ZRVT Zurvita Holdings Inc (CE)

Zurvita Holdings, Inc. (OTCBB:ZRVT) (“Zurvita” or the “Company”), a dynamic direct-to-consumer network marketing company offering turn-key solutions for high-quality consumer and business products and services, today announced its financial results for the third quarter of the 2010 fiscal year, ended April 30, 2010.

Third Quarter 2010 Highlights

• Revenues increased 47% quarter-over-quarter to a record $1.7 million.
• Gross profit increased 60% quarter-over-quarter to $587 thousand.
• Gross margin was a record 34% versus 32% one year ago.
• Net profit was $370 thousand, versus a net loss of $1.2 million one year ago.
• Held “Freedom Crusade” national conference, drawing over 650 attendees.
• Formally launched national online business advertising campaign featuring Local Search Engine Directory, Zurvita’s online local search and advertising software.
• Increased total number of sales representatives by 100%.

Commenting on the report, Zurvita Co-Chief Executive Officer Jay Shafer commented “We achieved record quarterly revenues and margins in the third fiscal quarter as our innovative service offerings gained traction among our independent sales representatives. These include advertising sales from our local search engine directory and commissions from energy sales, which represent new and fast growing revenue streams for Zurvita’s team based on our unique business-to-business model. Our revenues were also fueled by higher administrative and marketing fees associated with our online management assets and tools, buoyed by the doubling of our total sales representative base.” Added Mr. Shafer, “Going forward, we see positive continuing trends for Zurvita based on our continued and deepening ability to introduce exciting new tools and innovative offerings to our growing base of sales consultants, including in the financial services, online advertising, and energy markets.”

Third Quarter 2010 Results

Revenue for the fiscal third quarter ended April 30, 2010, increased 47% to a record $1.7 million. The increase was primarily attributable to new revenue streams from advertising sales related to the Company’s Local Search Engine directory and commissions related to energy sales, which together accounted for approximately $447 thousand of the increase in the Company’s revenues for the three months ended April 30, 2010, and an increase of approximately $314 thousand in administrative website sales and marketing fees as a direct result of growth in the Company’s total sales representative base, which more than doubled in the past year.

Gross profit in the third fiscal quarter ended April 30, 2010 increased 60% to $587 thousand versus gross profit of $366 thousand in the same period a year ago. Gross margin for the quarter was a record was 34%, up from 32% one year ago.

Operating expenses for the fiscal third quarter were $1.6 million, compared to $1.6 million one year earlier. Operating loss improved to $973 thousand versus $1.2 million for the three months ended April 30, 2009.

For the third quarter of fiscal 2010, the company recorded a net profit of $370 thousand, or $0.00 per diluted share, versus a loss of $1.2 million, or $0.02 per diluted share for the same period last year. Diluted earnings per share were calculated using a weighted average share count of 104.9 million in the third fiscal quarter of 2010, compared to 49.2 million one year ago.

Nine Month Results

Revenues for the first nine months of the 2010 fiscal year were $4.6 million, up 43% from $3.2 million in the same period one year ago. Gross profit was $1.2 million, or 27% of sales, an increase of 254% versus gross profit of $347 thousand, or 11% of sales, in the first nine months of fiscal 2009. Operating expenses for the nine months ended April 30, 2010, were $4.9 million, versus operating expenses of $4.9 million for the same prior year period. Operating loss improved to $3.6 million versus $4.6 million for the nine months ended April 30, 2009. The Company reported a net loss of $7.0 million, or $0.12 per diluted share, versus a net loss of $4.6 million, or $0.09 per diluted share, for the same prior year period. The increase in net loss is attributable to non-cash amortization of the Company’s advertising and marketing agreement as well as significant non-cash unrealized losses recognized on the Company’s outstanding liability warrants.

Financial Condition

As of April 30, 2010, the Company had cash and cash equivalents of $562 thousand and working capital of $267 thousand. Net cash used in operating activities for the first nine months of fiscal 2010 was $2.4 million, down from $4.6 million for the same period in 2009. Total liabilities and stockholders’ deficit was $4.7 million as of April 30, 2010 versus total liabilities and stockholders’ deficit of $3.5 million for the period ended April 30, 2009.

On June 3, 2010, the Company entered into a securities purchase agreement with an accredited investor and sold 2,300,000 shares of its designated Series C Convertible Preferred Stock and Series C Common Stock Purchase Warrants to purchase an aggregate of 9,200,000 shares of the Company’s common stock. The Company received aggregate proceeds from the Sale of the Private Placement Securities equal to $2.3 million.

Business Outlook

“We are very excited about the increases in revenue and margin that our innovative offerings have generated, and we are exploring new services designed to supply additional revenue streams to our business,” commented Mark Jarvis, Zurvita Co-Chief Executive Officer. “We expect this trend to continue and that we will realize more positive results in the quarters ahead based on our ability to grow and enable our representative base and introduce leading, business-to-business services. Our ‘Freedom Crusade’ national conference in Houston was a tremendous success, and we have already begun preparing for our ‘Champions Weekend’ conference in Orlando, Florida taking place July 22 to July 24.” Concluded Mr. Jarvis, “We are committed to the success of our consultant base as our executive team continues to identify and develop services to capture emerging business trends that we believe will significantly increase Zurvita’s future revenues and profits.”

About Zurvita Holdings, Inc.

Zurvita is a dynamic direct-to-consumer marketing company offering high-quality products and services targeting individuals, families and small businesses. The company’s highly differentiated services feature best in class consumer products and small business solutions through a growing network of independent sales consultants. Zurvita has rapid growth potential due to its experienced sales management team and its unique business-to-business strategy offering turnkey solutions for commercial and residential energy, advertising, telecommunications and financial services. For more information, please visit http://www.zurvita.com.

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

ZURVITA HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)       For the Three Months Ended For the Nine Months Ended April 30, April 30,   2010     2009     2010     2009   REVENUES Administrative websites $ 519,514 $ 207,023 $ 1,517,649 $ 621,766 Advertising sales 342,145 - 597,736 - Commissions 127,123 22,079 283,964 22,693 Marketing fees and materials 501,538 499,905 1,452,765 1,297,506 Membership fees   216,596     433,865     756,347     1,279,278   Total revenues 1,706,916 1,162,872 4,608,461 3,221,243   COST OF SALES Benefit and service cost 409,333 160,269 1,039,579 493,659 Sales commissions   711,061     636,248     2,341,937     2,381,047   Total cost of sales 1,120,394 796,517 3,381,516 2,874,706   GROSS PROFIT 586,522 366,355 1,226,945 346,537   OPERATING EXPENSES Depreciation 9,011 8,452 26,287 19,693 Office related expenses 115,872 56,679 284,760 183,326 Payroll and employee benefits 435,568 261,941 1,198,538 861,738 Professional fees 253,413 341,472 1,002,310 1,418,606 Selling and marketing 711,010 876,583 2,201,817 2,204,003 Travel   34,624     23,831     140,657     245,247   Total operating expenses   1,559,498     1,568,958     4,854,369     4,932,613     Loss from operations before other income (expense) (972,976 ) (1,202,603 ) (3,627,424 ) (4,586,076 )   OTHER INCOME (EXPENSE) Gain on change in fair value of share conversion feature 139,190 - 171,485 - Interest expense (82,405 ) - (190,501 ) - Gain (loss) on change in fair value of marketable securities 400,000 - (130,000 ) - Gain (loss) on change in fair value of warrants 948,435 - (3,091,230 ) - Loss on debt restructure   (50,000 )   -     (50,000 )   -   Total other income (expense)   1,355,220     -     (3,290,246 )   -     Income (loss) before income taxes 382,244 (1,202,603 ) (6,917,670 ) (4,586,076 )   Income taxes   12,287     8,140     32,429     22,549     Net income (loss) $ 369,957   $ (1,210,743 ) $ (6,950,099 ) $ (4,608,625 )   Basic earnings (loss) per share $ 0.01   $ ( 0.02 ) $ ( 0.12 ) $ ( 0.09 )   Basic weighted average number of common shares outstanding   56,964,734     49,240,000     56,683,117     49,240,000     Diluted earnings (loss) per share $ 0.00   $ ( 0.02 ) $ ( 0.12 ) $ ( 0.09 )   Diluted weighted average number of common shares outstanding   104,950,540     49,240,000     56,683,117     49,240,000   ZURVITA HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS     (Unaudited) April 30, 2010 July 31, 2009 ASSETS Current assets Cash $ 561,778 $ 1,390,953 Marketable securities (at fair value) 640,000 - Accounts receivable 117,212 47,732 Agent advanced compensation 721,784 927,002 Deferred expenses 148,768 - Deferred marketing costs   164,350     657,400   Total current assets 2,353,892 3,023,087   Property, plant and equipment (net) 93,366 112,036   Agent advanced compensation - 271,344 Marketing agreement 2,000,000 - Merchant account deposit 115,333 115,333 Other assets   92,263     24,126   Total assets $ 4,654,854   $ 3,545,926     LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable $ 211,348 $ 471,081 Accounts payable - related party 107,367 - Notes payable - current 385,484 787,237 Accrued expenses 230,718 148,001 Deferred revenue 1,097,270 934,321 Income tax payable   54,686     35,276   Total current liabilities 2,086,873 2,375,916   Deferred compensation - related party 64,736 - Notes payable - long term 1,616,776 284,967 Fair value of share conversion feature 421,941 - Fair value of warrants   5,005,290     549,780   Total liabilities   9,195,616     3,210,663     Redeemable preferred stock 2,848,747 1,211,000   Stockholders' deficit Common stock ($.0001 par value, 300,000,000 shares authorized; 65,022,714 and 64,440,000 shares issued and 57,022,714 and 56,440,000 shares outstanding as of April 30, 2010 and July 31, 2009, respectively) 6,502 6,444 Treasury stock (210,000 ) (210,000 ) Additional paid-in capital 9,530,451 9,094,182 Accumulated deficit   (16,716,462 )   (9,766,363 ) Total stockholders' deficit   (7,389,509 )   (875,737 )   Total liabilities and stockholders' deficit $ 4,654,854   $ 3,545,926   ZURVITA HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)     For the Nine Months Ended April 30, 2010 April 30, 2009 Cash flows from operating activities Net loss $ (6,950,099 ) $ (4,608,625 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization on note payable discount 95,635 - Amortization on deferred marketing costs 493,050 - Depreciation 26,287 19,693 Share-based compensation 386,327 112,870 Gain on change in fair value of share conversion liability (171,485 ) - Loss on change in fair value of marketable securities 130,000 - Loss on change in fair value of warrants 3,091,230 - Loss on debt restructure 50,000 - Changes in operating assets and liabilities Increase in accounts receivable (69,480 ) (7,664 ) Decrease (increase) in agent advanced compensation 476,562 (51,676 ) Increase in deferred expenses (148,768 ) (491,784 ) Increase in merchant account deposits - (115,333 ) Increase in other assets (46,106 ) (8,216 ) Increase in accounts payable and accrued expenses 12,914 141,593 Increase in deferred revenue 162,949 390,347 Increase in deferred compensation related party   64,736     -   Net cash used in operating activities   (2,396,248 )   (4,618,795 )   Cash flows from investing activities Purchase of property and equipment ( 7,617 ) (126,101 ) Purchase of marketable securities   (770,000 )   -   Net cash used in investing activities   (777,617 )   (126,101 )   Cash flows from financing activities Contributions of capital from The Amacore Group, Inc. - 4,575,375 Proceeds from sale of preferred stock 3,000,000 - Principal payments made on notes payable   (655,310 )   -   Net cash provided by financing activities   2,344,690     4,575,375     Net change in cash balance (829,175 ) (169,521 )   Beginning cash   1,390,953     174,585     Ending cash $ 561,778   $ 5,064     Supplemental disclosure of cash flow information Cash paid for interest $ -   $ -