SYNERGY BRANDS REPORTS FIRST QUARTER RESULTS
GROSS PROFIT INCREASES 68% TO $509,778
NET LOSS IS REDUCED 88% TO $132,818 (9 CENTS PER SHARE)
May, 2003 Synergy Brands Inc, Melville, New York, NASDAQ Small-Cap (SYBR)
Synergy Brands (Synergy) today announced its financial results for the first
quarter ended March 31, 2003.
Gross profit increased by 68% to $509,778 from $303,264. The increase in gross
profit occurred despite the fact that overall sales remained flat at $9.1
million for the first quarter of 2003. This improvement in gross profit is
directly related to the company's distribution and logistics operating model.
The company was able to increase its margin by managing its cost of distribution
through the efficiency by which it executes its orders. By streamlining its
operations through technology and logistics, it has been able to reduce its
procurement costs and reduce its operating expense base once its infrastructure
was developed. The Company's grocery business generated 61% of the company's
overall gross profit by increasing its gross profit percentage from 1.6% for the
first quarter of 2002 to 4.0% for the first quarter of 2003.
The net loss of the company was reduced by 88% to a net loss of $132,818 or
$0.09 per share as compared to a net loss of $1,106,605 million or $0.88 per
share. Net loss improved due to an increase in the company's gross profit and a
decrease in selling, general and administrative expenses. Selling, general and
administrative expenses decreased by 30% from $954,378 to $666,781 from the
first quarter of 2003 as compared to the first quarter of 2002. Contributing to
the decrease in selling, general and administrative expenses was a $100,000
decrease in compensation charges related to the issuance of stock-based
compensation to employees and vendors. The Company also had recorded a bad debt
recovery of $35,000 during the first quarter of 2003 as compared to a provision
for doubtful accounts of $58,000 for the first quarter of fiscal 2002.
Outlook
Management maintains its guidance for Fiscal year 2003. The company believes
that it can increase its sales for 2003 to $40 million from $31 million in 2002.
Management further believes that it can generate an adjusted operating income of
$700,000 (50 cents per share) for the full fiscal year 2003. Management
estimates are subject to the conditions outlined in its forward-looking
statements below. For the second quarter of 2003, the company estimates net
sales of $10 million and an adjusted operating income of 15 cents per share. All
estimates are issued under FD and are subject to forward-looking conditions.
03/31/03 03/31/02Change
Statement of operations data
Revenues
PHS Group (dealbynet) 7,889,209 7,937,925 -1%
Proset 880,288 796,134 11%
B2C Sites (beautybuys and net cigar) 310,147 334,233 -7%
Total 9,079,644 9,068,292 0%
Gross Profit 509,778 303,264 68%
Net Profit (loss) (132,818) (1,106,605) 88%
Per share (0.09) (0.88) 90%
Weighted shares outstanding 1,401,040 1,262,343
SYNERGY BRANDS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2003
(Uuaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 303,827
Cash collateral security deposit 250,000
Marketable Securities 2,415
Accounts Receivable, less allowance for doubtful accounts of $127,481 2,207,039
Inventory 1,706,219
Prepaid assets 445,746
---------------
Total Current Assets 4,915,246
Property and Equipment, Net 444,681
Other Assets 146,846
Notes Receivable 109,800
Web Site Development Costs,
net of accumulated amortization of $691,731 237,748
Intangible Assets,
net of accumulated amortization of $ 1,628,981 1,315,308
---------------
Total Assets $ 7,169,629
===============
SYNERGY BRANDS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2003
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ 2,434,674
Line-of-Credit 1,636,130
Accounts Payable and Accrued Expenses 11,994
Related Party Note Payable
------------
4,082,798
Total Current Liabilities
Notes Payable 467,111
Stockholders' Equity:
Class A Preferred stock - $.001 par value; 100,000 shares authorized and 100
outstanding; liquidation preference of $10.50 per share.
Class B preferred stock - $.001 par value; 9,900,000 shares authorized, and -
no shares outstanding
Class B, Series A Preferred stock - $.001 par value; 100,000 shares 60
authorized; 60,000 shares outstanding; liquidation preference of $10.00 per
share.
Common stock - $.001 par value; 49,900,000 Shares
authorized 1,479,059 shares outstanding 1,479
Additional paid-in capital 35,910,751
Deficit (33,228,922)
Accumulated other comprehensive income (loss) (2,530)
Less treasury stock at cost, 20,366 shares (61,218)
------------
Total stockholders' equity 2,619,720
------------
Total Liabilities and Stockholders Equity $ 7,169,629
============
SYNERGY BRANDS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
2003 2002
Net Sales $ 9,079,644 $ 9,068,292
------------- -------------
Cost of Sales
Cost of product 8,409,415 8,636,990
Shipping and handling costs 160,451 128,038
------------- -------------
8,569,866 8,765,028
------------- -------------
Gross Profit 509,778 303,264
Operating expenses
Selling General and Administrative Expense 666,781 954,378
Depreciation and Amortization 147,950 245,601
------------- -------------
814,731 1,199,979
------------- -------------
Operating loss (304,953) (896,715)
Other Income (Expense)
Interest Income 3,314 18,942
Other Income (Expense) 282,750 (192,858)
Equity in earnings of investee 40,562 15,206
Interest and Financing Expense (113,083) (49,860)
------------- -------------
213,543 (208,570)
Loss before income taxes (91,410) (1,105,285)
Income tax expense 41,408 1,320
------------- -------------
NET LOSS $ (132,818) $ (1,106,605)
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Basic and diluted net loss per common share: $ (09) $ (0.88)
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About Synergy Brands:
Synergy Brands is a holding company, which operates through three unique
business segments that all utilize business logistics. The businesses include
PHS Group (also known as www.dealbynet.com), Gran Reserve Corporation (GRC), and
Proset Hair Systems (Proset). PHS operates the Company's distribution business
in the grocery and health beauty aids consumer markets. Proset wholesale salon
products to chain drug stores and GRC manages the Company's online properties,
which include www.CigarGold.com, www.BeautyBuys.com and store.perx.com. The
company also owns a 20% stake in Interline travel and tours (ITT), a travel
company specializing in hotel and cruise sales solely to airline related
employees. Information on ITT can be found at www.perx.com.
(*) FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE AND MUCH OF THE FINANCIAL FIGURES AND OTHER INFORMATION
PRESENTED STATE AND REFLECT ASSUMPTIONS, EXPECTATIONS, PROJECTIONS, INTENTIONS
AND/OR BELIEFS ABOUT EVENTS THAT ARE INTENDED AS "FORWARD LOOKING STATEMENTS"
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. IN PARTICULAR THESE
INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS REFLECTING EARNINGS, PROFIT AND LOSS
OF THE COMPANY AND ASSOCIATED COSTS QUOTED HEREIN ON FIGURES EXPECTED TO BE
DISCLOSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10KSB. ANY OR ALL OF THE
COMPANY'S FORWARD-LOOKING STATEMENTS MAY TURN OUT TO BE WRONG. THEY CAN BE
EFFECTED BY INACCURATE ASSUMPTIONS OR BY KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES. FOR A DESCRIPTION OF MANY OF THESE RISK AND UNCERTAINTIES PLEASE
REFER TO THE COMPANY'S FILINGS WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
(WWW.SEC.GOV), INCLUDING FORMS 10KSB AND 10QSB. IN PARTICULAR BUT NOT TO THE
EXCLUSION OF OTHER RISKS AND UNCERTAINTIES, THE PROJECTIONS IN THIS RELEASE ARE
BASED UPON ASSUMPTIONS ON APPLICABILITY OF CERTAIN ACCOUNTING REGULATIONS
BELIEVED APPLICABLE BY THE COMPANY. ADJUSTEDOPERATING INCOME (LOSS) IS NOT
REPORTED IN ACCORDANCE TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) AND
SHOULD NOT BE RELIED UPON AS SUCH. OPERATINGINCOME (LOSS) EXCLUDES INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION. THE COMPANY PLANS ON FILING ITS 10QSB BY
MAY 15, 2003. THE INFORMATION THAT WILL BE REPORTED UNDER THAT FILING WILL HAVE
THE REVIWED FINANCIAL STATEMENTS UNDER GAAP AS WELL AS ALL OTHER SEC
REQUIREMENTS. THIS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY.
Contact: Bev Jedynak
Martin E. Janis & Company, Inc.
312-943-1100 ext. 12
b.jedynak-janispr@att.net