Variflex 8-K Variflex Reports Third Quarter Results

Exhibit 99.1

For Immediate Release	Contacts:	Variflex, Inc.
		Petar Katurich
		805/523-0322
		Sitrick And Company
		Jeff Lloyd
		310/788-2850

Variflex Reports Third Quarter Results

Revenues and Net Income increase 56% and 145%, respectively

MOORPARK, California, — May 27, 2003 —Variflex, Inc. (Nasdaq: VFLX), a leading provider of recreational consumer products, today reported the results for the third fiscal quarter ended April 30, 2003. The Company reported net sales for the quarter of $21.3 million compared to $13.7 million for the third quarter of 2002, an increase of $7.6 million or 56% and also reported net income for the quarter of $1,338,000 or $0.29 per diluted share, compared to net income of $546,000, or $0.12 per diluted share for the third quarter of 2002.

Net sales for the nine month period ended April 30, 2003 were $43.8 million compared to $30.2 million for the comparable period in the prior year, an increase of $13.6 million or 45% and reported net income of $680,000 or $0.15 per diluted share, compared to a net loss of $1,842,000 or ($0.40) per diluted share for the comparable period.

Jay Losi, Variflex’s CEO, stated, “Good business execution — from new product development to sales and delivery — enabled the Company to achieve significant increases in sales and profits in the quarter and year-to-date. Continued growth in both our action sport and outdoor product categories drove the sales increases. Our balance sheet remains strong which provides us with significant flexibility to develop and market our products, and to pursue other opportunities”.

Variflex, Inc. designs and develops specialty consumer products that are manufactured to the Company’s detailed specifications by independent contractors, and are then distributed in the U.S. and worldwide through the Company’s established retail distribution network. Variflex benefits from sales of its core sporting goods products through licensing agreements carrying the “Rocket Power”, “Sponge Bob Square Pants”, Jimmy Neutron” and “Tracker” brand names. Current products include in-line skates, skateboards,

recreational protective equipment (such as wrist guards, elbow pads and kneepads used by skaters and skateboarders) helmets, portable instant canopies and springless trampolines.

The Company may make certain statements that contain “forward-looking” information or statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “pursue” and similar expressions are intended to identify such forward-looking statements. There are risks and uncertainties that may affect our future operating results, business and financial condition, including but not limited to those listed in the Company’s most recent annual report on form 10K.

Note: Tables Follow

VARIFLEX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Nine Months Ended April 30						Three Months Ended April 30
	2003			2002			2003			2002
	(unaudited)						(unaudited)
Net sales	$	43,785		$	30,168		$	21,303		$	13,663
Cost of goods sold		36,712			26,033			17,260			10,984
Gross profit		7,073			4,135			4,043			2,679
Operating expenses:
Selling and marketing		1,866			1,761			808			764
General and administrative		4,109			4,463			1,409			1,419
Total operating expenses		5,975			6,224			2,217			2,183
Income/(loss) from operations		1,098			(2,089	)		1,826			496
Other income (expense):
Interest expense		(62	)		(69	)		(22	)		(23	)
Interest income and other		149			316			39			73
Total other income (expense)		87			247			17			50
Income/(loss) before income taxes		1,185			(1,842	)		1,843			546
Provision for income taxes		505			0			505			0
Net income/(loss)	$	680		$	(1,842	)	$	1,338		$	546
Net income/(loss) per share of common stock:
Basic	$	0.15		$	(0.40	)	$	0.29		$	0.12
Diluted	$	0.15		$	(0.40	)	$	0.29		$	0.12
Weighted average shares outstanding:
Basic		4,604			4,602			4,604			4,604
Diluted		4,604			4,602			4,604			4,604