Auri, Inc. (OTCBB: AURI) announced today financial results for the
three and six months ended June 30, 2011.
Second Quarter 2011 Highlights:
- Women's footwear generated $61,452 in sales in the second
quarter with Men's footwear generating $108,335 in sales for the
same period.
- Added 29 new retail distribution points in the 2nd quarter; 148
total retail locations at June 30, 2011
Three Months Ended June 30, 2011
Auri designs and markets branded contemporary footwear for men
and women in several unique styles. Auri's men's line consists of
both causal/sport shoes and fashion/dress shoes and an array of
sandals, while its new women's line, which debuted in February
2011, consists of an assortment of high-heel designs and flats. The
Company's fall 2011 women's line will also include boots, wedges
and platforms.
"With respect to both our men's and women's lines, our design
platform fuses high fashion with proprietary technologies to create
shoes that present true luxury with unparalleled performance and
uncompromised style," stated Ori Rosenbaum, CEO and Chairman of
Auri. "Our design team has created shoes with active suspension
systems, which incorporate compression control and anti-fatigue
features complemented by removable foot beds. By integrating
Outlast® temperature regulating linings, Liquicell® ultra-thin
interface technology, and encapsulated gel technologies, we are
able to provide form and function unlike other brands. To this end,
our innovative design philosophy and solid business fundamentals
earned Auri the #8 spot on Forbes Magazine's 2009 'America's Most
Promising Companies' list and we were the only footwear, fashion or
apparel brand to make the list."
Revenues
Revenues for the three months ended June 30, 2011 were $169,787,
23% lower than the $221,380 for the three months ended June 30,
2010. The primary cause of the year-over-year decline, which
occurred in both the women's and men's collections, was that the
Company shipped the majority of its spring merchandise to retailers
in the first quarter vs. the previous year spring sales coming in
the second quarter.
Cost of Sales
Cost of sales for the three months ended June 30, 2011 increased
to $169,975 from $154,180 a year ago. Gross margin decreased to 0%
in the three months ended June 30, 2011 from 30% in the comparable
period a year ago.
Operating Expenses
Selling, general and administrative expenses were $488,628 in
the second quarter of 2011 compared to $194,108 in the same period
a year ago. Auri incurred $201,273 of public company expenses,
including $122,500 of non-cash stock-based compensation expense,
which was not present in the year-ago period. Excluding these
costs, adjusted operating expenses increased approximately 48% to
$287,355.
Loss from operations was $483,816 in the second quarter of 2011
compared to $126,908 in the same period in 2010.
Net Income (Loss)
Net loss for the three months ended June 30, 2011 was $508,391
compared to a $130,536 loss for the three months ended June 30,
2010. The diluted loss per share was $0.01 based on 88.7 million
weighted average shares outstanding in the second quarter of 2011
compared to $0.00 and 53.5 million shares in the same period a year
ago, respectively.
The Company sold 1,190,000 units in a private placement during
the six months ended June 30, 2011. Each unit consists of one share
of common stock and one warrant to purchase one share of common
stock at $1.00 per share. The warrants are exercisable for a period
of two years.
Six months Ended June 30, 2011
Revenues
Revenues for the six months ended June 30, 2011 increased 31% to
$473,824 from the year ago period. Sales of women's footwear
increased approximately 112% to $234,306 and benefited from the
Company's launch of its women's line in February 2011 into 58
department stores and boutique doors.
Cost of Sales
Cost of sales for the six months ended June 30, 2011 was
$383,029 versus $251,750 last year. Gross profit was $90,795 in the
first half of 2011 versus $108,949 in the first half of 2010, with
associated gross margins of 19% and 30%, respectively.
Operating Expenses
Selling, general and administrative expenses increased from
$442,792 to $881,273 due primarily to additional legal fees,
addition of sales personnel and increased marketing/trade show
attendance. In addition, the Company spent approximately $201,273
in public company expenses during the first six months of 2011,
which were not present in the comparable period a year ago.
Operating loss was $790,478 compared to $333,843 in the first half
of 2010.
Net Income (Loss)
Net loss for first six months of 2011 was $837,723 as compared
to a loss of $337,594 during the six months ended June 30, 2010.
The diluted net loss per share was $0.01 based on 79.7 million
weighted average shares outstanding.
Liquidity and Capital Resources
As of June 30, 2011, the Company had $233,060 of cash and cash
equivalents and $133,333 of long term debt outstanding. Working
capital was $537,946 at June 30, 2011 compared to $240,325 at
December 31, 2010. The Company received $0.6 million in net
proceeds from various private placements in the six months ended
June 30, 2011. Based on current projected working capital needs for
the next twelve months, the Company needs to raise additional
capital to meet its operating goals.
Business Updates
On July 18th, 2011, Auri announced its entry into the Middle
East with an initial shipment to Fifty One East ("51 East"), a
luxury retailer located in Qatar. Auri's fall 2011 men's sport and
fashion footwear will be sold through 51 East's retail locations.
Auri currently has made its first shipment to 51 East with
additional orders scheduled for September delivery.
During the first two quarters the brand has added 52 new doors
of distribution with prominent department and premium boutique
stores domestically and internationally. Additionally, many of
these doors are expected to provide vertical growth and door count
for the fall 2011 collection.
Spring business has generated successful growth and brand
awareness with positive sell throughs in the women's collection
generating reorder activity and increased interest for fall.
Fall 2011 launch -- Auri's men's and women's fall collections
will be delivered on September 9th at approximately 150 retail
locations including Fred Segal, Rubenstein Brothers, The Tannery,
and Gary's Newport Beach and Del Mar.
Auri's women's fall collection incorporates 10 patterns in 32
SKU's. Retail prices range from $145-$295. The men's collection
features a diverse lineup of casual, dress, and sportswear oriented
footwear. The offering consists of 9 patterns in 24 SKU's. Retail
prices for the men's line range from $150-$285.
We believe the combination of great styles and unmatched comfort
will expand our sales and brand in this large and growing market. A
new marketing campaign and appearances at 7 trade shows this fall
are expected to produce additional positive momentum in the 4th
quarter carrying over in to 2012.
About Auri, Inc.
Auri designs, crafts and markets fashion footwear for men and
women, fusing performance engineering, innovative designs and
advanced technical materials to provide a new level of luxury in
fashion footwear. Crafted with Italian leathers and hand finished
details, the products incorporate a seamless fusion of next level
technologies with pure style delivering a unique experience of a no
compromise style.
Advanced technologies include active suspension systems,
compression control, Outlast® temperature regulating linings,
Liquicell® ultra-thin liquid-filled interface technology, and
encapsulated gel technologies. For more information, please visit
www.aurifootwear.com.
Safe Harbor Statement
This press release contains certain statements that may include
'forward-looking statements' as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
often identified by the use of forward-looking terminology such as
"believe, expect, anticipate, optimistic, intend, will" or similar
expressions. Such forward-looking statements involve known and
unknown risks and uncertainties that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Investors should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. The Company's actual results
could differ materially from those anticipated in these
forward-looking statements as a result of a variety of risks and
factors, including those discussed in the Company's periodic
reports that are filed with and available from the Securities and
Exchange Commission. All forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified
in their entirety by these risks and other factors. Other than as
required under the securities laws, the Company does not assume a
duty to update these forward-looking statements.
AURI, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2011 December 31, 2010
ASSETS (unaudited)
Cash and cash equivalents $ 233,060 $ 406,439
Accounts receivable - net 130,198 104,355
Due from factor 68,423 15,796
Inventory - net 325,534 226,773
Prepaid expenses and other assets 168,235 116,320
Deferred finance fee - net - 18,778
Total current assets 925,450 888,461
Property and equipment - net 57,896 85,035
TOTAL ASSETS $ 983,346 $ 973,496
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Accounts payable $ 130,263 $ 85,337
Accrued liabilities 90,574 46,132
Short-term note payable 100,000 -
Short-term portion of long-term note
payable 50,000 12,500
Short-term portion of long-term related
party note payable 16,667 4,167
Short-term convertible note payable - 500,000
Total current liabilities 387,504 648,136
Long-term note payable - net of short
term portion 100,000 137,500
Long-term related party note payable -
net of short term portion 33,333 45,833
TOTAL LIABILITIES 520,837 831,469
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value;
1,000,000 shares authorized, no shares
issued and outstanding - -
Common stock - $0.001 par value;
300,000,000 shares authorized,
59,735,360 shares issued and outstanding
at December 31, 2010 and 89,991,580
shares issued and outstanding at June
30, 2011 89,992 59,735
Additional paid in capital 5,579,544 4,451,596
Accumulated deficit (5,207,027) (4,369,304)
Total stockholders' equity (deficit) 462,509 142,027
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 983,346 $ 973,496
AURI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
Sales - net $ 169,787 $ 221,380 $ 473,824 $ 360,699
Cost of goods sold 169,975 154,180 383,029 251,750
Gross profit (188) 67,200 90,795 108,949
Selling, general and
administrative
expenses 483,628 194,108 881,273 442,792
Loss from operations (483,816) (126,908) (790,478) (333,843)
Other income
(expenses) (24,575) (3,628) (47,245) (3,751)
NET LOSS $ (508,391) $ (130,536) $ (837,723) $ (337,594)
Net loss per share -
basic and diluted $ 0.01 $ - $ 0.01 $ 0.01
Weighted average
shares outstanding -
basic and diluted 88,711,360 53,476,364 79,685,104 52,678,418
AURI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Six Months
Ended Ended
June 30, 2011 June 30, 2010
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (837,723) $ (337,594)
Adjustments to reconcile net loss to
cash used in operating activities
Depreciation, amortization and other 32,756 24,363
Stock based compensation 122,500 33,593
Recovery of inventory reserve 4,631 4,109
Allowance for bad debt 8,517 -
Changes in:
Accounts receivable (34,360) 39,905
Due from factor (52,627) (65,335)
Inventory (103,392) (30,799)
Prepaid expenses and other current
assets (51,915) 9,530
Deferred finance fee 18,778 -
Accounts payable 39,223 (20,086)
Accrued expenses 40,042 (4,593)
Net cash used in operating activities (813,570) (346,907)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments in connection with reverse
merger (49,192) -
Cash paid for purchase of property and
equipment (5,617) (11,201)
Net cash used in investing activities (54,809) (11,201)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of short-term
note payable 100,000 -
Proceeds from common stock sales 595,000 350,000
Net cash provided by financing
activities 695,000 350,000
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (173,379) (8,108)
CASH AND CASH EQUIVALENTS - BEGINNING 406,439 22,931
CASH AND CASH EQUIVALENTS - ENDING $ 233,060 $ 14,823
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for income taxes $ - $ -
Cash paid for interest $ - $ -
NON-CASH INVESTING ACTIVITIES:
Assumption of liabilities acquired in
reverse merger $ 10,115 $ -
Conversion of convertible note into
common stock $ 500,000 $ -
Contacts: Investor Relations: MZ-HCI Ted Haberfield President
Phone: (760) 755-2716 Email: thaberfield@hcinternational.net Web:
www.MZ-HCI.com Media Contact: SnL Communications Marla White Phone:
(310) 996-0239 Email: MWhite@snlc.net
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