $2,103,000 of pending patents
at both March 31, 2005 and December 31,
2004) 2,968,259 3,137,629
Deposits & Other Non-Current Assets 267,159 200,848
----------------------------------------------------------------------
Total Assets $6,749,693 $5,637,165
----------------------------------------------------------------------
Liabilities & Stockholders' Equity
Current Liabilities
Accounts Payable $1,473,896 $1,938,240
Accrued Expenses 2,930,682 715,044
Due to Related Party 246,858 298,938
Notes Payable - 1,200,000
----------------------------------------------------------------------
Total Current Liabilities 4,651,436 4,152,222
----------------------------------------------------------------------
Convertible Notes Payable, net of
unamortized discount of $4,295.295
and 0 at September 30, 2005 and
December 31, 2005, respectively 29,605 -
Stockholders' Equity
Common Stock - Voting, $0.001,
20,000,000 shares authorized
12,015,136 and 8,992,323 issued and
outstanding respectively 12,015 8,992
Convertible Preferred stock, $0.001 par
value, 1,000,000 shares authorized
Series A - 865,000 shares authorized,
796,568 to be issued (liquidation
preference of $37,351,000) 797 797
Series B - 1,000,000 shares
authorized, 116,754 to be issued
(liquidation preference of $5,474,980) 116
Additional paid-in capital 29,010,487 15,789,717
Accumulated deficit (26,954,763) (14,314,563)
----------------------------------------------------------------------
Total Stockholders' Equity 2,068,652 1,484,943
----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $6,749,693 $5,637,165
----------------------------------------------------------------------
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