SAN DIEGO, March 31, 2011 – InfoSonics Corporation (NASDAQ: IFON) a provider of wireless handset solutions serving Latin America and Asia Pacific, today announced results for its fourth quarter ended December 31, 2010.


“I am pleased to report that we made progress on a number of fronts during the fourth quarter,” said Joseph Ram, president and CEO of InfoSonics. “We continued the rapid transition of our business from being primarily a distributor of wireless handsets in Latin America to being a designer and manufacturer of handsets serving both Latin America and other emerging markets. We reported record quarterly sales of our verykool® branded products and recorded initial sales of such products into our newly-opened Asia Pacific market. Two phones developed entirely by our in-house R&D team are now in market, and development continues on a roadmap of products to expand our verykool® lineup during 2011. We will strive for an attractive industrial design as well as a unique combination of features which we believe will differentiate our handsets from the competition. We anticipate this will translate into improved sales volumes, average selling prices and gross profit margins.”

Commenting further on the results and strategy, Mr. Ram noted, “Although we had a spike in our Samsung distribution business in the fourth quarter of 2010 compared to the preceding third quarter, we expect that the first quarter of 2011 represented the final quarter of our distribution business. Starting in the second quarter of 2011, we anticipate that our business will consist purely of the development, manufacture and sale of our own proprietary line of verykool® wireless products. This should allow us greater flexibility in increasing gross margins. In addition, we will strive to conduct our business more on a build-to-order basis, which may lower inventory levels and exposure to obsolescence. We are focused on increasing sales volumes by introducing our new internally developed handsets into both our existing Latin American markets, as well as new markets in both Asia Pacific and Latin America. In addition, we are working now to expand business in all our geographic markets to more open market, non-carrier customers, where time-to-market is quicker and system integration expenses can be reduced. Although we know this will take time, we are excited about our strategy and feel that we have adequate working capital to support us through this transitional period.”

InfoSonics reported net sales for the fourth quarter of 2010 of $14.5 million, compared to $61.7 million for the fourth quarter of 2009 and $8.2 million on a sequential basis for the third quarter of 2010. The decrease in net sales from the prior year was due to continued reductions in Argentina distribution sales caused by the recently enacted import tariff, which increases the price of imported handsets by up to 30 percent. The increase in net sales for the fourth quarter of 2010 compared to the preceding sequential quarter includes a 95.8 percent increase in sales of the company’s verykool branded products and a 69.8 percent increase in distribution sales.

Gross margin in the fourth quarter of 2010 was 8.6 percent, compared to 5.7 percent in the fourth quarter of 2009 and 6.6 percent on a sequential basis for the third quarter of 2010. The improvement in gross margin compared to the prior year reflects a higher percentage of total sales derived from the company’s verykool product line which generate higher margins than our now completed distribution business. The gross margin improvement compared to the preceding sequential quarter reflects higher margins during the fourth quarter on verykool branded sales in Asia Pacific and the fact that the third quarter gross margin was reduced by a $306,000 charge to write down certain inventories to estimated market values.

Operating expenses in the fourth quarter of 2010 were $2.0 million, compared to $4.0 million in the fourth quarter of 2009 and $2.5 million on a sequential basis for the third quarter of 2010. The fourth quarter of 2010 includes $324,000 in research and development expenses related to the company’s new China development subsidiary, which was established during the second quarter of 2010. The decrease in expenses in the fourth quarter of 2010 compared to the same quarter last year related mostly to reductions in variable expenses linked to the decline in the company’s distribution sales, offset partially by the new R&D expenses. The decline in expenses compared to the third quarter of 2010 reflects a reduction in marketing and customer incentives, offset partially by an increase in variable expenses related to the increase in distribution sales during the quarter. In addition, SG&A expenses in the third quarter of 2010 included approximately $100,000 of expenses for bad debts and severance benefits from a reduction in force during that quarter.

The net loss for the fourth quarter of 2010 was $725,000, or $0.05 per share, compared to a net loss of $2.2 million, or $0.15 per share, in the fourth quarter of 2009 and a loss of $2.0 million, or $0.14 per share, on a sequential basis for the third quarter of 2010.

The company ended the fourth quarter of 2010 with $12.5 million in cash and cash equivalents. This represented a $4.7 million decrease from $17.2 million at the end of the third quarter of 2010, which amount was invested in trade accounts receivable driven by the significant increase in sales for the quarter. At December 31, 2010, the company had $20.9 million of net working capital and no outstanding indebtedness.

About Infosonics Corporation

InfoSonics is a provider of wireless handsets and related products to carriers and distributors in Latin America and Asia Pacific. The Company distributes products supplied by OEMs and also designs, develops, manufactures, markets, sells and provides after-sales support for its own proprietary line of products under the verykool® and other private label brands. Additional information can be found on our corporate website at and at

Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “hopes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Risks that contribute to the uncertain nature of the forward-looking statements in this release include continued acceptance and follow-on orders from current customers, the ability of the Company to attract new customers for its products, changing customer preferences, competition and unforeseen issues with supply chain, technology and development schedules. In addition, there are many other risks not listed here that may affect the future business of the Company, as well as the forward-looking statements contained herein. To learn more about the risks and uncertainties inherent in our business, we refer you to the risk factors set forth in our periodic reports filed with the Securities and Exchange Commission. All forward-looking statements in this press release speak only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances.


Vernon A. LoForti
Chief Financial Officer